First Republic Investment Management Review 2022 - MagnifyMoney
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First Republic Investment Management Review 2022

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First Republic Investment Management is a San Francisco-based registered investment advisor that is the investment arm of First Republic Bank. The firm offers portfolio management services to individual and institutional investors, and financial planning services are also available. Most of its clients are high net worth individuals, though it also works with a number of individuals who are not in the high net worth category.

The bottom line: First Republic Investment Management is the investment arm of First Republic Bank and offers portfolio management and financial planning services.

  • Has a Sustainable and Responsible Investing team
  • Many firm employees are also licensed broker-dealers
  • One disciplinary disclosure on its record

All information included in this profile is accurate as of September 2, 2021. For more information, please consult First Republic Investment Management’s website.

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Overview of First Republic Investment Management

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 bank’s private wealth management division has a team of close to 800 employees, nearly 400 of whom perform investment advisory roles.

First Republic Investment Management’s pros

  • Serves middle-income clients: Unlike some advisory firms that require a seven-figure investment to get in the door, many of First Republic’s individual clients do not classify as high net worth. Additionally, the firm does not require a strict minimum investment amount, though it does have a minimum annual fee of $7,500.
  • Offers flexible account options: First Republic Investment Management does not take a one-size-fits-all approach. Clients have a number of options in many regards: They can choose to wrap in trading and custody costs or pay separately; hand over day-to-day control of their account or hang onto it; open a separately managed account or go with the lower-cost robo-advisor program; or stick with publicly traded equities and fixed income or add in private funds with exposure to alternatives such as private equity and hedge funds.
  • Factors in sustainability and responsibility: A specific team at First Republic can help clients be mindful of certain environmental and responsibility issues that matter to them, as well as weed out companies with operations they’re opposed to, such as weapons, fossil fuels or genetically modified foods.
  • Provides discounts to bank customers: First Republic Bank clients who maintain specific deposit levels in their accounts may get a fee credit for financial planning and consulting services.
  • Offers cheaper online-only portfolio management: Investors just starting out, or who have smaller accounts, can consider the firm’s robo-advisor program, Eagle Invest. It charges an annual fee of 0.40% for portfolio management, and requires only $5,000 to start investing.

First Republic Investment Management’s cons

  • Earns revenue for selling certain products: First Republic receives compensation for selling clients certain mutual funds and insurance products, creating a financial incentive for advisors to push those products. This creates a potential conflict of interest between clients and the firm. Additionally, the firm’s affiliated broker-dealer stands to earn revenue when wealth managers recommend particular mutual fund share classes or money market mutual funds.
  • Product referrals come with payments: Wealth managers at First Republic Investment Management are paid to recommend certain First Republic Bank products and services to clients, such as loans against their portfolio and their trust and estate services. Thus, always dig deeper if a particular service is being recommended.
  • Incentivized to recommend its affiliated broker-dealer: First Republic has a financial incentive for advisors to recommend its affiliated broker-dealer, which may cost clients more than an unaffiliated broker.
  • Has a disciplinary disclosure: First Republic Investment Management does have a disciplinary event on its record. You can read more about this below.

What types of clients does First Republic Investment Management serve?

The majority of First Republic’s clients are high net worth individuals, although a large portion of individual investors do not have a high net worth. For reference, the SEC defines a high net worth individual as someone with at least $750,000 under an advisor’s management or a net worth believed to be at least $1.5 million.

The firm does not specify a minimum investment requirement for advisory services; however, clients are generally required to pay at least $7,500 in annual fees. The firm’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.

Services offered by First Republic Investment Management

Clients both individual and institutional can turn to First Republic to manage their portfolios and help plan their financial lives. The firm offers services from investment management to comprehensive financial planning to a robo-advisor offering to pension consulting.

Investment management: Most clients establish a discretionary relationship with the firm, in which the advisor makes the daily trading decisions in the account without needing the client to sign off. A non-discretionary account, where clients receive recommendations from the advisor but maintain control over trading decisions, is also an option.

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, and estate and generational planning.

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 firm’s robo-advisor program, which is offered through the third party FutureAdvisor.

