As Wall Street traders and investment bankers lick their chops at the prospect of six- and seven-figure bonuses next month, Morgan Stanley has decided that sales assistants should get a taste of corporate largess. It won’t put anybody behind the wheel of a “Beemer,” but the brokerage announced plans to bump up the 2006 raise pool to 3.5 percent from 3 percent, and will offer an additional 5 percent to some underpaid SAs, starting in December.
CEO John Mack announced the plan on an internal call last week. “It was characterized by company management as an investment,” says Jim O’Brien, a spokesman for the firm. “It’s designed to correct some undercompensation in the past.”
But the raises may also be aimed at keeping Morgan Stanley brokers happy. The firm has had a rough year, with the ouster of CEO Phillip Purcell, relentless rumors of a sale of the retail unit and the firing of 1,000 brokers upon Mack’s return. A parade of big producers has left Morgan in the past few months.
The raises are a small step toward bringing SA salaries in-line with their expanding duties. In 2004, median sales assistant salaries, which tend to be paid by the firm, rose just 1.9 percent, to $34,669, according to an annual survey of sales assistants who subscribe to Registered Rep. But bonuses, which are generally paid by reps, fell 5 percent, to a median of $5,469 in 2004.
Morgan Stanley will make an average of 3.5 percent in additional salary available to each branch, and managers will then decide how to allocate that based on performance. Some might get a 2 percent raise, some 4 percent and others none at all. The raises will apply to sales assistants, branch operations managers and administrative managers. (Typically these annual merit raises are around 3 percent at Morgan Stanley.)
But in addition to that, some assistants and administrative personnel will get an additional 5 percent raise. “This is really intended for the best performers,” says O’Brien.
Will this close the gap? “The career assistant will be thrilled with that,” says one big Morgan Stanley producer. “But the entrepreneurial sales assistant is not going to be thrilled with it. It’s a way to acknowledge that they’re a very important part of our business, but I would say that most sales assistants think they’re pretty underpaid,” she says.