Three of the four wirehouses have rushed out their compensation plans early this year. Typically, firms don’t announce early unless you have good news, and for the most part, they wanted to advertise few changes or advisor-friendly modifications. None of the three changed the core compensation grid.
UBS, which usually announces changes in November, kicked off comp season two months ahead of schedule with a plan that executives touted as being entirely positive for advisors. Grid payout rates were bumped up half a percentage point for producers between $1 million to $3 million. It supplemented expense accounts by $7,500 at the high end and lowered the threshold to qualify for its succession program to $2.6 million. Advisors previously had to be among the top 800 producers at the firm.
Not to be outdone, Morgan Stanley debuted its 2026 plan two days later. It appeared aimed at stealing some of the thunder from UBS at a time when UBS was seeking to slow attrition. Morgan Stanley’s plan cut in half the portion of advisors’ pay that is withheld for as long as six years as deferred compensation. At the high end, 7.5% will be deferred next year, down from 15%.
That’s a material difference and can put six figures in a senior producer’s pocket this year rather than requiring them to wait. For the most part, advisors appreciate having the cash in hand rather than the forced savings aspect of deferred pay.
Merrill Lynch rolled out its plan the following week. Executives touted only small tweaks to a couple banking and growth bonuses, but the main change was the increasing of the small household threshold to $500,000. Industry observers have long predicted this day would come given rising markets and inflation. Advisors can still receive a payout of 20% on households between $250,000 and $500,000 but no pay under $250,000, according to the ‘26 plan.
Reactions have been mixed. Some UBS advisors had hoped for more sweeping changes after a year of cuts. When Morgan Stanley unveiled its change, UBS advisors were envious of the reduction in the deferred ratio. Advisors still have to defer similar portions of up to 15% at UBS, and the length of that deferral can extend to seven years.
Wirehouses every year task their compensation teams with saving money, not paying more. So why the relatively positive changes? One answer is that they are finally acknowledging the threat from independence.
Rising attrition from large, billion-dollar teams is cutting into their bottom line. They know those teams are leaving for better economics, and the market has become competitive. There’s no more value to charging advisors half of their revenue to be on the platform.
Thanks in part to the supported independence movement, advisors now have plug-and-play options to access the same big-firm support and service yet costs barely 10-15 of their revenue at 1099 tax rates. Plus, they have the option to monetize their practice at four- six times revenue and more if they sell.
There’s no deferred comp, no small household hurdles and no annual bonus maze to try to navigate. Most importantly, there is no burdensome compliance and oversight that leave advisors scratching their heads why they must pay their firm 50% protecting the best interests of their firm. Wirehouses are realizing that with the barriers to independence now lowered, they can no longer depend on inertia to keep top producers in their seats.
As the Editor of The Gershman Group, a boutique financial services consulting firm, TGG brings expertise in financial analysis, strategic planning, and market research. With a keen eye for detail and a passion for helping businesses navigate complex financial landscapes, TGG delivers insightful, high-quality content to empower informed decisions. Backed by years of industry experience, TGG makes complex topics accessible through clear and compelling communication, shaping the firm’s thought leadership and commitment to excellence in financial services.
