The earnings of firm leaders continues to outpace those of frontline advisors, suggests new research.
“The brokerage business has been the recent star,” said compensation consultant Andy Tasnady of Tasnady Associates. “With the government reducing the leveragability of some of the other businesses, a lot of firms are making less money in the non-brokerage business while brokerage has been chugging along and going steady.”
Care to guess who was the highest-paid broker-dealer CEO? Hint: He works for a bank whose stock symbol happens to be MS.
Morgan Stanley Wealth Management’s Greg Fleming earned total compensation this past year of $16 million, 10 per cent higher than a year earlier. Fleming is so important to Morgan Stanley’s overall growth – its wealth management division accounts for 43% of total revenue – that the executive actually earned $3 million more in 2014 than Bank of America CEO Brian Moynihan.
It’s a good time to be atop the wealth management ladder although compensation pales to pre-recession figures when wealth management executives routinely earned total compensation double what they are today.
Case in point: Fleming earned $34 million in 2006 as an Executive Vice President of Merrill Lynch, one of four EVPs to earn $30 million or more that year. Not to be outdone, Merrill CEO Stan O’Neill made a whopping $91 million dollars in 2006 only to be dismissed in late 2007 for bringing one of the most iconic firms in American business history to the brink.
O’Neal received a $162 million severance package to ease the pain, a story chronicled in Win Smith’s excellent book, Catching Lightning in a Bottle.
The six highest-paid CEOs for broker-dealers in 2014, including Fleming in the number one spot, earned $55 million in 2014; and while not nearly as rich as the payments from 2006, indicate there aren’t too many jobs in financial services better than CEO for a large wealth management business.