Updated on Monday, August 10, 2020
First Republic Investment Management is a registered investment advisor headquartered in San Francisco, with additional locations along the East and West coasts, as well as one in Jackson, Wyo. The firmâ€™s team of more than 640 employees provides investment management and financial planning services to individuals and institutions. Today, the firm has more than $87 billion in assets under management (AUM).
All information included in this profile is accurate as of August 10, 2020. For more information, please consult First Republic Investment Managementâ€™s website.
|Assets under management: $87,280,528,053|
|Minimum investment: None specified, but minimum annual fee of $7,500 required for investment advisory services|
|Fee structure: A percentage of AUM; fixed fees; performance-based fees|
|Headquarters:||111 Pine Street
San Francisco, CA 94111
First Republic Investment Management is the private wealth management arm of First Republic Bank. The parent bank, which purchased the investment management group in 1999, is a California state-chartered commercial bank that provides personal and commercial banking services to individuals, businesses and nonprofits. First Republic Bank was founded in 1985, and has traded publicly on the New York Stock Exchange since 2010.
Today, the bankâ€™s private wealth management division has a team of about 641 employees, with more than 330 performing investment advisory roles. The firmâ€™s 28 offices are primarily located along the nationâ€™s coasts, with a number of offices in California, as well as locations in Oregon, Massachusetts, Connecticut, New York and Florida. Inland, the firm has an office in Wyoming.
The firm caters to individuals and families, as well as their estates and charitable foundations. More than half of these clients are considered high net worth individuals, which the SEC defines as those who have at least $750,000 in assets under management or a net worth of at least $1.5 million.
The firm does not require a minimum investment amount for advisory services; however, clients are generally required to pay at least $7,500 in annual fees. The firmâ€™s robo-advisor program, dubbed Eagle Invest, is an exception: It charges no minimum annual fee, but instead requires clients to invest at least $5,000.
Institutional investors round out the firmâ€™s client list. Its roster includes pension plans, defined contribution plans, profit-sharing plans, private pooled investment vehicles, banks, corporations, nonprofits and other businesses, as well as Eagle Alternative Investment Funds.
Clients can turn to First Republic to manage their portfolios and help plan their financial lives.
Investment management: When establishing a relationship, the firm helps clients identify their goals and objectives, review their current holdings and create a custom portfolio suited to their needs, which includes identifying suitable investment managers and funds. The firm then continuously monitors the portfolio and its performance.
Most clients establish a discretionary relationship, in which the advisor makes the daily trading decisions in the account without needing the client to sign off. Others choose a non-discretionary account, where clients receive recommendations from the advisor but maintain control over trading decisions.
Financial planning: First Republic offers more comprehensive financial planning services to high net worth clients, including many business owners. These clients can expect a detailed review of their goals and financial situation, addressing topics such as asset allocation, retirement, equity compensation, estate and generational planning, insurance and charitable giving. The firm also may recommend life, disability or long-term care insurance.
Robo-advisor service: Individuals with as little as $5,000 to invest or who are looking for less costly portfolio management can consider Eagle Invest, the firmâ€™s robo-advisor program, which is offered through the third party FutureAdvisor. This online program uses a computer algorithm to invest a clientâ€™s funds based on their answers to a series of questions around risk tolerance, objectives and other aspects of their financial situations. Client money is invested in one model portfolio, largely spread across exchange-traded funds (ETFs) and money market funds, and can include up to nine equity and fixed income asset classes. Communication is intended to happen entirely online.
Private pooled investment vehicle management: Finally, the firm also manages some private pooled investment vehicles, known as the Eagle Alternative Investment funds. Wealth managers may recommend clients invest in those funds or directly into other private funds.
Here is a complete list of services offered by First Republic Investment Management:
Separately, a large portion of the firmâ€™s wealth managers and representatives are licensed as broker dealers through the firmâ€™s affiliated broker-dealer, First Republic Securities Company. Thus, outside of these advisory relationships, wealth managers can also buy and sell securities for clients and earn compensation per transaction, often in the form of a commission. Many of the firmâ€™s wealth managers are also licensed to sell insurance products.
When initially starting a relationship with First Republic, clients should expect a review of their goals and current financial situation. To create the clientâ€™s custom investment plan, wealth managers take into consideration characteristics like a clientâ€™s objectives, financial situation, time horizon, risk appetite, tax bracket and cash needs. The firmâ€™s advisors each have their own investment philosophies and preferences, so performance can vary based on the wealth manager.
First Republic Investment Management offers many investment strategies across multiple asset classes, including publicly traded equities, fixed income and private securities. Multi-asset strategies can also include funds that invest in hedge funds, private equities and other categories, such as alternative investments and derivatives. Wealth managers also may recommend investing directly in a security or through a mutual fund, ETF or private fund.
