Global Massachusetts 2015

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Global Massachusetts 2015 Brochure [pdf]

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World Class K-12 Math & Science Agenda [pdf]

Talent and innovation fuel investment management

By Ronald P. O'Hanley
(published in the October 6, 2006 edition of the Boston Business Journal*)

Investment management is a $45 trillion business worldwide and Massachusetts is a major driver of the industry. Thanks to innovation, a world-class talent cluster, and sustained reputation, Boston is to money management what Silicon Valley is to computer technology.

Boston firms manage more money than any American city except New York, and rank fourth in the world. Collectively, the financial services industry employs 225,000 people in Massachusetts, and a multiple of that in related and support businesses. Moreover, money management firms are continually spawning enterprises, such as new investment firms, hedge funds, analytical services, consultants and financial service technology.

The comparison with Silicon Valley is particularly appropriate, because the future of Massachusetts as a world-class investment capital is by no means guaranteed. Silicon Valley still thrives because it has repeatedly reinvented itself as it evolved from computers and hardware to software and services.

In an increasingly competitive and fully networked global economy, financial portfolios can be managed from anywhere. Recognizing this, we too must reinvent ourselves by adapting our business models to the demands of a new century. That requires a regional environment offering an attractive talent base, appealing quality of life, and a reasonable cost of doing business.

Produce and develop talent
The educational system is a major asset for New England's economy. The past 13 years of educational reform have seen a notable improvement in the quality of public K-12 education in the Commonwealth, and our economy has long been fueled by a wealth of top-notch private colleges. But public higher education has not kept pace, and it is the source for many of the hundreds of entry- and mid-level accounting, analyst and compliance positions we cannot fill because of a lack of qualified candidates. Upgrading public higher education, including the community college system, would be a great help and alliances with international companies and universities represent a potential pipeline of foreign talent.

Manage the cost of living
It is unrealistic to expect Massachusetts to be the low-cost location for many of the back office functions that support money management operations. Indeed, the Commonwealth has recently lost of a number of these positions. However, we can and should still push for policies that improve the region's affordability and quality of life. The money management industry is not just composed of highly paid portfolio managers. Operations, support functions, lawyers and accountants are critical to our enterprises. Outsourcing is a very real possibility for even mid- and high-level positions, given the tremendous cost advantages abroad or in other parts of the U.S. We need to give the investment management industry every economic justification for keeping as many jobs as possible here.

Housing is the single biggest cost-of-living factor, and we need to be creative in addressing this need. Recent legislation to encourage development of affordable housing is a positive if cities and towns follow through. An additional idea is to increase the maximum rental deduction beyond $3,000 - perhaps for the first five years it is claimed on Massachusetts returns. Another is to incent employers to offer modest housing subsidies for employees who stay more than three years.

Retain and Build
Investment management is one of the Commonwealth's biggest employers. With the expansion of the global economy and the growth of assets under management, there is no reason to believe it will not continue to grow. But the Commonwealth needs to focus relentlessly on retaining and sustaining this industry. Much self-congratulating has occurred regarding the Bristol-Myers Squibb decision to build a new plant in Devens, with the potential for 550 new jobs. Yet Massachusetts does not appear to have this same focus on retaining and regenerating what is a genuine global business already within its borders. Doing so will not only sustain our current enterprises but create a cycle of renewal worthy of Silicon Valley.

As a coalition of concerned business and civic groups, Global Massachusetts 2015 endorses four guiding principles to enhance our economic security:

• Invest in talent
• Think globally
• Focus substantial resources on a few big opportunities
• Improve alliances among industry, higher education and government

We look forward to working with the next governor and legislature to promote these principles as the cornerstone of a comprehensive economic development strategy.

Ronald P. O'Hanley is vice chairman of Mellon Financial Corp. and president and CEO of Mellon Asset Management. He is a member of the of Global Massachusetts 2015 Steering Committee.

*final published version may contain minor edits

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