Another major wirehouse is keeping its compensation largely the same in 2022.
In a similar approach to
Morgan Stanley and other wirehouses are facing more rivals than ever for financial advisor talent, whether among regional employee brokerages, independent broker-dealers or the increasing number of RIA platforms and consolidators. In the firm’s last earnings call, CEO James Gorman cited some “
The firm’s “upscale name” and competitive offers have helped it beat out the other wirehouses for advisors this year, according to recruiter Michael King, who notes that some brokers tend to be less disposed to Morgan Stanley because of a greater emphasis on deferred compensation.
“They're encouraging more asset gathering, and lending is a big moneymaker for the firms,” King says of Morgan Stanley’s grid. “That's a very smart move, and I’m not surprised.”
Timing of tweaks
A shift in the third quarter that counts self-directed E-Trade accounts held by Morgan Stanley clients as part of an advisor’s net acquired assets also marks the first time that the pay model has integrated the do-it-yourself investing platform into broker compensation since last year’s
“Consistent with our strategic objectives, the plan is designed to support you as you continue to grow your practices and deepen client relationships,” Lumia said in a statement. “The minimal updates made to the plan are aligned with our modern wealth strategy and are intended to best position you as your businesses evolve to meet your clients’ unique needs.”
Morgan Stanley didn’t make any executives available for an interview about the pay grid. The wealth management news outlet AdvisorHub first
Other adjustments to payouts from lending activity will start in January. For starters, advisors may receive a lending growth award without having positive year-over-year gross revenue growth or net acquired assets for the year.
With Morgan Stanley raking in at least $6 billion in new loans for
In July, as part of the shift to include net new liability growth in the count of new assets under a client’s total balance across their accounts, advisors will pick up three more percentage points on their credit rate for clients that add at least $5 million over a rolling 12-month period.
That same month, Morgan Stanley is allowing teams that maintain the same balance or gain dollars in trailing 12-month net acquired assets and liabilities among at least 50% of their clients to receive compensation as a group. The firm will pay the incentive to teams that meet that provision or three others it introduced last year for the first time. Lastly, in a slight variation in June, brokers will get 15 bps instead of 10 for average monthly client money held in bank deposits, savings and cash sweep accounts, with a cap on eligible balances of $1 million.
Recruiting outlook
The largely unchanged pay grid for next year forms a contrast with the long-term transformation described by Gorman on
“You had financial advisors who left and who you recruited, and for many years we were net deficit of financial advisors as were frankly most of the broker-dealers in my 30 years of doing this,” Gorman said. “A couple of years ago the net deficit changed materially for us. We are seeing net positive attrition, very few advisors leaving and significant advisors coming, in particularly large teams from across the street and the banking industry.”
Regardless of any quarterly metrics, though, Morgan Stanley and other wirehouses are deploying methods of encouraging advisors to stay, whether to collect their deferred compensation or to keep all of their clients’ loans under the same roof, according to recruiter Danny Sarch of Leitner Sarch Consultants. If the firms can retain the brokers all the way up to their eventual retirements, they’re vying to ensure their clients’ children use the firm as well.
“They're trying to hold on to what they have and keep a bigger piece of it. They're just playing the hand that they're dealt,” Sarch said. “Succession is the giant story in this industry.”
