Morgan Stanley (MS.N) will shift the way advisers in its wealth management business are paid next year, cutting bonuses tied to the amount of revenue they bring in and rewarding them instead for growing assets and loans.
Advisers, who learned of the new plan Thursday afternoon, will also be able to buy discounted Morgan Stanley shares for the first time, according to details of the plan reviewed by Reuters.
Among the elements unchanged in the plan is the advisers' pay-out grid, which is industry parlance for the chart used by brokerage firms to determine pay. Advisers at Morgan Stanley receive a percentage of the revenue they generate, with the percentage amount increasing at certain levels. Some advisers had expected that Morgan Stanley's profit pressures would lead it to make cuts to the grid.
Also unchanged was the minimum account size on which the company's nearly 17,000 advisers can get paid a fee. That was left at $100,000, well below the minimum size of $250,000 at rival Merrill Lynch Wealth Management.
Nearly four years into its acquisition of the Smith Barney brokerage from Citigroup Inc. (C.N), Morgan Stanley is moving past the cost-cutting stage and focusing on profit growth. Two of its key objectives are to grow fee-based accounts and increase loans to its advisory clients.
The new pay plan is meant to align brokers' pay to these goals, with a new bonus plan for growing assets and loans, and give them increased ownership in the company through the discounted share plan. To offset the cost of these new perks, the company is cutting its overall revenue bonus by two percentage points.
Morgan Stanley rival UBS Wealth Management Americas released its 2013 compensation plan earlier this week, making tweaks to reward advisers for cross selling, but leaving the pay grid unchanged. (Reporting By Jennifer Hoyt Cummings and Lauren Tara LaCapra; Editing by Jennifer Merritt and Leslie Adler)