Mass Insight Corporation

Massachusetts is a worldwide financial services hub but the lack of a coordinated state strategy and fierce global competition threaten the industry's 180,000 job base, according to a new report released by the Greater Boston Chamber of Commerce and Mass Insight Corporation's Global Mass 2015 initiative.

The report, "Securing Massachusetts's Leadership Position in Financial Services," identified nearly $40 billion in annual economic activity and 180,000 jobs in financial services, many for middle to upper-middle income workers earning $50,000 to $100,000 annually. But it predicts that Massachusetts will not reach its full job growth potential - and certain jobs will continue to leave the state - unless it implements a specific strategy for the financial services industry based around talent development, innovation and enhanced collaboration between industry, academia and state government.

"The Massachusetts financial services industry, like our economy, is at a tipping point," said Paul Guzzi, president and CEO of the Greater Boston Chamber. "Our state's overall record of job growth lags that of the nation, and looking ahead, our financial services industry is projected to create a lackluster 3,000 new jobs by 2010. We need collaborative leadership from business, government, and academia to combat the local and global forces that threaten our jobs and our position of strength in financial services."

"Massachusetts must capture the next round of financial services innovation and talent to compete and grow jobs in the competitive global landscape," said Mass Insight President William Guenther. "As the first installment in the Global Mass 2015 initiative, this report outlines a coordinated strategy for Massachusetts to remain a top-tier financial services hub while laying the foundation for a comprehensive, sector-based economic strategy."

The report, produced with the assistance of McKinsey & Co., shows that Massachusetts has the natural resources to become a top-tier global financial services center focusing on asset management, asset services and insurance. However, the absence of a coordinated strategy caused Massachusetts to miss out on a potential $50 billion share of managed assets from the growing hedge fund market and to struggle in retaining critical middle income back office and support jobs.

The report predicts that without collaborative state, college, and industry action, Massachusetts will at best create 3,000 new financial services jobs by 2010 - a rate well below the anticipated growth of our competitor states. If Massachusetts grew at the same rate as other leading states during that period, it would benefit from 15,000 new jobs and $12 billion in additional economic output. But recent news reports have shown that financial services firms are shifting jobs to more low cost areas across the nation and world.

The report outlines three key initiatives to help Massachusetts unlock its job growth potential:

Preserving and expanding our diverse employment base by creating a Talent Development Bank to match workforce needs of industry with talent development programs delivered by public and private higher education institutions; expanding state government outreach to leading in-state and out-of-state employers; and adopting a statewide strategy to create regional economic opportunities.
Transforming Massachusetts into a global center for financial services talent and innovation by sowing formal linkages with area universities, like a financial services resource center, to position the state on the cutting edge of financial services innovation.
Creating a more stable, predictable and competitive tax, permitting and regulatory structure for all employers, including financial services firms. While Massachusetts has made progress on permitting reform, other competitor states, such as North Carolina, have made significant economic gains by fostering a more competitive business climate, including a more stable tax structure.

The release of the report was widely covered in regional, national and even international media, with pieces running in the Boston Globe, the Boston Herald, Bloomberg News, WBUR radio and the Financial Times. Here are some selected stories:

Boston Globe or [PDF version]
Bloomberg or [PDF version]
Boston Business Journal or [PDF version]
Boston Herald or [PDF version]
Financial Times (available to subscribers only)
The Patriot Ledger or [PDF version]

Mass Insight / Greater Boston Chamber Press Release [PDF]

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