Clients interested in environmental, social and governance issues should turn to the firmâ€™s Sustainable and Responsible Investing team. This group can help clients factor into their portfolios issues that matter to them, such as resource and waste management, carbon emissions, factory conditions, product quality and safety and board diversification. On the flip side, clients opposed to certain activities can use specific screens that evaluate companiesâ€™ involvement in alcohol, tobacco, gambling, weapons, fossil fuels, genetically modified foods and more.
How much clients pay will vary by service and asset type, and their rate is negotiated with the wealth manager. For the management of fixed income portfolios, clients generally pay an annual fee calculated as a set percentage of the total assets under management. For equity portfolios, the annual fee is tiered, meaning clients pay a lower rate for additional assets invested. In some cases, clients simply pay a flat fee. Fees are charged quarterly in advance, and can be deducted from the account or billed to the client.
Keep in mind the firm typically charges a minimum annual fee of $7,500, which should be no more than 3% of assets under management. That minimum may be reduced in certain circumstances, though, and does not apply to the robo advisor Eagle Invest program.
Here are the firmâ€™s standard fee schedules for equity/balanced portfolios and fixed income portfolios:
|Incremental Fee for Equity/Balanced Portfolios|
|Assets Under Management||Incremental Fee|
|First $2 million||1.50%|
|$2 to $5 million||1.25%|
|$5 to $10 million||0.75%|
|$10 to $25 million||0.60%|
|$25 million and up||0.45%|
|Total Fee for Fixed Income Portfolios|
|Assets Under Management||Total Fee|
|$2 million to less than $10 million||0.40%|
|$10 million to less than $25 million||0.35%|
|$25 million or greater||0.30%|
On top of these advisory fees, clients can expect to owe internal fees on products they are invested in, including mutual funds, ETFs, certain private funds and insurance products. Some private funds may also charge performance-based fees, which are determined based on a percentage of the fundâ€™s unrealized and realized gains and only apply if a certain benchmark is reached. Brokerage commission and transaction fees will also be added on top of these advisory fees in non-wrap accounts, where clients pay advisory, brokerage and custodian fees separately.
The firm does offer a wrap fee program, where transaction and custody costs are bundled in the fees. Wrap clients must use the affiliated First Republic Securities Company for brokerage services, which uses Pershing as its clearing broker.
The lower-cost robo advisor Eagle Invest program charges an annual fee of 0.40% of assets under management, which acts as a wrap fee and thus includes trading and custody costs.
Finally, financial planning and consulting clients pay a flat fee negotiated based on the scope of the work requested. Clients who use First Republic Bank and maintain certain amounts of money in their accounts can have these fees waived.
All registered investment advisors are required by the SEC on their Form ADV paperwork to disclose disciplinary and legal events against the firm, its employees or an advisory affiliate that would be material to a client evaluating the firm and the integrity of the management team.
First Republicâ€™s disclosures include one allegation from the SEC. The SEC alleged that from January 2014 through July 2018, the firm purchased, recommended or held more expensive mutual fund share classes that paid compensation to First Republic when other less expensive share classes were available, and did not adequately disclose this conflict of interest. First Republic settled with the SEC without admitting or denying the findings, paying about $1 million in disgorgement and prejudgement interest but no civil monetary penalty or fine. The SEC also settled with 78 other investment advisors at the same time for similar conduct.
First Republic also includes one disclosure about a specific individual.
Potential clients can contact the wealth management division of First Republic by calling 800-392-1400, or searching for a local office in their area on the websiteâ€™s Office Locations tab. You can also fill out a contact form on First Republicâ€™s website to have the firm contact you.
Established clients can expect to receive ongoing reviews of their accounts from their wealth managers and reports at least quarterly. Clients should immediately notify their wealth manager about any changes in their investment objectives, risk tolerance or other financial situations, which may prompt more frequent reviews.
Clients living near one of First Republic Investment Managementâ€™s 28 offices may consider the firm if theyâ€™re looking for portfolio management and straightforward financial advice. (More comprehensive financial planning and consulting is limited to high net worth investors for a fee.) Investors with leaner pockets will appreciate that the firm works with clients not deemed high net worth, and even offers a less expensive online robo-advisor option for investors with as little as $5,000.
Keep in mind, however, that the firm can earn compensation from certain product recommendations, such as life insurance and mutual funds. Whatâ€™s more, wealth managers are paid well to recommend the bankâ€™s products. Thus, it is the clientâ€™s job to ask questions about why a product is being recommended and what the wealth manager or firm stands to gain from the recommendation.
As is always the case when youâ€™re researching financial advisors, make sure you understand how much and from whom the advisor earns money off of your business. Then you can decide if the firmâ€™s services and performance are worth the cost.