Denver stands tall

Dec 8, 2013 @ 12:01 am

By Andrew Osterland

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Whether it is the mountains, temperate climate or access to an incredible range of recreational activities, Denver has always been a magnet for those who like an active outdoor lifestyle.

Increasingly, however, the Mile High City has become a favorite destination for businesses and entrepreneurs, who are fueling one of the more dynamic and competitive regional economies in the country. Once subject to vicious commodity-driven cycles in the energy and mining sectors, the Denver economy is now far more diversified than even in the recent past, helping it weather the financial crisis better than most cities.

Colorado is one of just 15 states that have recovered all the jobs that it lost during the financial crisis and recession.

“The Denver economy is no longer a one-trick pony. We now have seven or eight big industry clusters in the region,” said Jodi Rolland, managing director of Merrill Lynch's 12-state heartland market, based in the city.

With a highly educated and relatively wealthy population, Denver presents an attractive opportunity for financial advisers, and she expects Merrill's presence there to expand.

“We currently have 110 financial advisers serving the Denver market, and we'll continue to see the number grow,” Ms. Rolland said.

THE LIFESTYLE

Denver's advantages begin with its location. Located on the plains just 12 miles east of the Front Range of the Rocky Mountains, the Mile High City has a surprisingly pleasant climate.

It rarely gets extended periods of deep cold in winter, thanks to warm Chinook winds that regularly descend upon the city, and the summers are warm during the daytime and cool at night. Denver gets an average of 300 days of sunshine annually.

“When people from elsewhere think of Denver, they think of ski areas and snowy football stadiums,” said Jeff Schaefer, head of registered investment adviser Schaefer Financial Management Inc. and a Colorado native. “But we get 310 days of sunshine a year, and you can golf almost year-round.”

The natural assets of the region have been a major draw for people in all walks of life, including the financial advice industry. More than two-thirds of Denverites hail from elsewhere.

Long Island, N.Y., native Joel Javer, an adviser with RIA Sharkey Howes & Javer Inc., made the move to Denver 41 years ago.

“I think it's a lifestyle choice more than anything else,” he said. “For someone in New York or Atlanta or Dallas who wants a more open, outdoors lifestyle, this is the place.”

THE ECONOMY

It is hard to exaggerate the transformation of the Denver economy in the past three decades. Because it was dominated by the energy and mining industries, the city's economy was in shambles after oil prices collapsed in the mid 1980s.

“We used to be about Coors, the Cold War and carbon,” said Tom Clark, chief executive of Metro Denver Economic Development Corp., referring to the beer company and the large aerospace and energy industries in the region. “We were a very poorly diversified economy.”

Flash forward, and the Denver economy has a major presence in industries such as technology/telecom, health care/biosciences, aviation/aerospace and financial services. Perhaps more than any other major American city, Denver has managed to foster the growth of a wide variety of industries creating thousands of high-paying jobs.

“We've worked extremely hard to diversify our economy,” said Patricia Silverstein, president of Development Research Partners and chief economist for the MDEDC. “It started with the economic-development entities, but what has led to the success and continuing effort is the involvement of private business.”

In 2002, after the dot-com implosion, Colorado ranked 49th in job growth in the United States.

It now ranks fifth, according to the Bureau of Labor Statistics, and the employment growth rate for this year is expected to be 3%, according to Ms. Silverstein.

THE WEALTH

The upshot of Denver and the state's broader economic development is an increasingly sophisticated and wealthy population.

Colorado is the second most highly educated state in the country, behind Massachusetts, as measured by the percentage of people having bachelor's degrees or higher, according to a 2012 Census Bureau statistical abstract of 2009 data.

The state also flies high in terms of innovation and entrepreneurialism.

It ranked seventh in the Commerce Department's 2012 State Innovation Index, and it had the third-highest concentration of proprietors as a percentage of the population (25.5%), according to Ms. Silverstein.

Although not all those proprietors are entrepreneurs generating big wealth, it speaks to the vibrancy of Denver's economy.

“There's lots of wealth here that needs managing, and it's not a crowded field for financial advisers,” Mr. Clark said.

In fact, it is a very open and welcoming field, said Judy Shine, who moved to Denver in 1985 and launched her fee-only financial planning firm several years later.

“In terms of the business environment, I've always felt Denver was incredibly friendly and open,” she said.

Colorado is ground zero for the fee-only financial advisory movement, with both the College for Financial Planning and the Financial Planning Association headquartered there.

Ms. Shine credits the support of local industry luminaries such as Eileen Sharkey and Richard Wagner for encouraging her with her practice.

“They said, "Do your own thing,'” she said.

THE CHALLENGES

Denver isn't without its challenges.

“We're doing a lot of things right, but there are some things we need to be aware of and take a hard look at,” Ms. Silverstein said.

Heading that list is the state's tax structure. Although Colorado has the lowest state sales tax of any state that has one, when the taxes levied by localities are factored in, it has the seventh-highest sales tax burden in the country.

Residential property taxes in the state are the third-lowest in the country, but local governments make up for it on the commercial side of the equation.

Businesses pay rates about three times higher than residential property owners, according to Ms. Silverstein, and it represents a significant obstacle for business investment.

“It's an obvious challenge for us,” she said.

Colorado also may face some tough choices around financing infrastructure to support the expanding economy. The Taxpayers' Bill of Rights constitutional amendment passed in 1992 requires voter approval of any tax increases in the state, though restrictions were loosened in a 2005 referendum.

And while voters did recently approve a resolution to tax marijuana sales — now legal in Colorado — tax increases are always a hard sell, and it could be an issue for needed education and infrastructure spending down the road.

For Denverites, however, the advantages offered by their city far outweigh the challenges.

“I think there are two ways of figuring out where to live,” Ms. Shine said.

“You find the job of your dreams and move there, or you figure out the city you love and find a job there,” she said. “I have both here.”

Andrew Osterland is a freelance writer based in New York.

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