Morgan Stanley raises advisor revenue thresholds 10%

Morgan Stanley will increase the revenue marks that separate payout tiers by roughly 10% across its wealth-management payout grid, the firm said in an internal memo. The change takes effect with the firm’s 2027 compensation updates and requires advisors to generate more revenue to remain in the same payout bands.

The actual payout percentages will not change. The grid will continue to range from about 28% for the lowest producers up to 55.5% for top producers. Under the current plan, advisors who produced $1 million in annual revenue typically retained 44% of that amount and those at $2 million retained 48%. With the new thresholds, those revenue totals must be around 10% higher to secure the same payout percentages.

Vince Lumia, head of client segments at Morgan Stanley Wealth Management, wrote in the memo that the firm reviews its plan yearly to “reward growth, encourage the right behaviors and drive our strategy,” and that the 2027 updates are intended “to support the continued strength of our business while helping you maximize the full potential of your practice through the Firm’s unmatched resources.”

The firm described the adjustment as intended to address so-called grid creep, a common industry issue in which advisors earn larger payouts because the market value of assets they manage has increased rather than because they added new client assets or improved performance. Compensation consultant Andrew Tasnady noted that firms rarely eliminate grid creep entirely and often raise production thresholds to partially offset it.

Sources familiar with Morgan Stanley’s pay policies reported that gross revenue for the wealth-management force rose about 56% on average over the past three years. During that period, the firm recorded roughly $1.1 trillion in net new assets; that figure excludes gains from market appreciation.

The memo also included a change to the Advisor Legacy Program. Currently, advisors with 25 or more years at the firm can receive a 15 percentage-point increase to their payout rate in retirement. Beginning next year, that increment will be 17 percentage points for advisors with 30 or more years of tenure.

Earlier this year, Morgan Stanley altered other elements of advisor compensation. The firm halved the portion of pay delivered as deferred compensation while increasing regular pay by corresponding amounts. It also introduced incentives aimed at driving new asset flows and encouraging clients to place funds into the firm’s savings products and certificates of deposit.

Morgan Stanley last adjusted advisor pay thresholds in 2024; the 2027 updates are the latest change meant to align compensation with the firm’s growth and asset-mix objectives.