Morgan Stanley is modifying its financial advisor compensation plan to stimulate account growth and lending, according to news reports.
“The minimal changes to the plan are focused on rewarding asset acquisition, the growth of your practice and to support you as you continue to deliver more value to your clients,” Vince Lumia, head of field management, wrote in a memo to employees, according to Barron’s.
Under the 2023 plan, Morgan Stanley doubled the bonus advisors can reap on households that add between $500,000 and $2 million to accounts at the firm. Advisors can now earn 2% on such households, up from 1% previously.
Additionally, the firm raised the minimum required lending balance growth necessary for a bonus from $1.5 million to $2 million and dropped the payout from 0.4% to 0.3%, according to Barron’s.
Morgan Stanley is also changing a policy that forced advisors into a lower payout on households with less than $250,000. Advisors won’t be penalized on payouts for those clients provided that they grow net assets and loans held with the firm by at least 5% and provided that the bump in business translates to at least $25,000 of the client’s money, the publication writes.
That change follows comments from executives touting the power of the company’s Morgan Stanley at Work and E*Trade direct investor units to fuel new advice relationships. CEO James Gorman called the units “an unbelievable revenue machine”
Morgan Stanley is also ending a bonus rolled out in 2018 aimed at rewarding advisors who provided financial planning, according to Barron’s, which credits AdvisorHub with first reporting the changes to the compensation plan.
Morgan Stanley is the last of the four main wirehouses to roll out 2023 compensation plan changes.
In early November, Wells Fargo unveiled its 2023 compensation plan, which had few changes based on the belief that “advisors want no surprises,” Sol Gindi, head of Wells Fargo Advisors, told Barron’s at the time.
Merrill Lynch followed, upping its payment grid thresholds but eliminating a policy that had advisors forfeiting the first 3% of monthly revenue to the firm.
Although UBS had, earlier this year, raised the up-front percentage for incoming advisors’ trailing 12-month production, its 2022 compensation plan was not changed for 2023.
Source: news.google.com
