A peek behind the curtains of these two firms demonstrates how the right combination of features has created a best-of-both-worlds model that stands out amongst the competition.
It seems as though every week we read about another billion-dollar-plus team leaving the likes of Merrill Lynch, UBS, Morgan Stanley and even Goldman Sachs to join First Republic Wealth Management or Rockefeller Capital Management.
In a world of more choice than ever, top advisors seem drawn to the formula that these firms offer—a best-of-both-worlds model with a boutique quality that gives advisors the support and infrastructure of a big firm combined with a sense of independence and control.
Yet fully understanding their appeal starts by looking at where they came from and where they are today.
How the models evolved
First Republic Private Wealth Management
A once “under-the-radar” wealth management unit, First Republic Private Wealth Management is now often a top advisor’s first choice—growing from $14.5B in assets a decade ago to over $190B in assets today. It’s one of the wealth management industry’s largest corporate RIAs with more than 100 teams under its umbrella.
The firm’s growth has accelerated tremendously in recent years. For example, in 2020 alone, First Republic recruited 8 mega-teams representing a total of $19B in assets—with advisors from Merrill Lynch, J.P. Morgan, Morgan Stanley, Wells Fargo Private Bank and Goldman Sachs. And 2021 kicked off with the onboarding of a large Citigroup team managing nearly $3B in assets.
It was CEO Jim Herbert’s desire to launch a wealth management franchise decades ago, and now PWM president Bob Thornton’s vision and leadership that kick-started the momentum in 2010. With 20 years of previous experience in senior roles at Goldman Sachs, Credit Suisse and Deutsche Bank, Bob has guided the transformation of First Republic into a major player in the space.
So what made First Republic a destination of choice amongst top advisors? After all, these folks are a discerning lot who would generally eschew the idea of working for a bank.
Having represented a number of the teams that joined First Republic in the past 5 years, they are attracted to the entrepreneurial culture and aggressive recruiting packages. But it’s the true referral opportunity from its bankers that makes it the ultimate growth play—a winning combination for sure. As Bob shared with me in a podcast interview, over a 3-year period through 2019, “Our bankers have averaged more than $5B a year in new assets under management to our advisors. That’s quite significant amongst 100 teams.”
As an advisor on a $10mm team that moved to First Republic from Merrill Lynch put it, “I can say our decision to make this move has been a roaring success. During the first four years here, our business has grown more than 50% by almost every quantitative measure. And, more importantly, the quality of service and support, investment advice and financial planning solutions has risen to a level rivaled only by the very best in our business.”
Rockefeller Capital Management
Built upon the single-family office that served the iconic Rockefeller family exclusively, Rockefeller Capital Management in its current multi-family form came onto the scene in March of 2018. It was then that ex-Morgan and Merrill leader Greg Fleming, in partnership with private equity firm Viking Global Investors, made an almost instantaneous splash by recruiting rock star advisors and leadership talent from the wirehouse world.
And it’s a recruiting drive that just keeps getting stronger.
As of this writing, the firm has 48 private wealth practices managing some $70B in assets. In 2020 alone, Rockefeller recruited 23 teams representing some $18B in assets, and just in the first few months of 2021, 12 teams with over $9B in assets have signed on.
That represents extraordinary growth at a time when the race for top talent is more competitive than ever before.
With almost every firm bidding for the most productive advisors in the industry, why is Rockefeller winning so often? First off, top advisors are attracted to the brand—a name synonymous with the ultra-affluent. Plus, the firm allows advisors to offer a bespoke experience for their clients, providing access to unique investment solutions and the ability to operate with significantly more control and freedom than is possible at a big brokerage firm.
And there’s a cherry on top: The firm is paying ultra-competitive recruiting packages—sometimes with equity offered as an inducement for select teams.
As the senior member of a recently recruited $7mm team put it, “It’s an absolute breath of fresh air to be here. I wake up every morning feeling energized and excited to come to work in an environment where I feel I have complete control over my professional life.”
That’s a pretty powerful endorsement.
The common ground between the two firms
First Republic and Rockefeller represent exactly what most advisors are looking for: More freedom. More flexibility. More control.
While going independent has been all the rage for the past decade, there are still plenty of top advisors who feel that building something from scratch is just a bridge too far. First Republic and Rockefeller are each built on an RIA chassis leveraging third-party custodians, while offering robust infrastructure and support so that the advisors have the feel of independence without the hassle of managing a business.
Both firms are building around the advisor elite—generally speaking, those with a minimum of $3 million in annual production and around $500 million in AUM. While there can be some notable exceptions to this, it’s fair to say that they are looking to recruit the best advisor talent from every major brokerage firm.
First Republic and Rockefeller are limited to select markets—so, for advisors who on all other criteria may be a good fit, the chances of either firm opening in cities outside their geographic area may be unlikely.
As appealing as First Republic and Rockefeller are, there are plenty of advisors who wouldn’t see either as the right destination. For advisors looking to build a brand and legacy with the greatest control, these models are just not independent enough. And conversely, there are many advisors who are simply more comfortable within traditional brokerage firms.
High net-worth advisors who are looking for a “best-of-both-worlds” boutique firm, are likely to find First Republic and Rockefeller equally appealing—yet it will be one firm’s vision, leadership and community of advisors that will ultimately win them over.