EXCLUSIVE: Morgan Stanley will leave the network unchanged in 2022 and focus more on asset growth and lending


December 1, 2021

Morgan Stanley won’t make any changes to its core payout grid in 2022, but has tweaked a few other incentives to encourage brokers to increase asset and credit balances, and to encourage customers to use E * Trade for self-directed online accounts.

The plan, which was unveiled to the company’s 16,000 or so brokers on Wednesday afternoon, includes a number of minor changes, including the ability for brokers to qualify for higher team-based compensation, upgrade payouts for loans and mortgages, and payment on some. to increase the customer’s cash on hand. The changes will come into effect gradually from January to September next year.

In deciding on its 2022 plan, Morgan Stanley was trying not to “rock the boat,” after a year in which senior management had touted its high broker retention rate and positive net recruitment rate, executives said as they discussed possible changes last month . The last made wire house major changes to the network, which pays brokers a range of 28 to 55.5% of their sales in 2020.

Vince Lumia, Head of Field Management at Morgan Stanley, announced the relatively small changes to the 2022 Plan in an internal memo aimed at helping brokers “expand their practices and deepen customer relationships.”

“The minimal updates to the plan are in line with our modern wealth strategy and are designed to position you optimally as your business evolves to meet the unique needs of your clients,” wrote Lumia.

Among the changes for next year, Morgan Stanley will adjust a net bonus on assets acquired in July to count net new debt in addition to new assets. It is also expanded the earnings potential, expressed as three network percentage points of the income of households adding $ 5 million or more in net new money and debt over a rolling 12 month period.

Introduced in 2019 and designed to encourage brokers to convince clients to consolidate assets, the bonus currently increases the payout rate by one percentage point for households adding $ 500,000 or more and by one percentage point for those over $ 2 million a second point.

In the third quarter, brokers will also receive credits for assets that clients add to self-managed E * Trade accounts, provided the client has agreed to allow their Morgan Stanley broker “visibility” to those accounts.

The change comes because Morgan Stanley has focused on net new money as a key metric for the health of its wealth department and started reporting this year total net new money as part of corporate profits.

Also in July, Morgan Stanley added the fourth way for teams to qualify for a bonus that grants all members of a team the payout of the largest producer. According to the plan for next year, they can win the award if each member of the team has at least 50% of their clients’ net new money and liabilities unchanged or positive.

In other changes aimed at push Broker to Do More Banking, Morgan Stanley adjusts qualification for its loan growth price starting January to require at least $ 1.5 million in net new loan balances of $ 1 million. It also reduces the payout from 50 basis points to 40 basis points, but removes the requirement that brokers must have net positive or net profits to qualify.

As part of the changes that come into effect in January, mortgage payments for brokers will also be standardized to 75 basis points. Previously, they received “step-up” payouts of 60 basis points on the first three mortgages and 75 on the fourth. Brokers will also receive first-time loans for a client who works at Morgan Stanley who takes out a mortgage and receives 35 basis points on mortgages from non-advisor employees.

To encourage brokers to top up their bank balances, Morgan Stanley will restore a 15 basis point payout on broker account funds invested in cash management products in June. (Previously, it had slashed salary to 10 basis points in 2020.) However, in order for brokers to qualify, their clients must have a CashPlus account that meets fee waiver requirements, including a deposit and a regular minimum premium.

Morgan Stanley’s relatively few changes reflect an approach taken by competitor Merrill Lynch Wealth Management, who announced to brokers in October that it would also be leaving the core elements of its payout as well as a frosting and carrot growth grid unchanged in view of the upheaval and many optimizations in recent years.

UBS Wealth Management USA two weeks ago revealed more changes in content in 2022. The new plan will increase the total payout percentages in its core payout to 60%, but embarrassed some brokers by cutting out a net allotment for new assets and adding a seniority bonus to its core payout grid that could penalize some earners, teams or increase deferred compensation.

Wells Fargo Advisors has not yet announced any plans for its compensation for 2022.


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