Q&A talks to James T. Brett, president & CEO of The New England Council, about the current and future state of Connecticut’s financial-services sector.
Q: The New England Council, a nonpartisan business advocate, recently released a report that found Connecticut’s economy relies on the financial-services sector more than any other New England state. What constitutes financial services and how big of an impact does the sector have on Connecticut?
A: The report focuses on three major sectors that define the financial-services industry — banking, insurance, and asset management. Collectively, they employ 112,000 individuals in Connecticut directly, and contribute another nearly 210,000 indirect or induced jobs. As such, the industry was responsible for 14.1 percent of all state employment in 2015. Additionally, the industry contributes to roughly 20 percent of the state’s Gross State Product.
Q: Within financial services, what sector can we expect to see the most growth from in New England and Connecticut over the next five years?
A: The emerging financial technology, or FinTech, space is an area ripe for growth. Through early 2016, the total investment in FinTech startups founded in New England stands at over $750 million. It is yet to be seen exactly how these technological innovations will impact jobs, but financial firms of all sizes have already recognized the key role FinTech stands to play in the industry’s future.
Q: There are rumors that Aetna might move to Boston. What is the biggest threat to maintaining a strong financial-services sector in Connecticut?
A: The greatest threat to the region’s financial-services sector is the need for an adequately sized, skilled workforce. Without bank tellers, retirement advisors, and insurance agents, the financial-services industry would collapse. It is critical that we work to maintain an ecosystem where graduates from our area’s colleges and universities stay here in New England to work in their chosen fields.
Q: What are some policy changes the Council would like to see in Connecticut and/or New England to support the financial-services sector? Where does the Council stand on President Trump’s vow to reduce financial regulations?
A: In addition to a skilled workforce, the New England business community has long clamored for a tax reform measure, and it seems as if the possibility of undertaking such an effort is strong this year. It is no secret that the nation’s tax code — which is over four times longer than the complete works of William Shakespeare — has long been in need of an overhaul.
In particular, the Council would urge Congress to ensure that tax incentives for retirement savings are retained and enhanced in any reform package.
The New England Council has also expressed concerns about a variety of financial regulations, including the Department of Labor’s fiduciary rule for asset managers and the complexity and scope of regulations facing small and mid-sized community banks. We are pleased to see that the president has placed a high priority on listening to the business community to strike a more prudent regulatory balance.
Q: There is a concern about the state’s aging workforce, particularly in financial services. Is Connecticut prepared to fill jobs as Boomers retire?
A: The entire New England region is acutely sensitive to its aging population and the impact that is having on employment. This is a common theme across industries. In the financial-services sector, employers are undertaking a variety of initiatives to attract the next generation workforce. For instance, the Connecticut Insurance and Financial Services (CT IFS) cluster offers programs like High School Inc., which is a college preparatory school in downtown Hartford for high school students considering a career in financial services. They also hold periodic boot camps and career fairs to help fill existing jobs. Ultimately, it will be industry-driven partnerships that will ensure we are prepared for the changing workforce.