doneUncover key sales insights
doneTarget sales behaviors and performance levels
doneBalance pay mix elements
doneDesign compelling compensation vehicles
doneMaximize clarity and appeal of sales plan and communications
doneUncover key market insights
doneDesign research and tracking
doneConduct qualitative and quantitative research
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- COMPENSATION 2025
Firms put targets on low-end producers
Andrew Tasnady, an industry compensation consultant and the founder of Tasnady & Associates, said there’s nothing new about firms reducing payouts to low producers to give them a push toward higher revenue generation. What is different this year is the dim prospects that the market will come to the rescue.
If stock values fall or offer only tepid returns, the resulting pain will fall on advisors at all revenue-production levels. Since advisor compensation consists in large part of fees set at a percentage of assets under management, it tends to increase or decrease in direct proportion to the value of stocks and other assets in clients’ portfolios. If the market tanks, the result would be a double whammy for low producers, many of whom have already seen their payout rates reduced in recent years, Tasnady said.
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Compensation consultant Andrew Tasnady, the founder and managing partner of Tasnady & Associates, said it's not uncommon for firms' pay policies to run to 30 or 40 pages. Undergirding them all is usually a fairly simple compensation grid laying out how much money advisors get to keep from the revenue they produce for the firm; the grids tend to be tiered to allow higher producers to retain a larger percentage of the income they generate.
The complication comes in with the many incentives firms use to encourage behaviors like arranging loans to clients or selling insurance products while discouraging others. Tasnady said some firms' plans have "gotten so big that they now have a summary of: here's the basics."
"And then they'll say, but you have to see this other plan for the gory details on each of these individual more esoteric elements," he said. "So the whole thing can certainly be 40 pages."
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Meanwhile, Wall Street rivals have been quicker to add independent options. Goldman Sachs, which has a private wealth unit of captive brokers serving the ultra-rich, launched in 2020 an RIA custody business as a way to expand product distribution. Morgan Stanley Investment Management, by contrast, leans on product wholesalers to drive those sales efforts.
Adding an RIA or independent affiliation option boosts scale because many large firms already have the trading infrastructure and other back office services in place, industry consultant Andy Tasnady wrote in an email. Wirehouse brands have customer recognition and financial strength that can appeal to independent RIAs looking to shore up credibility with clients, he added.
Industry consultant Andrew Tasnady, the founder and managing partner of Tasnady & Associates, said some firms no doubt have good reason to be tapping the brakes on recruiting.
"In the short run, that will boost your profits because you are not paying to grow," he said. "But it could slow down your growth rate in the long run. So it's a strategic decision."
Recruiting has likely lost some of its appeal to firms seeking to boost their bottom lines by reducing expenses. Morgan Stanley and UBS, for instance, have made controlling costs a central plank in their plans for their wealth management divisions.
As for the delay, compensation consultant Andy Tasnady told ThinkAdvisor that if UBS aims to help shift the remaining advisors and clients who haven't moved into fee-based relationships to make that change, it "probably is a good idea to give advisors more time to have those conversations with their clients."
Tasnady said the advisors pushing back against the change are probably more senior, not on teams and not the highest producing advisors.
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