The Massachusetts financial services sector, already a cornerstone of the state’s economy, is poised for significant potential growth over the next 10 years. That’s one of the key findings of Talent and Technology – A 2024 Vision, a comprehensive report on the outlook and critical human capital needs for an increasingly important pillar of the state economy.
The report’s key findings:
Where we are today:
- Massachusetts asset management and retirement savings, a major local strength, stands to benefit disproportionately from the 60 percent projected growth in global investable assets, to $100 trillion, by 2020. Massachusetts’ financial services industry growth is projected at an annual rate of 2.1 percent, faster than the US financial services industry.
- A Hub for Fintech Innovation: Massachusetts, with its combination of global financial services leaders and big data startups, together with the talent base in the universities, is positioned to grow as a Fintech center.
- Tech talent needs are growing: Mass Finance anticipates significant technology-related hiring needs as the sector increasingly is technology focused, driven by advances in Fintech, risk management, and big data and requirements for compliance and cybersecurity.
- Financial services jobs are changing, calling for a blend of quantitative and business skills. More collaborative partnerships between policymakers, educators and business are called for to prepare the next-generation workforce.
- In the midst of change, sector stability: Massachusetts’ share of financial services employment within the U.S. is expected to remain stable through 2022.
The Massachusetts Financial Services Portfolio Today
- State’s most important for-profit sector: Provides 5.1% of state employment, 9% of GSP.
- Average employee income of $115,810/yr, more than double the state average.
- Boston is home to 3 of the top 10 retirement savings managers, making it the number one cluster of market leaders.
- Home of the mutual fund, MA accounts for 18% of assets under management in the U.S. Assets under management in the state grew 16.3% in 2013.
- A national leader in custody and administration services with two of the nation’s largest operations, State Street and BNY Mellon, totaling approximately $55 trillion in assets under custody and administration.
- One of two states to be home to top 10 insurers in each of the property & casualty, life, and health sectors.
- MA is home to 6 of the top 50 hedge fund managers in the U.S.
- Of the $30.5 billion invested by the VC sector in 2013, 12% was invested in New England-based firms
- Third to NY and CA in number of PE firms, third in aggregate capital raised over the last 10 years
- Home to 3 of the top 15 private equity firms in total funds raised over the last 10 years
The Future Vision: Key policy considerations
Massachusetts needs to implement a talent strategy that captures the momentum of the financial services industry and fuels its future growth. Possible strategies include:
- Brand Massachusetts financial services as a growth industry focused on tech innovation and one of the world’s leading retirement asset management centers.
- As a center for retirement assets, promote an agenda that preserves retirement savings incentives and expands access to next-generation financial services technology.
- R&D: Investing in early-stage research and talent development through a Big Data Research Center of Excellence.
- Expand university training for 25-35-year-olds, in coordination with the financial services industry to upgrade skills or cross-over to financial services.
- Capture more international student talent, a strong suit of Massachusetts with some 50,000 foreign students here, through immigration reform.