According to an article in InvestmentNews, Morgan Stanley has joined fellow wire houses UBS and Merrill Lynch in revising compensation to spur lower performing, experienced advisors to increase production while rewarding those who hit performance targets. Advisors with commissions and fees less than $2.5 million will need to increase production by 10% to maintain their payouts.
In an effort to funnel more assets into standard, non-discretionary accounts, Morgan Stanley is reported to be charging a 5 BP fee on advisor-managed accounts. While two of their competitors are owned by major lending institutions, Morgan Stanley is trying to increase lending activity by rewarding advisors who increase loans and security-backed lines of credit.
Earlier this year, Morgan Stanley and Merrill Lynch reported that they are pulling back on retention bonuses. The current move seems to be an attempt by wire houses to reward and retain high end advisors already in the fold by adopting a basic business practice: “It’s cheaper to keep a client than get a new one.”
