Morgan Stanley raising pay hurdle for its financial advisors in 2024
Morgan Stanley’s 15,000 financial advisors will have to work harder in 2024 and generate more revenue to earn the same amount of take-home pay as they did this year.
Large wirehouses like Morgan Stanley rely on complex, cumbersome pay schemes known as “grids” to determine what percentage a financial advisor keeps of each dollar of revenue he or she generates; wirehouse advisors typically pocket in the neighborhood of 40 cents per dollar of revenue.
But reaching that level will be a little more difficult for Morgan Stanley’s financial advisors starting in January. According to sources familiar with Morgan Stanley’s plans, the firm will raise the incentive compensation grid by 10% next year.
That means that financial advisors who produced revenue near $1 million annually this year will have to increase that by 10%, or generate $1.1 million in fees and commissions, to take home the same percentage of revenue as they did this year. Morgan Stanley has not made changes to its pay grid levels or thresholds since 2020, according to those same sources.
Industry website AdvisorHub.com first reported the news of the pay changes occurring next year at Morgan Stanley. The large firms typically outline those compensation plans in the fall. In the past, Morgan Stanley has tweaked its compensation plan to reduce the payout to low-performing brokers and financial advisors.
To soften the blow, Morgan Stanley is increasing business plan development allowances, a way for advisors to invest in their practices, by 10%.
“What this means is if a financial advisor’s production next year stays flat, then the payout will go down,” said Danny Sarch, an industry recruiter.
The increased pay plan thresholds were made, in part, “to acknowledge
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