With the third quarter of 2023 in our rearview mirror, now is the time when firms start outlining and announcing their compensation plans for 2024. Morgan Stanley is the first to release their Comp Plan to their nearly 15,000 brokers, with the official announcement having come in the last week of September.
After making minimal changes to its core compensation plan over the past few years and having its compensation grid remain unchanged since 2020, Morgan Stanley is making more significant modifications for 2024. Headlining those changes is the increase in production hurdles on the core compensation grid. Starting in January, brokers will need to generate roughly 10% more revenue in order to maintain their current payout.
In addition to the grid changes, they have also announced tweaks to their small household policy. Brokers will no longer receive credit for households with less than $250,000 in assets unless they grow the assets by at least 5% and have $25,000 in net new assets or liabilities.
Also, with the 2024 plan comes the elimination of the lending growth award, which paid brokers 30 basis points of loan revenue for adding at least $2 million in loans. This is part of Morgan Stanley’s recent efforts to phase out the bonus due to the fact that incorporating loans into calculations for a net new asset bonus can increase payout by up to three percentage points.
According to an internal memo, Vince Lumia, head of field management, informed brokers that they were announcing the 2024 compensation plan early this year to ensure that brokers have the information, tools, and resources needed to deliver the best value to their clients as they prepare their businesses for 2024.