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Morgan Stanley

Morgan Stanley to Pay Advisors to Use Its Technology

The brokerage invested heavily in technology; now it’s got to get its advisors to actually use it.

Morgan Stanley Wealth Management, the brokerage business owned by the Wall Street bank, released the 2019 compensation plan for its more than 15,000 advisors on Monday. Though much of the sales hurdles and rates remain the same, there is one difference: The brokerage firm is prepared to pay advisors to start using the newest tools the firm has rolled out to them.

The brokerage has been investing heavily in new technology and hiring personnel to support it. Morgan Stanley integrated LifeYield’s tax optimization software in November and rolled out its own robo advisor in December. It also has been developing its own Goals Planning System, a goals-based financial planning platform, and Next Best Action, an internal recommendation engine to guide advisors’ decisions, as well as BlackRock’s Aladdin, an investment-risk analysis tool—all in an effort to make its advisors more efficient and deliver a higher level of advice to clients.

Now that those tools and services are in place, the brokerage has made it clear that it expects advisors to use them. “Our goal now is to drive adoption of this technology and our compensation plan provides incentives to do so,” Vince Lumia, the head of field management, wrote in a memo to advisors on Monday, reviewed by

The core compensation, or the so-called grid, including credit rates and deferrals, will remain unchanged in 2019, the memo said. Advisors are typically paid a baseline percentage of the fees and commissions they earn, then have opportunities to make more—or might earn less—based on any number of stipulations.

In the new compensation plan that will go into effect April 1, 2019, advisors can earn up to 3 percentage points more. Among the opportunities, advisors to small accounts of $100,000 to $250,000 will earn 1 percent more if those clients receive a goals-based plan with ongoing monitoring via one of the new tech platforms. If those accounts don’t receive the goals-based plan, the payout to the advisor will be reduced by .25 percent. 

Morgan Stanley is also nearly doubling the payout to advisors who use its loan platform, giving an additional 15 basis points on the average monthly cash balance funds for clients using the Cash Management program, and eliminating some smaller fees entirely.

Year 2017 was a record year for Morgan Stanley’s wealth unit in terms of revenue and profit margins, although some analysts thought the bank should have set a higher bar for the business this year.

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