Wirehouse Comp Plans for 2024: What's In, What's Out
The three wirehouse firms that have disclosed their 2024 advisor compensation plans seem to be paying attention to advisors’ concerns over recent pay issues, industry consultants say.
The wirehouses “tried to layer in an element of listening to an advisor’s feedback and rolling back certain unpopular elements ([like] Merrill hair cutting brokerage commissions)” but fell “short of wholesale changes advisors were looking for,” according to Louis Diamond, president of Diamond Consultants, a recruiting firm.
For example, both Merrill Lynch and UBS “rolled back some unpopular polices that have helped fuel defections,” said executive search consultant Mark Elzweig, president of Mark Elzweig Co. At the same time, Morgan Stanley is the “only … wirehouse to monkey with their grid and raise payout hurdle rates,” he explained.
Wells Fargo still hadn’t announced its 2024 advisor compensation or communicated its details as of Thursday.
Here are some of the key changes at Merrill, Morgan Stanley and UBS for 2024, and what the shifts mean for their advisors and the industry.
UBS
Jason Chandler, head of Global Wealth Management Americas at UBS, informed advisors about the firm’s 2024 Financial Advisor Compensation Plan last week, telling them in an internal document: “The principles this year remain the same — rewarding productivity, growth, and longevity.”
For 2024, the firm’s “incentive grid remains unchanged and we are introducing incentives to support our growth strategy,” Chandler said.
“Based on our key principles and your feedback, we are adding a new Client Growth Award and new incentives for engaging clients in banking services,” he explained.
Under that new plan, advisors hired before Jan. 1, 2022 will be awarded 1% of the business they do for the trailing 12 months that they can be compensated for, as of December 2024, he noted. Advisors, who number about 6,000 in the Americas, must also generate positive net new business (net new assets and net new lending) from Nov. 1, 2023 to Dec. 31, 2024.
Morgan Stanley
In September, Morgan Stanley Wealth Management told its roughly 15,000 brokers that they must generate more revenue next year to maintain the same payouts as this year.
The firm’s 2024 pay plan will raise the production hurdles on brokers’ core compensation grid by about 10%. For example, brokers who generated $990,000-$1.1 million this year will have to produce $1.1 million-$1.2 million to earn the same revenue next year.
Brokers also need to reach $5.5 million in revenue, up from $5 million in 2023, to qualify for the highest payout.
Payouts, meanwhile, continue to range between 28% to 55.5% of the fees and commissions brokers generate, based on where they fall in the firm’s 16 revenue bands. Next year’s change will affect about 33% of the Morgan Stanley’s advisors, according to an AdvisorHub report.
Morgan Stanley also changed its small household policy to eliminate payouts for brokers with with households that have less than $250,000 in assets — unless the accounts qualify for growth exemptions. Brokers will also get no credit for households that don’t grow by at least 5% and have $25,000 in new assets or liabilities in 2024.
