At some point being one of the worlds largest, deepest, and arguably most integrated global bank and wealth manager makes a difference. That difference was clear in the midst of the regional banking crisis at First Republic specifically. 

Morgan Stanley, which remains the ‘real’ Wirehouse leader in advisor headcount here in the US. (**no it isn’t Merrill Lynch; their numbers are fake based on hiring nearly 1000 trainees a year to hide extraordinary attrition). That size, scale, global reach and depth became very friendly confines for huge teams leaving First Republic in the midst of a panic. The Morgan Stanley waters were very, very warm. 

One interesting footnote, which bolsters the thesis that First Republic teams were looking for scale and safety for their clients, was the reality that Morgan Stanley’s upfront payment escrow setup. 

Morgan Stanley put together a deal so that upfront payments were escrowed so that any remaining deals for First Republic advisors still owed to their old firm would be paid back first. The escrow idea may have been seen as an impediment to speedy transitions (UBS didn’t require it and brought over several FRB teams); but rather it proved to be seen as a thoughtful and legally careful way to smooth a transition. Some teams choosing to litigate any payback based on extraordinary circumstances. 

The escrow model may be something that we see in the future and could potentially become more than a footnote in recruiting circles. We’d even project that upfront payments could continue to drift higher if they are attached to an escrow/payback period. Something to consider given that there are deals out there offering as much as 200% upfront. 

FYI – there are still more former FRB (now JPM Securities) teams on the move. We’d expect Morgan Stanley, UBS and Rockefeller to continue to be their landing spots.