Minneapolis: Blizzard of opportunity

Almost inevitably, the first thing most people think of when it comes to the topic of living in Minneapolis is the cold weather.

When pressed, even the most devoted locals will admit it can get a bit nippy in the winter, even if that acknowledgement is a roundabout effort to focus on the upside of below-freezing temps.

“They even plow the bike lanes in the winter; it’s that hard-core,” said Darla Kashian, a financial adviser at RBC Wealth Management.

In some respects, talking about plowed bike lanes in a city where the average low temperature is less than 26 degrees five months a year is akin to Arizona residents describing 110 degrees as a “dry heat.” In essence, it is a relative concept. And for those living and working in this city of nearly 400,000 people, the weather is just part of the charm.

“FORWARD THINKING’

“This is a forward-thinking, well-educated community,” said Scott Oeth, a principal at Cahill Financial Advisors Inc. in suburban Medina.

Mr. Oeth, who grew up in Madison, Wis., and has lived in the Minneapolis area since 1998, views the city the same way a lot of locals do — as a kind of hidden gem or oasis, regardless of whether outsiders see it as a destination point.

“Minnesotans are famously reserved and quiet, but once you get inside, there are going to be great opportunities for a skilled financial planner,” he said.

A large part of the opportunity comes as the result of an economic and demographic blend that in many ways presents an optimal canvas for the financial advice industry.

“I think the idea of financial planning is really embraced here, and it’s a major advantage that you’ve got a large, affluent community of white-collar workers,” Mr. Oeth said. “A lot people around here are familiar with the concept of comprehensive financial planning.”

Ross Levin, president of Accredited Investors, gives a nod to the local media for understanding the value of the financial planning industry and helping to promote the importance of financial advice.

“The media is sensitive to financial planning issues, so people are aware of the need to do things with their money,” he said. “It also helps that we’re dealing with a population where the income and education level is above average.”

Of course, the flipside of a more sophisticated market is that the local adviser must be careful not to look or act like a representative from Wall Street.

“There’s definitely a lot of competition here, so you need to have the right platform, the right technical skills and the right relationships,” Mr. Oeth said. “It’s a great area if you’re an independent or a broker-dealer rep, less so if you’re a Wall Street broker.”

YOUNG AND EDUCATED

In terms of market potential for advisers, nearly 70% of the population is under 45, and more than 70% of residents have attended college.

The median annual household income of around $48,000 might not sound great until you factor in the below-average cost of living for a major metro area. The median home sale price last year was $222,300, and the state’s current unemployment rate is just 5.1%.

“Living here is pretty affordable,” Ms. Kashian said. “I live just five miles from my office, and even though I have a successful career, I could never do something like that in Manhattan.”

In terms of downsides (beyond the cold, of course), Ms. Kashian said there is some truth to the criticism that Minneapolis can be a very closed community.

“It’s kind of a joke that it can be hard to become friends with native Minnesotans because they will still be hanging out with the kids they went to preschool with,” she said. “There is a reputation that if you didn’t grow up here, and are not well-connected, it can be hard to fit [in]. I think that’s a criticism that has some legs.”

Ms. Kashian moved to Minneapolis from Miami 20 years ago, and as the mother of two young children, she now describes herself as dug-in.

“It’s astonishing to say it out loud, but I love it here,” she said. “I’m really not a fan of winter, but it’s such an easy place to live that you just learn to put up with the cold.”

Part of putting up with the cold is provided via the Minneapolis Skyway System, which includes several miles of enclosed walkways that connect much of the downtown area. Ms. Kashian affectionately calls it “the gerbil system.”

And that system is utilized and supported by a robust local economy that includes a number of Fortune 500 companies, including Ameriprise Financial Inc., one of the city’s largest employers. Other notable financial services companies and big employers include RBC Wealth Management, Thrivent Financial for Lutherans, Wells Fargo & Co. and U.S. Bancorp.

“I would guess that at least half the planners in the Twin Cities have spent some time at Ameriprise,” Mr. Oeth said.

With other companies and institutions such as Target, Xcel Energy, Allina Health, Fairview Health Services and the University of Minnesota also representing some of the city’s largest employers, the local economy has been able to sidestep some of the challenges that have confronted other, less diversified Midwestern cities.

Mr. Levin, who moved to Minneapolis from Pennsylvania 48 years ago, has fully embraced his inner Minnesotan.

“Some people don’t like the weather, but even when it’s cold, it’s usually sunny,” he said. “I run outside year-round.”

Mr. Levin acknowledged that the city “doesn’t have much diversity, but it is a relatively accepting community.”

“I would say the Bohemian index for Minneapolis would be pretty high,” he added.

TAX PLANNING

From an advice perspective, the tax-planning opportunities are seen as ripe because of the state’s above-average tax rates.

“In a high-tax state, there are things you can do to create value for your clients, including a high participation rate in philanthropy,” Mr. Levin said.

Another reality that comes with clients’ living in affordable Northern towns is the ever-present second home. Whether it is a small cabin on a lake or a winter home in a Southern state, Minneapolis-based advisers see a lot of second and even third homes — and all the tax- and estate-planning challenges that come with them.

“Cabins and lake homes are very common; you might even see two in each family,” Mr. Oeth said. “The winters in Minnesota do lead to some cultural things that might only seem normal here, and that’s why I don’t see any reason to live here unless you’re OK with the weather.”