© 2020 Arizent. All rights reserved.

Morgan Stanley raises comp grid hurdles by 10%

Register now

Morgan Stanley advisers might have to work a little harder next year to pull in the same paycheck.

The wirehouse is raising hurdles for its compensation grid by roughly 10% for production levels below $5 million, according to a person familiar with the matter and who asked not to be named.

The number of hurdles in the comp grid will stay the same as will the so-called penalty box payment, which is a flat 20% rate for brokers generating less than $300,000 in revenue per year, according to the source.

The changes have yet to be announced to the firm's more than 15,000 advisers.

A spokesman for the firm declined to comment when asked about the changes.

Morgan Stanley's executives have focused on making the wirehouse more profitable, and have targeted expenses as part of their overall efforts.

"It is an easy way to save a bit of money for the firm, and simple to implement," says Andy Tasnady, a compensation consultant in Port Washington, New York.

Morgan Stanley did a similar grid stretch in 2014, he adds.

CEO James Gorman has a target range for the firm's pretax margin of 23% to 25% for 2017.

The wirehouses typically announce new compensation changes at the end of the year, but UBS broke ranks in June, announcing a number of changes for its 2017 plan. Among the alterations, the firm will pay more to advisers at the high-end and is making its compensation plan less complicated. The brochure explaining the UBS' plan shrank from 34 pages to eight, the firm said in June.

Merrill Lynch and Wells Fargo have not yet made announcements about potential changes to their 2017 compensation plans.

For reprint and licensing requests for this article, click here.