What is a payout grid?
A payout grid is the compensation schedule that brokerage firms use to pay financial advisors. The firm tracks the revenue each advisor generates from commissions, advisory fees and other products, a figure usually called production or gross dealer concession (GDC), and pays the advisor a percentage of it. The percentage is the payout rate.
The grid is tiered. Advisors who produce more revenue in a year cross thresholds that move them into higher payout rates. At Morgan Stanley, for example, payout rates range from 28% for the lowest producers to 55.5% for the highest, Financial Planning reported in September 2026. Merrill's standard cash grid pays 34% to 51% of revenue, according to AdvisorHub's September 2025 coverage of the firm's 2026 plan.
Grid thresholds matter as much as the rates. When a firm raises the production needed to reach each tier, an advisor with flat revenue earns less even if the percentages do not change. Wirehouses typically publish new plans each fall for the following year, and trade publications report them from internal memos, since the firms do not publish their grids. This guide is general information, not legal, tax or career advice.
How does deferred compensation work?
Wirehouses pay part of each advisor's compensation in deferred awards, cash or stock that vests over several years. Deferral rewards advisors for staying, because unvested awards are generally forfeited when an advisor leaves for a competitor.
Morgan Stanley changed its approach for 2026. AdvisorHub reported in September 2025 that the firm would cut its deferral rates in half, from a range of 1.5% to 15.5% of pay depending on grid position, and increase regular cash pay by a corresponding amount, leaving total pay rates and the core grid unchanged. Morgan Stanley's own 10-Q filing for the quarter ended June 30, 2026 confirms that in the first quarter of 2026 the firm reduced deferred compensation as a proportion of total compensation for Wealth Management advisors.
Deferral is one reason a wirehouse paycheck is hard to compare with independent pay: part of the stated payout arrives years later and only if the advisor stays, which is also why recruiting packages from competing firms often aim to replace what an advisor would forfeit by leaving.
What are small-household and growth penalties?
Many wirehouse plans reduce or eliminate pay on revenue from smaller client households, to push advisors toward wealthier clients and to route small accounts to centralized service. Merrill is the clearest example. According to AdvisorHub's September 25, 2025 report, Merrill pays nothing on households under $250,000, a line it first set in 2012, and for 2026 doubled its small-household threshold to $500,000, paying a reduced 20% rate on revenue from households between $250,000 and $500,000. Financial Planning reported that household size is measured using combined assets and loans.
Growth incentives and penalties work in the other direction. Plans often add awards for net new assets, new households or banking business, and some reduce pay for advisors whose books shrink. Morgan Stanley's 2026 plan added bonuses for bringing in new assets and for client deposits in the firm's savings accounts and certificates of deposit, Financial Planning reported. Wells Fargo's 2026 plan added a payment of up to 25 basis points on the prior month's average daily balance in certain newly opened checking accounts, plus an incentive tied to engaging clients' heirs, according to InvestmentNews.
What did Morgan Stanley, Merrill, UBS and Wells Fargo change for 2025, 2026 and 2027?
Morgan Stanley: Beyond halving deferrals for 2026 (AdvisorHub, September 2025), the firm told advisors it would raise the revenue thresholds for each payout tier by 10% across the board in 2027 while keeping the payout percentages the same, according to Financial Planning and ThinkAdvisor in September 2026. Financial Planning said the last threshold change was in 2024. The firm also enhanced its program for retiring advisors: the payout increase available in retirement rises from 15 percentage points for advisors with 25 or more years at the firm to 17 points for those with 30 or more years, Financial Planning reported.
Merrill: For 2026 the firm left its core 34% to 51% grid untouched but tightened its small-household policy, as described above, according to AdvisorHub and Financial Planning in September 2025.
UBS: The firm's 2025 plan reduced payouts for advisors producing under $750,000, according to Financial Planning, with cuts of 2 to 4 percentage points. The 2026 plan, reported by AdvisorHub on September 16, 2025, raised payouts by half a percentage point for producers between $1 million and $3 million (a $1 million producer moving from 49% to 49.5%) and added a 60% rate for advisors or teams producing $20 million or more, above the prior top rate of 59.5%. For 2027, Financial Planning reported in 2026 that UBS made no changes to its grid.
Wells Fargo: InvestmentNews reported in October 2025 that Wells Fargo Advisors kept its $13,500 monthly production hurdle and 50% payout above it for a fifth straight year, and left lending compensation unchanged at 75 basis points for securities-based lending and custom credit and 35 basis points for mortgages.
How do independent broker-dealer payouts compare?
Independent broker-dealers pay a much larger share of revenue because the advisor, not the firm, pays for offices, staff, technology and other business costs. LPL Financial, the largest independent broker-dealer, reported a payout rate of 87.44% for the three months ended June 30, 2026, compared with 87.33% a year earlier, in its quarterly SEC filing, attributing the change to shifts in the mix of brokerage and advisory business.
The headline payout is therefore not comparable to a wirehouse rate. An independent advisor receiving 87% or 90% of revenue must still cover overhead out of that amount, and broker-dealers may charge platform, technology and other fees on top.
How are advisors paid at an RIA?
Registered investment advisers do not use a brokerage payout grid in the same way. An RIA collects advisory fees directly, pays its advisors salaries or revenue shares, pays operating costs and keeps what is left as profit. An advisor who owns the RIA is paid twice: as an employee and as an owner taking the profit. Kitces has described this dual role as the reason payout percentages alone are a misleading way to compare wirehouse and RIA economics.
Profitability varies widely by firm size, pricing and how much the owners pay themselves, so an RIA's effective payout to an owner-advisor depends on its margins rather than on a fixed grid. Owners also bear costs a wirehouse would otherwise carry, such as compliance, office leases and technology.
Owners also build equity that can be sold. RIA valuations are covered separately in our guide to how RIAs are valued.
How does compensation affect recruiting and breakaways?
Pay plan changes are a common trigger for advisor moves. AdvisorHub framed UBS's more advisor-friendly 2026 plan, reported in September 2025, as a response to a rise in defections after the firm's 2025 cuts. Firms also use compensation to retain advisors: deferred awards and forgivable recruiting loans both create a cost to leaving.
Competitors respond with recruiting packages. A Diamond report published in October 2026, covered by Wealth Solutions Report, put employee-model packages for desirable wirehouse teams at about 350% to 425% of trailing-12-month revenue. These deals are usually structured as forgivable loans repaid through continued service.
For advisors considering independence, the comparison is between a wirehouse payout plus a recruiting check and the higher revenue share and equity of an independent model. Cerulli Associates reported in February 2026 that 71% of advisors say they would choose an independent channel if they were to switch firms.