MSSB outlines 2010 broker pay plan

Morgan Stanley Smith Barney officials previewed the firm’s new pay plan with brokers on a conference call last week.

The new pay plan will bring the schedules for Smith Barney brokers into line with those from Morgan Stanley and go into effect Jan. 1.

Payouts for the firm’s 18,444 brokers will start at 28% for those doing up to $200,000 in production, then go up to 42% for representatives who bring in $600,000 to $999,999, according to a person familiar with the plan who asked not to be identified.

MSSB is retaining the higher grid rates that Smith Barney had, of from 44% to 46% for $1 million-plus producers.

The same grid applies to all products. Morgan Stanley brokers had been getting slightly higher payouts for fee-based products.

In addition, legacy Smith Barney reps will get a break with a lower penalty box.

Under the combined MSSB plan, veterans will have to gross $250,000 or more to avoid a 20% payout.

Smith Barney reps had been facing a $300,000 hurdle to avoid that penalty.

By using Morgan Stanley’s more generous penalty box, MSSB puts to rest rumors circulating recently that the firm would bump up the production requirement to about $400,000.

The new plan will also have four deferred incentive plans, based on revenue growth, length of service, net new assets and new $1 million-plus households.

Brokers were still digesting the details of the new plan, but several said the changes looked minor.

“It looks like a little nibbling around the edges,” said a West Coast MSSB rep who asked not to be identified.

“If you’re doing $350,000 to $400,000 [in annual production], you’re getting about the same,” said a MSSB broker in the Midwest who also asked not to be identified.

“If you’re over $400,000, you do a bit better. If you’re under $350,000, you’re penalized a bit,” this rep added.

E-mail Dan Jamieson at [email protected].

Related Topics: Morgan Stanley & Co., Smith Barney