Morgan Stanley joined two of its competitors this week and tweaked its compensation plan to give brokers more incentive to improve performance.
Morgan Stanley, which employs the country's largest network of advisers, will reduce payouts to low-performing experienced brokers, expand awards for hitting performance targets and enhance bonuses for increasing lending, according to details of the plan confirmed by InvestmentNews.
In compensation plans announced internally this week, Morgan Stanley, Merrill Lynch Wealth management and UBS Wealth Management Americas all took a variety of steps to encourage all of their 40,000 advisers to emulate the industry's top revenue producers and cultivate the U.S.'s wealthiest clients. Wells Fargo & Co., owner of the country's third largest brokerage, has not yet announced its compensation plans for next year.
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Morgan Stanley next year will require brokers who generate less than $2.5 million in commissions and fees to increase their revenue by 10% to maintain the same payout.
As it stands now, brokers earn between 28% and 47%, depending on their total annual revenue, according to the formula that determines broker pay. Advisers in the top bracket produce $5 million or more. Advisers with nine or more years of experience who produce less than $300,000 get just 20%.
But the firm will temporarily allow brokers to be paid for smaller accounts for up to two years, “allowing advisers time to bring additional assets to the firm and gain better visibility to clients' investments,” according to language from the plan con
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