Financial, Professional & Business Services in the USA
The U.S. financial and business services sector is the most dynamic component of the US economy. It provides the fuel that promotes job creation, competiveness and sustains economic growth and innovation.
The Financial, Professional and Business Services industry in the United States is the largest and most liquid in the world. In 2011, finance and insurance represented 8.3 percent of U.S. GDP and employed 5.8 million people. The world’s leading professional services companies locate in the United States to serve this large and dynamic sector and in 2011 the industry comprised about 760,000 firms, employing over 7.8 million people.
The United States features a transparent, stable regulatory environment, strong intellectual property rights protection and enforcement, and a reliable judicial system. Together with a highly skilled workforce and intellectual leadership, the United States generates a greater and more stable demand for financial and professional services than any other country.
At the end of 2011, the U.S. banking system had $13.9 trillion in assets. It supports the world’s largest economy with the greatest diversity in banking institutions and concentration of private credit.
The U.S. asset management subsector is unrivalled in its depth and diversity. U.S. asset managers are currently meeting the pension management needs for almost 60 percent of the global retirement market.
In 2011, the insurance industry’s net premiums written totaled approximately $1.2 billion. According to the Swiss Reinsurance Company, premiums recorded by life and health insurers accounted for 45 percent, and premiums by property and casualty insurers accounted for 55 percent.
In 2010, venture capital-backed companies employed more than 12 million people and generated nearly $3 trillion in revenue. Respectively, these figures accounted for 11 percent of private sector employment and represented the equivalent of 21 percent of U.S. gross domestic product during that same year.
Firms in this subsector generated $116.1 billion in revenue in 2010. Firms provided payroll services, financial auditing services tax preparation services, and other consulting services for individuals and corporate clients.
Legal services generated $140.3 billion in revenue during 2010. The subsector is highly fragmented with the 50 largest firms accounting for less than 15 percent of total revenue.
This subsector accounted for $152.6 billion in revenue during 2010.
Investment in the U.S. financial services industry offers significant advantages for financial and professional services firms. In 2012, at least 132 of Fortune’s Global 500 companies had chosen to locate their headquarters in the United States to take advantage of its creative, competitive, and comprehensive financial services sector. Major financial centers include New York, Boston and Chicago but companies shouldn’t overlook other centers such as Los Angeles, Atlanta, San Francisco, Washington DC, Houston and Miami.
Competition is based on range of services and products, level of fees, and company reputation. There are high barriers to entry as new companies face establishment costs, build a reputation to compete and have a niche product or service.
Getting into the market
Routes into the market vary. Examples of potential routes include:
Establishing a local presence. For example, many financial services companies, such as banks and insurance companies, looking to enter the U.S. market are required to seek approval from U.S. Federal Regulatory Agencies. These could include the Federal Deposit Insurance Corporation (FDIC), Federal Reserve System (FED) and the Securities and Exchange Commission (SEC).
Servicing the market remotely from the UK to end-user clients.
Forming partnerships/strategic alliances in-market. UK companies should take a medium to long term view to build local networks, for example, to be become part of a bidding consortium for public tenders.
In preparation for market entry, UK companies should consider:
Highlighting an established track record
Identifying and understanding existing competition in the market
Identifying Unique Selling Points (USPs)
Investigate and address any regulatory requirements.
Evaluate route to market options, which may differ from market to market.
Able to demonstrate a commitment and have capacity to serve the local market.
Both U.S. and UK financial institutions face very similar challenges as a result of new regulations and a challenging business environment. In the aftermath of the 2008 financial crisis, both U.S. and UK Governments took significant steps to reform the regulatory architecture in financial services. The US was a first mover with the Dodd-Frank Wall Street Reform and Consumer Protection Act which was signed into law in July 2010. Aspects of the Dodd-Frank act will impact UK banks’ US operation while other extra-territorial aspects of Dodd-Frank threaten to impose limits on UK banks business operations in other jurisdictions outside the U.S.
Market intelligence is critical when doing business overseas, and UKTI can provide bespoke market research and support during overseas visits though our chargeable Overseas Market Introduction Service (OMIS).
To commission research or for general advice about the market, get in touch with our specialists in country – or contact your local international trade team.
Kelly Harlick, Sector Lead, Financial, Professional and Business Services –. British Consulate-General, New York. Tel: +1 212 745 0411 or email: email@example.com
Erica Juergensen, Business Development Associate, Financial & Professional Services – British Consulate-General, New York. Tel: +1 212 745 0347 or email: firstname.lastname@example.org
UKTI runs a range of events for exporters, including seminars in the UK, trade missions to overseas markets and support for attendance at overseas trade shows.
SIMFA Financial Technology Expo – annual event
June, 2013. New York
29th Annual Futures & Options Expo – annual event
November, 2013. Chicago