Morgan Stanley Raises Pay For Top-Performing Brokers
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Morgan Stanley is rejiggering its pay package for brokers to improve compensation for higher producers with better customers while squeezing underperfomers.
The new compensation plan will raise commissions across the board by one percentage point to brokers who generate a minimum of $300,000 in commissions and fees annually.
Morgan Stanley is also rolling out a program that allows brokers with at least $300,000 in production to use up to 25% of their pretax income to buy company stock. Brokers are entitled to at least 20 and as many as 40 bonus shares for every 100 shares they purchase, based on their length of stay at the firm. The purchased shares vest within three years, while the bonus shares vest over four years.
“It allows substantial wealth creation over the course of their career,” the chief operating officer of national sales at Morgan Stanley’s global wealth management unit, Andrew Saperstein, said at a press briefing.”We chose to reward as many brokers as possible.”
On the other hand, Morgan Stanley will no longer pay its brokers for business done with households that have less than $50,000 with the firm, raising the minimum from $35,000 previously. Payouts will be made at reduced levels for households with assets of $50,000 to $75,000.
Mr. Saperstein said the majority of his unit’s 8,000 advisors will reap additional rewards, but declined to give a specific number. “We wanted to come up with a compensation plan that would allow us to be competitive in attracting and retaining high-producing financial advisors,”Mr. Saperstein said.
Under the new higher commission scheme, payouts on fee-based and managed money products, such as mutual funds and annuities, will rise to 39% from 38% for brokers who produce $300,000 to $349,999, and will rise as high as 43% for those bringing in $1 million or more.
Payouts for sales of stock, bonds and other products sold on a per-transaction basis will rise to 36% of gross revenue from 35% for brokers producing at least $300,000, with the percentage topping out at 41%, these people said.
Morgan Stanley has fired 1,500 underperforming brokers and brokertrainees over the past two years.
