After a year of upheaval, wirehouse advisors can expect few changes in 2021 — at least as far as comp plans go.
Morgan Stanley, which recently unveiled its 2021 compensation plan, mirrored similar moves at UBS and Merrill Lynch, both of which kept core grids that determine payouts intact.
Industry insiders aren’t surprised, noting it is a good way to placate FAs after a year marked by unprecedented market volatility, economic damage and a public health crisis.
“I think they’re keeping things stable as much as they can. I think because of the pandemic they don’t want to make any waves,” recruiter Michael King says.
Morgan Stanley did detail a few changes, affecting team-based awards and private wealth managers, to the firm’s more than 15,000 advisors last week.
Alterations include higher hurdles for cash pay, a grid stretch for deferred compensation and new bonuses.
Specifically, the firm introduced a new requirement for team-based bonuses around client engagement. Teams must now have positive net acquired assets or 10% financial penetration or 75% online penetration. Teams only have to meet one of those criteria once during the year. The change will be implemented in July 2021.
The firm also tweaked its lending growth award, dropping a requirement for six new loans for the advisor to be eligible. The award amount is calculated by multiplying the advisor’s lending balance growth by a 50 bps payout rate. The change takes effect in January.
“Importantly, the plan remains consistent with our modern wealth strategy and demonstrates our continued commitment to support the growth of your business as you deliver the highest standard of care to your clients, even in the most challenging of times,” Vince Lumia, head of Field Management, wrote in a memo to advisors.
On the private wealth side, the wirehouse is increasing the threshold for new PWM households to $5 million from $2 million. The change takes effect April 2021 and includes an exemption for households with a qualified financial plan and with at least $100,000 of assets plus liabilities. Without the financial plan, payouts drop to as low as 5%.
Morgan Stanley also extended a deadline to use any remaining 2020 business development allowances to March 15, 2021.
AdvisorHub first reported Morgan’s comp plan this week.
