A crack in First Republic Bank's wealth management franchise, with $271.2 billion in assets, revealed itself as the first sizable financial advisor left the bank. Vishal Bakshi joined Morgan Stanley last Friday, St. Patrick's Day, according to BrokerCheck, after joining First Republic less than a year ago from Merrill Lynch.
A financial advisor since 2001, Bakshi, who is based in midtown Manhattan, reportedly has $1.5 billion in client assets, according to an industry report about his move. An industry source who asked to remain confidential said that Bakshi's hiring at Morgan Stanley was unsolicited
A First Republic spokesperson declined to comment Thursday morning when asked about Bakshi leaving the firm. A Morgan Stanley spokesperson also declined to comment.
First Republic has persistently paid recruiting bonuses to financial advisors that were competitive and at times near the high end of the market, industry sources have said for several years.
Over the last 13 years, First Republic Securities Co., the bank’s broker-dealer, and First Republic Investment Management Inc., its registered investment advisor, have hired a total of 291 financial advisors, while seeing 58 leave the firm for various competitors over that time, according to a survey of 13 years of data from the InvestmentNews Advisors on the Move database. That leaves First Republic with a net gain of 233 advisors, many of whom are elite financial advisors who generate $1 million or more in annual revenue.
Bakshi clearly is that type of financial advisor. Prior to starting work at First Republic last June, he had been registered at Merrill Lynch since 2013, where he held the titles of managing director and wealth manager.
"Vishal Bakshi is a highly regarded wealth manager who will strengthen our expanding team in metropolitan New York,” Bob Thornton, president of First Republic Private Wealth Management, said in a statement at the time. “Vishal shares First Republic’s commitment to exceptional and differentiated client service.”
What's difficult to understand about First Republic's financial advisors, market sources have said this week, is the variety of forces working against them and how that will affect their loyalty to their employer. The bank's stock was trading at $12.35 per share near midday Thursday, down 89.9% from a month ago when shares were priced at $123.22. It's not clear whether the bank will receive any further injection of deposits from competitors, or to what extent wealthy clients have pulled deposits.
It's also not clear how restrictive the terms of any long-term recruiting deals, which include cash payments, would be if more financial advisors wanted to leave and work elsewhere.
"The problems for advisors there could accelerate if more teams like this leave," said Danny Sarch, an industry recruiter. "We're in crazy times, yet again."
Industry news website AdvisorHub.com first reported the news of Bakshi leaving First Republic Bank.
[Also read: Is First Republic bank in trouble? First Republic’s cloudy future puts wealth management on notice]
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