Morgan Stanley will require financial advisors to generate 10 percent more revenue to reach the same compensation payout levels in 2027. The change follows three years of market gains that increased client asset values and advisor revenue, according to a company memo first reported by Financial Planning.
Morgan Stanley last adjusted its payout thresholds in 2024. Sources familiar with the firm's compensation policies told Financial Planning that advisor gross revenue has increased by an average of 56 percent over the past three years, while the firm attracted $1.1 trillion in net new assets, excluding market appreciation.
Morgan Stanley will keep its existing payout percentages, which range from 28% for the lowest producers to 55.5 percent for the highest. This year, advisors generating $1 million in annual revenue could keep 44 percent of that amount, while those generating $2 million could keep 48 percent. The new thresholds mean advisors must produce more revenue to qualify for those same payout rates.
Vince Lumia, head of client segments at Morgan Stanley Wealth Management, said the 2027 updates aim to reward growth, encourage desired business practices, and help advisors maximize their practices through the firm's resources.
The firm will also increase retirement compensation through its Advisor Legacy Program. Advisors with at least 25 years at Morgan Stanley currently qualify for a 15-percentage-point increase in their payout rate in retirement. Beginning in 2027, advisors with at least 30 years at the firm will qualify for a 17-percentage-point increase.
Morgan Stanley also revised other compensation policies this year. The firm cut deferred compensation in half and increased regular pay by corresponding amounts. It also introduced incentives to encourage advisors to attract new assets and move client funds into the firm's savings accounts and certificates of deposit.
Compensation consultant Andrew Tasnady previously told Financial Planning that firms use higher revenue thresholds to offset some of the compensation increases that market appreciation can generate. Morgan Stanley's 2027 changes follow that approach by raising the bar for higher payouts without reducing the payout percentages themselves.
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