First Republic Advisors Caught Flat Footed
On March 31, First Republic Bank announced that an acquisition is unlikely and that the firm will continue with restructuring and shoring up the bank. Most advisors are praying someone will come to the rescue, but few lifeboats seem to be on the horizon. Some question, even if there is a spin off or a White Knight, how they will grow a book in the future using First Republic’s tainted name?
Advisors banked their life career on First Republic, most believed it was their last move ever, and most are so very proud to be part of such a special, culturally rich firm. How can advisors even consider a move when many just went through the painful exercise to move their books escaping big firm culture and politics. Clients were sold the FRB platform, what happens to all the front-end payments, the backends, and the deferred comp for advisors? Will advisors and clients have to return to what the left with intention?
Wall Street simply doesn’t have the people power to handle this number of advisors considering moves, vetting, and eventually onboarding them. Over 300 First Republic advisors with businesses from $2 million to $75 million are getting destroyed by Wall Street with a flurry of texts and calls from managers, friends, and recruiters to consider jumping ship to the likes of Morgan Stanley, UBS, JP Morgan, the Royal Bank of Canada, Rockefeller Capital, and more. Normally the process of moving an advisor or team takes six months, not two weeks, and most certainly not with the volume of advisors and teams on the move. The energy is frantic, competitive, and utterly confusing.
Few teams are making a tactical or strategic plan. Mistakes are already being made on both sides. There already is a wide spread between what is offered one advisor versus another at the same firm, private documents are flying everywhere, advisors are fielding calls, taking meetings, and confidentiality is hardly being observed.
Roger Gershman, President of The Gershman Group, was himself was a $1B Top Advisor who has had experience when his firm was bought out and notes that “advisors need help, they are being barraged with phone calls and offers when they need to be focused on their business and taking clients through the downfall of the bank. We offer legal counsel, transition preparedness and documentation, and expertise into the best possible deals with the best cultural fit for an advisor or team’s business. With the spread on deals varying from advisor to advisor substantially up to 100 basis points or more, why would an advisor in these uncertain circumstances expect to take that much time to try and sort what the best deal is?” Consultants to advisors offer a confidential place to discuss options freely to determine the best fit in times of turbulence and rapid change.