JP Morgan Acquires First Republic: What’s Next for Advisors and Clients?

Financial Advisors

First Republic’s advisers and their clients went to bed Sunday night as part of a failing bank’s deposits and woke up Monday morning as part of JPMorgan Chase, the nation’s largest bank by assets. . A more comfortable place.

First Republic’s more than 200 advisors will join JP Morgan Advisors, JP Morgan’s wealth unit. JP Morgan currently has more than 5,000 advisors across its wealth management practice. JP Morgan sees wealth management as an attractive business with steady returns and has sought to move up the ranks of its advisors.

Jamie Dimon, chairman and CEO of JPMorgan Chase, said, “This acquisition will provide moderate returns for the company as a whole, benefit our shareholders, help us further advance our asset strategy, and strengthen our existing portfolio. Complement your franchise.

For clients, the transition should be seamless as 84 former First Republic branches will open as Chase branches.

First Republic has lost a number of financial advisors to competitors in recent weeks.

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First Republic’s wealth management assets totaled $289.5 billion at the end of the first quarter, but may have lost some of these assets as advisors departed for other employers during April there is. The process can take some time, but clients and their assets often follow advisors to new firms. When reporting first-quarter earnings, First Republic said the advisor team’s assets under management, which retired on April 21, were less than 20% of the assets under management the company held on March 31. I said yes.

As of Friday, more wealth managers were preparing to pounce on competitors, according to lawyers representing recruiters and advisers. The exit may continue, although it may slow down under JP Morgan.

bank in trouble. San Francisco-based First Republic, known for its meticulous service focused on wealthy customers, was hit hard by the crisis at the local banks. Customers withdrew their deposits, and First Republic stock plummeted. In mid-March, it received a lifeline in the form of $30 billion in uninsured deposits from the largest US banks, including JP Morgan and Bank of America.

wells fargo

and Citigroup

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Last Monday, First Republic revealed a range of deposit losses when reporting earnings. Not including the $30 billion bailout, its deposits were down about $102 billion. The bank’s share price continued its decline following the earnings news, ending the week at $3.51, down 97% for the year.

The damage was not limited to consumer finance. First Republic’s vaunted wealth management division, which serves high net worth clients, ended the month with many empty desks. Since March 17, at least 21 wealth management practices (either team or solo advisors) have left First Republic to join competitors, according to public registry records. The retired advisor has overseen over $40 billion in assets and has joined companies such as Morgan Stanley.

JP Morgan, Royal Bank of Canada

Advisors were pouncing on competitors until Friday when the team that managed the $3 billion surrendered to Morgan Stanley.

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These losses could have been fatal for First Republic, which has benefited for years from cooperation between its wealth management and banking divisions. For example, last year, bankers at the firm referred more than $11.5 billion of his assets under management to wealth units, which resulted in more than $3 billion in total deposit balances being referred to colleague bankers, First Private said. said Bob Thornton, president of Wealth Management. Republic during the company’s fourth quarter earnings call in January. Thornton said deposits referenced by Wealth Manager and Sweep his account accounted for more than 13% of his total deposits at the bank.

On average, advisors who travel between firms bring about 75% of their client assets with them, according to research firm Ceruri Associates. Recruiters say given the bank’s predicament, the former First Her Republic adviser is likely to bring more than that to employers.

Write to Andrew Welsch at

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