87% of professionals who currently work for Family Offices in the USA are open to moving for work. Of these, 55% are thinking of relocating to another state and two-thirds cited local taxation policy as the contributing factor.
With more than a third of professionals now contemplating leaving their current environment, we anticipate a great deal of movement in 2021 with candidates and even Family Offices, moving inter-state for a more affordable lifestyle.
Having spent the last few years of my career working within an UHNW family in Uganda, recruiting for several more in the UK and most recently, across America, I know a thing or two about Social Mobility and the freedom and flexibility it offers.
For me it was a personal choice driven by the excitement of travel but the sheer amount of Americans now looking to social mobility is driven less by personal choices and more from rising concerns over local economies and state taxes.
When you can move a mile and save thousands, it isn’t hard to see why but with state taxes unchanged and 57% stating they are more open to moving now than pre- COVID 19, the virus is clearly having a greater impact on Family Offices than many would care to admit.
Naturally, when I help Family Office executives move across America, it is more often than not due to them joining a new Family Office but as the world turns virtual and remote working becomes commonplace, Family Offices could benefit from a newly global or at least national talent pool.
More and more Family Offices are offering remote working as a benefit of the role in a bid to attract a wider selection of candidates and just this month we matched a Canadian candidate with a New York based Family Office. While we all anticipate the day when we can return to person to person contact, I can’t imagine remote working ever becoming a buzzword only lived in Silicon Valley.
Remote working is here to stay and Family Offices are benefiting from online and outside expertise.
Remote working aside, candidates across America are, much like the rest of the world, spending more time at home and benefiting from the flexibility to relocate for a better working environment.
Whether it is the ability to walk along the coast on a lunch break or save 13% on state income taxes, candidates are realising there is more to life than working a commutable distance away from the City. I predict social mobility to be a wonderful silver lining of the coronavirus pandemic, benefiting both Family Offices and their employees in 2021 and someone else who agrees, is Brad Sprong.
Brad Sprong is the National Industry Tax Leader for KPMG Private Enterprise practice. Here he discusses Social Mobility, the implications of differing taxation and explores why Nevada, Arizona and Florida are all on the Family Office agenda.
While I do not believe that Biden’s proposed changes to taxation policy is driving any real change, there is a fear that the wealthy and almost-wealthy will be taxed and it almost feels punishment driven – we’ll tax you twice, once when you make it and then again because you have it. The Biden administration has also deemed anyone who earns $400,000 as wealthy. If you are a professional couple who lives on the coast, you might be making this but it doesn’t define you as rich. Living costs should play a part in the decision and the fact they have not and the proven ability for many of us to work from home, will likely drive social mobility in 2021.
California has up to a 13.3% state income tax rate, neighbouring state Nevada has a 0% state income tax rate. You can move a short distance and save a lot of money. You can’t however see the ocean from Nevada! We are now seeing a lot of people relocating to lower taxing states. However, it is easy to forget how big a deal moving actually is, both physically and emotionally. People have homes, families, children, favourite places, etc. It isn’t an overnight process but we are seeing numerous wealthier folks move from the higher to lower income tax states and it creates its own concerns over revenue within the local economy.
We have recently seen some quite high-profile individuals move and it results in a significant loss of income for particular states, I expect this will continue as a focal point in 2021, especially for those retiring and not wanting to lose a large percentage of their retirement income to state income taxes. Nevada, Arizona and Florida are just a few of the states seeing an increase in population and I expect it will continue.
In 2021 Family Offices will continue to approach both investments and structural changes with prudent caution, forecast for as much of the future as they can and really find the best setting that offers the highest quality of life both environmentally and economically.
Download the full US report to find out more.