With the introduction of Morgan Stanley’s new compensation plan, 2013 is shaping up to be another cutthroat year as wirehouse and regional firms look to lure top advisor talent.
Morgan announced Thursday a number of changes to its compensation plan, including long-term bonuses for growing assets and a capital accumulation program to allow advisors to buy company stock at a discount. While the plan also included a cut in revenue bonuses and transaction revenues, the overall package remained attractive even as many advisors worried Morgan might cut back to try and meet its announced target of 20% profit margins.
“I didn’t expect this to be a positive,”
A number of advisors were pleased to learn Morgan had left some key items intact, such as the minimum account size of
“A couple expressed positive comments on Morgan Stanley,” Edde said, adding that some of the teams he spoke to about the move said that it showed the firm was listening to its field leaders.
According to a Morgan official familiar with the 2013 plan, the final outline drew support from branch managers and an advisory council with whom the firm had consulted in order to decide on a competitive plan. “They were very positive about it,” the official noted.
The plan comes on the heels of a slight dip in the firm’s headcount of approximately 17,000 advisors with Morgan Stanley Wealth Management reporting a loss of 159 advisors in the second quarter and 704 since the second quarter of 2011. Wirehouses on the whole are losing advisors, according to an October report by Cerulli which reported that firms like Morgan,
“Firms use payouts to [incentivize] performance, drive certain behaviors, and to tie Advisers to golden handcuffs, making it painful to leave,”
The stock options have a three year vestment and the growth award is attached to a five-year bonus agreement with a 100% upfront loan in the first quarter of 2014, which could make it harder to leave, according to Nasi. The increased bank-lending bonuses, which are offered at a number of competitor firms, will also help deepen client relationships and deepen connections within the bank, making it harder to transition, he added.
“From the first conversation to the start date, it’s a long process always obstacles and issues come up and this will be another thing that will come up that you’ll have to iron out,” Nasi said.
That may not be enough, however, Sarch said.
“It works when the stocks goes up, and backfires when it goes down,” he said. “All the grids are similar and since firms tinker with them every year, making a recruiting decision based on the grids is a waste of time.”
The teams that Edde is working with who are looking to leave from
“Anybody who’s leaving right now is not going to jump on that [compensation package],” he said.
According to an official with
“It’s basically at most a three year vesting program so I would say it’s very aggressive in terms of the speed which this vests,” the official explained. “If our primary purpose was to lock people in we’d make a longer vesting period. Obviously we want people to stay.”
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