Morgan Stanley announced significiant changes to its compensation grid for financial advisors late last year. The significance was felt across the wealth management division as it was the first such change since 2017, and the changes were aggressive to the upside.
That was then, this is now.
The coronavirus pandemic, significantly roiled markets, what is assuredly a coming recession or at least a serious slow down in the economy – all of these factors have forced Morgan Stanley, and other firms to adjust their plans. As such, advisors are getting a reprieve from the increased production and household added levels. The reaction from advisors was a brief relief in the midst of a shit storm over the past three weeks. Many, though, were taken a bit aback by the news that the levels would be reinstated and expected to be passed by October 1.
Per media reports late Friday:
“The firm is delaying some forthcoming compensation changes for its 2020 pay plan in recognition of the “enormous challenges” advisors are facing during a time of extreme market volatility and a global pandemic. Some of the now-postponed changes could have required some advisors to generate more revenue to earn the same pay.”
April 1st is moments away and the reality that this health crisis is still growing, rather than slowing gives advisors case for concern when it comes to the reinstatement of the increased comp grid levels. The rumblings have picked up speed over the weekend and there is some rumored evidence that they could be pushed back even further.
Two sources that we spoke with at the firm believe that the comp grid changes could ultimately be annexed into 2021. The challenges that advisors are facing now and probably throughout the foreseeable future almost demand it. One of the sources put it this way:
“The announcement is a no-brainer, but firm brass need to get further ahead of this if they don’t want departures to accelerate. That is a real possibility. Any and all pressure points are heightened right now and cooler heads need to prevail up in the ivory tower. No matter what the new comp grid changes were meant to produce – zero chance that those metrics are going to be made. Should be an easy and well received decision to push all of it to 2021.”
That makes all the sense in the world. But global investment banks aren’t always as smart as they think they are. And a little reminder when it comes to departures and Morgan Stanley’s current operating process on legally attacking those that leave with court ordered TRO’s – anyone checked on whether or not courts are currently open for business at the moment? Nope. Act accordingly.