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 provided by First Republic Investment Management:

  • Investment management services
  • Financial planning
    • Retirement planning
    • Trust and estate planning
    • Charitable planning
    • Education planning
    • Business planning
    • Long-term care planning
    • Cash flow forecasting
    • Spending analysis and budgeting
  • 401(k) plan management and pension consulting
  • Private pooled investment vehicle management
  • Advisor to public mutual fund
  • Family consulting services
  • Family wealth resources and engagement
  • Insurance and risk management for individuals and businesses
  • Trust and estate services
  • Workshops and seminars

Separately, a large portion of the firm’s wealth managers and representatives are licensed as broker-dealers through the firm’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 firm’s wealth managers are also licensed to sell insurance products.

How First Republic Investment Management invests your money

First Republic Investment Management offers many investment strategies across multiple asset classes, including publicly traded equities, fixed income and private securities. The firm’s equity strategies span multiple market capitalization levels and geographic regions, while its fixed-income strategies include a broad range of offerings, incorporating different geographic exposures, tenors and credit ratings. Multi-asset strategies can also include funds that invest in hedge funds, private equities and other categories, such as alternative investments and derivatives.

Investment strategies are recommended to clients based on their unique needs as well as their risk tolerance, current financial situation and future goals. The firm will use multiple strategies to meet a client’s objectives.

Those interested in environmental, social and governance issues can turn to the firm’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
  • Safety
  • Board diversification

On the flip side, clients opposed to certain activities can use specific screens that evaluate companies’ involvement in alcohol, tobacco, gambling, weapons, fossil fuels, genetically modified foods and more.

Fees First Republic Investment Management charges for its services

Portfolio management fees: 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. That minimum may be reduced in certain circumstances, though, and does not apply to the robo-advisor Eagle Invest program.

Here are the firm’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%
First Republic Investment Management Total Fee for Fixed Income Portfolios
Assets Under Management Total Fee
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 fund’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.

Eagle Invest fees: The robo-advisor Eagle Invest program, which is part of the firm’s wrap fee strategy, charges an annual fee of 0.40% of assets under management.

Financial planning and consulting fees: 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.

First Republic Investment Management disciplinary disclosures

First Republic’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.

As a registered investment advisor, the firm is required by the SEC to report on its Form ADV paperwork any 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. For more information on the firm and to view its Form ADV, you can go to its IAPD page.

First Republic Investment Management onboarding process

  1. Contact the firm: Potential clients can contact the wealth management division of First Republic by calling the firm, or searching for a local office in their area on the website’s Office Locations tab. You can also fill out a contact form on First Republic’s website to have the firm contact you.
  2. Review your goals and financial situation to get an investment plan: When initially starting a relationship with First Republic, clients should expect a review of their goals and current financial situation. To create the client’s custom investment plan, wealth managers take into consideration characteristics like a client’s objectives, financial situation, time horizon, risk appetite, tax bracket and cash needs. The firm’s advisors each have their own investment philosophies and preferences, so performance can vary based on the wealth manager.
  3. Update your wealth manager when necessary: 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.
  4. Receive reviews and reports: Established clients can expect to receive ongoing reviews of their accounts from their wealth managers and reports at least quarterly.

Where First Republic Investment Management is located

First Republic Investment Management has offices in the following states:

  • California
  • Connecticut
  • District of Columbia
  • Florida
  • Hawaii
  • Illinois
  • Massachusetts
  • New Jersey
  • New York
  • Oregon
  • Washington
  • Wyoming

Is First Republic Investment Management right for you?

Clients living near one of First Republic Investment Management’s offices may consider the firm if they’re looking for portfolio management and straightforward financial advice. 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. What’s more, wealth managers may be paid to recommend the bank’s products. Thus, it is the client’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. Make sure to weigh your options and consider your unique needs to ensure you find an advisor to work with that’s truly right for you.

The “Find a Financial Advisor” links contained in this article will direct you to webpages devoted to MagnifyMoney Advisor (“MMA”). After completing a brief questionnaire, you will be matched with certain financial advisers who participate in MMA’s referral program, which may or may not include the investment advisers discussed.