Executives at the four largest brokerage houses have set their sights on higher profit margins. But even as they trim expenses, streamline branch offices and reduce back office staff, they’re struggling with compensation costs for brokers.
At Morgan Stanley Wealth Management, for example, compensation and benefits for all employees account for as much as 60% of revenue. At UBS Wealth Management Americas, which breaks out compensation specifically for their advisers, it is even higher. The firm has spent an average of around 70% of revenue on its financial advisers since 2011, according to SEC filings.