CT puts faith in ‘new world’ firms to spur finance sector revival

In the past year, several companies have announced ambitious plans to each hire hundreds of employees in Connecticut. Financial services are arguably the largest driver of that surge.

Mirador and other fast-growing firms such as Digital Currency Group, iCapital and Tomo Networks will not on their own offset the large and longstanding job losses in the financial sector in Connecticut since the 2008 financial crisis. Even now years after the financial shock, the state is still grappling with downsizing at some of its largest financial services and insurance companies.

But local and state officials are confident that their growth, supported by targeted public subsidies, can help sustain the economic recovery the state has been charting in th two years since the COVID-19 pandemic shutdown.

“The old-world financial services have had a tough go,” Gov. Ned Lamont said in an interview this week. “The new-world financial services are going great.”

New wave of financial services

To support its growth, Mirador plans to open by the end of this summer its under-construction offices covering more than 20,000 square feet across the fourth floor at 850 Canal St., in Stamford’s South End. Employing about 100, the firm specializes in managed services for the wealth management industry.

It will relocate from 10 Corbin Drive in downtown Darien, where its main offices have been since its 2015 founding — after deciding to stay in its home state.

“Being here, we’re able to pull in people who have been in the state,” Mirador founder and managing partner Joseph Larizza said in an interview. “But we also have people who graduated from Arkansas, Notre Dame, Michigan, and they all chose to come live and work in Stamford. Compared to New York City, it’s much more affordable for us and them.”

The other newcomers include Digital Currency Group, a cryptocurrency and blockchain technology-focused company building a new headquarters at the Shippan Landing complex in Stamford’s Shippan section. DCG announced last November plans to hire more than 300 people in the state in the next five years.

Last year also brought significant job announcements from iCapital and Tomo Networks. With a technology platform used by asset managers and wealth managers, iCapital aims to create 200 jobs during the next two years at its downtown Greenwich offices, which opened in September.

Tomo, which focuses on real estate, committed to employing up to 100 local professionals by the end of last year at its headquarters in Stamford’s South End.

“You’re really coming to our growing fin-tech sector here,” Stamford Mayor Caroline Simmons said at a press conference Monday at 850 Canal to announce Mirador’s relocation. “With all the other fantastic businesses we have, you’re really adding that vibrancy to our city.”

She added, “We hope you enjoy Stamford. There are many restaurants, you’ve got The Village, Granola Bar and all these fantastic amenities.”

Mirador’s employees will appreciate 850 Canal’s proximity to dining and entertainment venues, Larizza said. A central location for the new offices was a high priority given that employees are used to a bustling environment in downtown Darien.

“The ability for us to create a community — whether it’s having a drink after work or having a business lunch — we needed to be able to recreate that,” Larizza said. “Stamford was one of the few places that allowed us to create that environment and culture, so we can really be one.”

Widespread job losses

Despite the optimism generated by the recent hiring announcements, the state’s financial sector still has not returned to its job levels leading up to the 2008 financial crisis. Preliminary data from the state Department of Labor shows that in March 117,700 people worked statewide in “financial activities,” which includes banking and finance, insurance, real estate, rental and leasing businesses.

The sector’s employment is down 0.9 percent from a year ago and 19 percent from March 2008. Overall, the state’s employment has grown 3 percent in the past year — but it is still down 4 percent from the same point in 2008.

Last July, Bridgeport-based People’s United Bank announced that it would lay off about 750 employees, as a result of its acquisition by M&T Bank. The actual number of layoffs, however, might be reduced because, the company said earlier this month, “People’s United employees will be given priority when applying to the over 1,000 job openings across all M&T communities.”

At property-casualty insurer The Hartford, the No. 142 company on last year’s Fortune 500 list, the Connecticut headcount has declined in the past year by about 600 positions, or 10 percent, to a total of approximately 5,500. Employees moving out of state while continuing to work for the company remotely accounted for about 50 percent of the decrease.

In addition, Connecticut is still contending with the retrenchment of financial-services multinational UBS. Its number of in-state employees plunged from 3,775 in 2008 to 1,136 last year. The Switzerland-headquartered company declined to comment on the reasons for the plummeting in-state headcount, although its efforts since 2008 to rein in costs have been widely reported.

NatWest Markets, a neighbor of UBS in the downtown Stamford office building at 600 Washington Blvd., has faced similar headwinds in the past decade. Formerly known as Royal Bank of Scotland, it laid off more than 700 Stamford-based employees between 2015 and 2018.

A role for (smaller) corporate subsidies

During the 2011-2019 tenure of Lamont’s predecessor, Gov. Dannel P. Malloy, corporate subsidies played a large role in the state’s strategy — much of it aimed at the financial sector.

But UBS’ precipitous employment decline in the state has revealed the limits of those incentives. In 2011, UBS qualified for a $20 million loan that could be fully forgiven if it hit certain job targets. Its 10-year contract with the state ended last year, with the company having earned forgiveness of $12.5 million, while having to pay back the remaining $7.5 million. During the past decade, it reached only three times the annual employment average needed to gain maximum loan forgiveness.

Lamont’s administration has not disavowed business subsidies, but it is generally offering much less funding compared with the large deals Malloy approved.

“We’re trying to make sure it’s transparent and simple, that it’s low-cost to taxpayers and that it’s low risk,” state Department of Economic and Community Development Commissioner David Lehman said in an interview.

“We need to have something, but it’s not the No. 1 play in the playbook. We want to lead with all the great stuff happening in Connecticut — the tax certainty, the recent population growth, the [state budget] surpluses, the fiscal house getting in order. That’s what we’re leading with — not incentives.”

To support Mirador’s growth, DECD will provide a grant of up to $3.24 million, the payoff it it creates and retains 250 full-time jobs.

Larizza said the support of officials such as Lamont, Simmons, Lehman and Peter Denious, CEO of the economic development-focused nonprofit AdvanceCT, was pivotal in Mirador’s decision to stay in Connecticut.

Before choosing Stamford, the firm also considered potential headquarters locations in other states, including New York, New Jersey and Rhode Island.

The state funding was “definitely a factor,” in the decision to relocate to Stamford, Larizza said. “But more importantly, it was the enthusiasm … what Gov. Lamont, David, Peter and Mayor Simmons did relative to all the states around us was remarkable.”

Digital Currency Group and iCapital have also qualified for grants in the seven-figure range if they meet job targets. Similarly, asset-management firm Hudson Bay Capital could receive a grant of up to $1.3 million if it creates 40 additional positions at its existing offices in Greenwich. The amount of Tomo’s potential subsidies has not been finalized.

“These are the right types of incentives. They’re a good use of the state’s money,” Chris DiPentima, CEO and president of the Connecticut Business & Industry Association, said in an interview.

“It’s ‘create jobs and then get the incentives,’ whereas I think with the prior administration a lot of money was being thrown out to lure companies to Connecticut, but not necessarily to grow and stay in the state.”

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