I just read Andrew Welsch’s article “What’s next for Advisor Pay” and it inspired me to ponder the advisor comp models for the entire WM industry.
If you have ever wondered how it is that you are working on a 45% payout and your buddy who opened an RIA is making 65% look no further than Mr Welsch’s story. He found your 20%.
James Gorman has it and he wants to take more. The article quotes Mr Gorman as saying he wants to take Morgan Stanley’s 20% margin to 25%. How is he going to do that? There are only 100 cents in the dollar, and your payout is fixed!
There are three ways he can grow margin:
- Cut expenses
- Incentivize you to sell higher margin products
- Enhance the “pay to play” model that is already in place (see attached article).
Our suggestion is you set up your own RIA, and let James keep 100%, of zero.
READ MORE (click to read pdf file in new window)
(pdf file sourced from: https://www.morganstanley.com/wealth/disclosures/pdfs/revenue_sharing.pdf)