Morgan Stanley adjust pay grid

JAN 12, 2017
With an eye on reducing costs, Morgan Stanley is increasing the revenue thresholds its advisers have to reach in order to see a pay increase in 2017. According to two published reports, Morgan Stanley will raise certain pay hurdles on its compensation plan, known as a grid in the industry, by about 10%. That roughly means that a broker who produces $800,000 in fees and commissions in 2016 will need to generate $880,000 next year in order to receive the same overall pay, said Danny Sarch, an industry recruiter. “All thresholds are 10% higher,” he said. AdvisorHub.com on Friday first reported the change in Morgan Stanley’s compensation plan for its close to 16,000 advisers. The grid that determines advisers’ payouts will continue to have 16 breakpoints with percentages ranging from 28% of fees and commissions at the low end to a peak of 55.5%, according to AdvisorHub, which cited several anonymous sources. Morgan Stanley’s CEO, James Gorman, is trying to reduce compensation expenses across the firm, including the firm’s Wealth Management group. Mr. Gorman plans to reduce expenses by $1 billion next year at the firm, according to an investor presentation from January. The target for 2017 compensation at Wealth Management is less than 56% of the Wealth Management’s group total revenue, according to the presentation. That compares to compensation accounting for 57% of expenses at Morgan Stanley Wealth Management in 2015. On top of increasing it pay hurdles, Morgan Stanley also takes 10% of an adviser’s net pay and drops that into a deferred compensation plan, which takes several years for an adviser to vest. In 2014, Morgan Stanley made a similar move in its compensation grid to advisers and raised breakpoints by 10%. A Morgan Stanley spokeswoman, Christine Jockle, did not return phone calls to comment.

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