Morgan Stanley’s news that it will hike revenue thresholds has prompted at least one recruiter to criticize the wirehouse’s management.
Many of its 15,000 advisors must now meet higher thresholds to get the same payout percentages as they did this year.
Morgan Stanley’s move won’t increase its FA ranks, and may even reduce them, according to Mark Elzweig, a recruiter and president of New York-based Mark Elzweig Company.
The wirehouse has increased thresholds by about 10%, according to people familiar with the plan's highlights, introduced in a memo by Vince Lumia, head of field management for the wirehouse.
The targets of the potential haircut, effective April 1, are advisors generating less than $5 million a year.
Meanwhile, Morgan Stanley FAs eagerly await more details about the new plan, which they may learn later this week.
"They don’t care if their sales force continues to shrink. The projected extra revenues from squeezing their advisors with increased payout hurdles are worth it to them," Elzweig argues. "But, fewer Morgan Stanley advisors these days are cowed by the prospect of exiting a non-protocol firm. All the other brokerage firms have already cracked the code on how to do this without generating a temporary restraining order."
The thresholds for Morgan Stanley advisors generating more than $5 million will remain unchanged, according to people familiar with the plan.
Those same sources stressed Morgan Stanley hadn’t altered its FA compensation grid since 2017 — despite the fact that equity markets have increased by 35% during the last few years, thereby increasing almost all FA revenues.
The new comp plan “is focused on rewarding growth that will be achieved by deepening relationships, adding new clients and delivering a standard of care to all of your clients,” Lumia told reps in a statement later released to the press.
Although the new plan raises revenue thresholds, it also offers advisors up to four percentage points — one point more than in 2019 — if client assets hit certain targets and they set up financial planning services.
“Most advisors will be unaffected by this update unless they are close to a revenue breakpoint,” people familiar with the plan's highlights claim.
But Morgan Stanley advisors were taking a wait and see attitude — at least for today.
“The nitty-gritty will be discussed with management in a meeting tomorrow,” one Morgan Stanley FA, who planned to withhold judgment until then, tells FA-IQ.
In his memo, Lumia noted that the wirehouse’s investment strategy team predicted just this week that next year “will be more challenging from a return perspective than this past decade.” But he also told Morgan Stanley advisors if they "centered on a financial plan," that "will help ensure that you serve your clients better than anyone else in the industry and supports the steady growth of your practice."
This article is an update of an article that first appeared here as breaking news, Tuesday, November 19, 2019.