Morgan Stanley (MS) CEO James Gorman signaled less advisor switching and thus lower costs on his company's earnings call last week (compensation fell to 57% of wealth management revenue in Q3 vs. 63% a year earlier) and Bank of America (BAC) is ending the practice of retention bonuses to top Merrill Lynch performers. Bonuses handed out to brokers amid the financial crisis were a "tax on the industry," says Gorman.
For its part, Merrill lost the fewest number of advisors to competitors in Q3 since the end of 2010. BofA doesn't disclose the compensation ratio for the thundering herd, but said its wealth management margin was a robust 25.6% in Q3 (it hit 27.6% in Q2, the highest since 2007).
A recent regulatory rule backed by Morgan and Merrill may also help: Finra voted to make defecting brokers disclose how much their new employer paid them to leave. Stifel Financial (SF) - with more than 2K brokers - calls the action anti-competitive.