Morgan Stanley plans to increase expense budgets to help brokers entertain wealthy clients and offer new bonus plans for brokers who perform...

Morgan Stanley plans to increase expense budgets to help brokers entertain wealthy clients and offer new bonus plans for brokers who perform above average, according to reports in the US press. The move is designed to help brokers attract and retain high-net-worth clients while its new bonus plan will "help us retain our experienced professionals,” said a senior Morgan Stanley official involved in the move. In August, Morgan Stanley sacked around 1,000 of its lowest-producing brokers, but has struggled to retain some of its best producers who are being lured by rival firms, according to reports. The new plan will almost treble the expense budgets of brokers who bring in $1 million or more of fees and commissions to $10,000 from $3,500 today, according to Morgan Stanley. Allowances in 2006 for brokers producing between $400,000 and $1 million will double to as much as $6,000. At the bottom end, brokers bringing in $250,000 to $400,000 a year will get a travel & entertainment allotment next year of $1,000. They currently are ineligible for an expense allowance. Morgan Stanley in August hired James Gorman, the former head of Merrill Lynch’s private client business, to run its retail brokerage unit and go after rich clients. He will join the firm early next year.