It turns out there’s some life in the concept of a financial-services cluster in Pierce County after all.
It just moved its focal point about a dozen miles up the road.
Let’s review some regional economic-development history. Some time back, strategizers came up with the idea of building a cluster of companies – banking, investments, back-office and support – in the financial-services sector.
The theory was that Tacoma had an excellent headstart on the cluster, being the headquarters of Russell Investments, a company globally known for its indexes and investment research. In addition Tacoma was home to two growing regional banks, Columbia and Rainier Pacific. The plan was to use that base to recruit other companies in financial services that would compete and cooperate with and feed off one another, generating jobs in the process.
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Good theory, until it ran into real-world practice. Russell moved to Seattle. Rainier Pacific joined the list of failed Washington banks.
Seattle didn’t just import Russell; it also took delivery of the idea of building a financial services cluster. So far the plan hasn’t gained much traction. Seattle was never much of a national financial services center, and its biggest claim to fame is to have been the headquarters town of a much larger and more spectacular bank failure (Washington Mutual).
But meanwhile, something was happening back in jilted Pierce County. As noted by the Economic Development Board for Tacoma-Pierce County, Gig Harbor now has a small concentration of financial services companies.
Many of them, an EDB report says, were started by Russell alumni, including the Russell Family Foundation, Threshold Group, Global Index Group and Evergreen Asset Management. That’s not surprising – a component of the original financial-services cluster plan was that Russell would produce spin-offs.
So is this a cluster? Can it be developed as one?
“We are trying to do that,” said EDB President Bruce Kendall. “There’s something going on. There’s real expertise there. We’re exploring what we have here exactly, and what it can be.”
Kendall notes that the firms are small. “One or two could pop at some point, but betting on that is a pretty tough bet,” he said.
It’s not just a matter of growth. It’s also a matter of doing something different. That was the allure of Russell, and why its departure hurt – what it does is done in very few other places.
Just about every town with more than one traffic light has someone managing money. RAH Financial, a Covington financial staffing firm that puts out an annual ranking (by asset size) of money managers in Washington, lists 295 firms that have at least $1 million under management. Largest in the state? That would be Russell, at No. 1. Largest headquartered in Pierce County? That would be Threshold, at No. 21.
Thus the challenge is to not only increase the number of firms and their size but to find some niche they fill, some function they perform, that isn’t filled or done by hundreds of firms everywhere else.
And maybe the founders of these firms are happy with the size they are, which allows them to operate in a pleasant small-town locale such as Gig Harbor. Too much success and growth might compel them to find more space to operate in a big town like, well, Tacoma.
Nonetheless, it’s interesting that initial pessimism (including in this corner) that Russell’s skedaddle out of town doomed the financial services cluster concept might have been premature. Plan A didn’t work because the premises changed. But there’s a reason people ask, “What’s Plan B?” when reality intrudes. In the case of the financial services cluster, reality seriously messed up Plan A. But with extensive rewriting, Plan B, or Plan A 1.1, has some intriguing potential. Let’s try it out.
Bill Virgin is editor and publisher of Washington Manufacturing Alert and Pacific Northwest Rail News. He can be reached at email@example.com.