If you are a Morgan Stanley Advisor you shouldn’t be cheering this announcement. Moving client asset management fees to a monthly pay schedule looks like a small net positive for both advisors and clients, but we are not sure it makes sense. Why would a global investment bank slightly increase reporting and administrative costs to process monthly fees versus quarterly fees?
Many wealth management veterans and industry ‘watchers’ believe that wirehouses continue to debate the idea of paying advisors a salary/bonus structure similar to investment bankers. Instead of monthly commissions and quarterly asset management fees, a salary and bonus structure would be the ultimate cost control play. In fact, Barclays (before it sold its wealth management unit to Stifel in 2015) attempted the salary/bonus model attached to quarterly resets before bowing out of the wealth management game altogether.
Still, if you are wary of the constant changes being made to how you are compensated at your firm, this development might become a concern for many . A potential monthly average could be calculated and turned into a salary, with commissions paid out quarterly. A strange twist on how the payout matrix exists today.
We don’t like this move, and given Morgan Stanley’s track record of valuing the bottom line at a significantly larger percentage than the firms relationship with advisors… keep a sharp eye on where this move could go.
As a reminder, Morgan Stanley is no longer part of the broker protocol. And something else to consider – the passive but unavoidable power of the oceans tide. You may not always feel it, but it moves you where it wants to move you. Take a step back and ask yourself this question: how far from the work environment you signed up for 10, 20, 30 years ago has Morgan Stanley drifted? 3xequity did a survey recently on this topic. Feel free to contact us at firstname.lastname@example.org if you want the results of the survey.
This new policy could feel like another drift in the wrong direction. We will see…