First Republic Retains Nearly 90% of Wealth Advisors

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Over the last seven weeks, dozens of former First Republic advisors have fled the bank, landing at such places as RBCMorgan Stanley, UBS, JPMorgan and Rockefeller, according to WealthManagement.com and published reports. But those departing teams accounted for less than 20% of total wealth management assets as of March 31, said First Republic Bank CEO and President Mike Roffler, during the bank’s first quarter earning call on Monday.

Further, he said the bank expects to retain a portion of the assets associated with departing teams.

First Republic says it has retained nearly 90% of its advisors, as of April 21.

“This is a testament to the terrific wealth management franchise our talented teams have built over the years,” Roffler said. “We remain fully committed to our integrated banking and wealth management model and the unique benefits it provides to clients.”

On Monday’s shortened earnings call, Roffler read a statement for about 10 minutes, but did not take questions from analysts.

“Over the past seven weeks, as we were impacted by industry events, our commitment to delivering exceptional client services has not wavered. We continue to meet our clients’ banking and wealth management needs, as we always have.”

The firm’s ended the first quarter with $289.5 billion in wealth management assets, up 6.7% from the prior quarter. That included $11 billion in net client inflows. Wealth management fees were $223 million during the quarter, up 6.7% from the fourth quarter. Revenues from the wealth management division represented 18.5% of the bank’s total revenues.

On the call, Roffler said the bank continues to take steps to strengthen the business, including focusing on insured deposits from new customers, providing off-balance sheet liquidity solutions to existing clients and reducing the size of its workforce by 20-25% in the second quarter.

“In addition to the actions I’ve outlined, we’re pursuing strategic options to expedite our progress while reinforcing our capital position,” he said.

Average account sizes at the bank have decreased, but it has retained over 97% of client relationships that banked with First Republic at the start of the year. And while the bank experienced “unprecedented deposit outflows” in the middle of March, deposits stabilized the week of March 27, and have remained stable since then, Roffler added.

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As of March 31, the bank’s insured deposits were $54.6 billion, or 73% of total deposits. That excludes the $30 billion in deposits it received from the big banks. Uninsured deposits were $19.8 billion, or 27% of total deposits. As of April 21, total deposits were $102.7 billion, including the $30 billion, down 1.7% from the end of the first quarter.

“This slight decline from March 31 reflects seasonal client tax payments that occur each April,” Roffler said.

First Republic has seen a number of high-profile advisor teams jump ship in recent weeks. In the latest move, a team of advisors in California and Connecticut, including Paul Tramontano and Jon Goldstein, joined Cresset Asset Management, Financial Advisor IQ reported.

https://www.wealthmanagement.com/industry/first-republic-retains-nearly-90-wealth-advisors

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