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Morgan Stanley Revamps FA Compensation Plan

July 31, 2018

In its new compensation plan, Morgan Stanley is nudging its financial advisor force to get clients to hold more money with the firm, in part by letting the firm access their overall financial picture through the firm’s new technology, according to the Wall Street Journal.

Starting April 1, advisors who generate $5 million or more in annual revenue can receive a payout of 58.5% of that money — up from 55.5% they earn currently, if they meet certain targets on net new assets and use some of the firm’s new financial planning tools that show clients’ outside money and assets, according to the paper.

Even smaller advisors stand to gain from using the new technology: advisors with clients with as little as $100,000 at the firm can earn an extra 1% if they can get them into a plan that lets Morgan Stanley see their outside assets, the Journal writes. At the same time, advisors whose clients have under $250,000 at the firm will be penalized if they don’t use such plans, according to the paper.

In May, Andy Saperstein, co-head ofMorganStanley’s wealth management unit, said the firm has been integrating Aladdin,BlackRock’s risk management platform, to help it convince current clients to bring more of their assets to Morgan Stanley.

The wirehouse’s advisors can earn even more if they can get clients to take out mortgages or portfolio-backed loans and bring more banking business to Morgan Stanley, according to the Journal.

The company is almost doubling the rate advisors can earn on debt, and brokers can also earn 0.15%, up from the current 0.05%, on client balances when Morgan Stanley can see the entirety of their clients’ financial situation, the paper writes.

(iStock Photos)

Morgan Stanley’s new compensation plan follows last year’s payout changes at rival Merrill Lynch, which incentivized advisors to bring on new clients, according to the Journal.

Merrill Lynch advisors who meet certain targets will be able to earn 2% more of the revenue they generate for the firm, while those who miss them will lose 2%, the paper writes.

By Alex Padalka
  • To read the Wall Street Journal article cited in this story, click here.