Exclusive: Morgan Stanley Makes Changes to Broker Pay

Posted by adaniels in Blog on October 26, 2011

Morgan Stanley Smith Barney is revamping its financial adviser pay structure to help raise its profit margin to 20 percent by encouraging brokers to bring in new business and sell more loans, industry sources said.

Executives of Morgan Stanley Smith Barney, a joint venture with Citigroup Inc. (C.N) briefed managers Friday on the plan, which also will slash pay for lower producers. Financial advisers are getting briefed on the plan this week, recruiters said.

The extent to which these changes cut or boost compensation costs will depend on the numbers of brokers who offset decreases in some areas with new incentives, recruiters said.

Head of the brokerage firm’s 51-percent owner, Morgan Stanley (MS.N) Chief Executive James Gorman, “seems to be dead set on hitting a 20 percent profit margin, and they’re not going to be able to do that without messing with compensation,” said recruiter Ron Edde of Armstrong Financial Group in Carlsbad, California.

Click link to view full article at Reuters

Written by Joseph A. Giannone – Reuters

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