What do UBS and Edward Jones have in common? At first blush, not much. One is a subsidiary of a huge Swiss bank and focuses on ultra-high-net worth clients in major markets. The other -- based in the Midwest -- is known for its tiny, one-man offices, especially in small towns and rural areas. One spent the past few years losing financial advisors hand-over-fist, while the other is like Hotel California: Nobody ever leaves.

But there is one common thread, at least temporarily. Those two brokerage companies saw the biggest increases in advisor compensation in recent years for their top producers.

While recruiting packages generate a lot of interest , the actual pay that advisors receive from their firms doesn't get as much attention. So once again, On Wall Street has sifted through the payout grids in our industry for a unique comparison of their pay packages. And we returned to our outside compensation expert, Andy Tasnady, to create our signature comparative chart, which ranks the firms based on various levels of advisor production. For this ranking, we divide wirehouses and regionals into separate lists. Edward Jones, with its unique corporate structure, is listed alone in a third category.

This year, for the first time, we also charted the changes over the past five years for the million-dollar producers. That's where you'll see the increases at UBS and Edward Jones.

So now UBS stands atop the wirehouses in the million-dollar category. Edward Jones, which is charted with the regionals in this case, lands in the middle of the pack. Just three years ago, they were both at the bottom of the heap in terms of payouts. For the top-paying regional, that distinction goes to St. Petersburg, Florida-based regional Raymond James. In fact, Raymond James has been at the top for the past five years, according to our analysis, and consequently, did not show the steep increase of Edward Jones or UBS.

Looking at just the past year, there has not been much change. Executives at the financial firms, as well as industry analysts and headhunters, say that most companies feel pretty good about their current payouts and are now focused on growth after two years of turmoil.

Andrew Tasnady, creator of OWS' comparative charts and managing partner of the compensation and performance consulting company, Tasnady Associates, says that while it was a quieter year, the changes that were evident were consistent with recent trends, such as companies being harsher on advisors that are on the low end of trailing-12 production.

This year, for example, Janney and RBC joined the ranks of companies to shrink pay slightly for some advisors at the lower levels. Over the past three to five years, a number of companies have added similar penalties if an advisor has been on the job for a long time -- usually five or 10 years -- and is still producing at a level the company deems to be inadequate for their experience level -- often $200,000.

Another issue Tasnady cited -- more of a carrot than stick -- was the growing use of various bonuses to influence FAs in offering specific services or selling specific products. This can come in the form of selling more annuities, for example, or offering planning services.

Ameriprise, a new addition to our compensation analysis, offers an interesting example of this. For new clients with more than $100,000 in household assets, the FA receives a 60% payout for the first year, says Kim Hoversten, vice president for Acquisitions & Field Compensation. That policy was designed to help the company grow, he said. In fact, the entire compensation plan was made to help align companies' interests to those of the FAs to create growth, he says.

Those types of programs are varied enough that they cannot be factored into our comparative charts.

Despite such contingency bonuses, however, compensation expert Tasnady also sees a trend toward simplification of the core compensation plans. That trend is notably on display at the regional shops.

Consider St. Louis-based Stifel. It has had one of the easiest grids to understand in all of our compensation analyses over the years. Stifel's goal is to offer a plan that can be summarized on just a few lines and on one page, says David Sliney, director of Strategic Planning, Technology, and Operations at Stifel. Essentially, an advisor gets 25% on anything up to $10,000 per month; and 50% on anything over that amount. "Our objective is to be simple, straightforward and product-neutral," Sliney says.

Hilliard Lyons, in Louisville, Ky., offers much the same payout: 25% on anything up to $10,750 per month; and 50% on anything higher. It also is product-neutral, paying the same percentage regardless of what is being sold to a client, says Darryl Metzger, executive vice president of the Private Client Group at Hilliard.

The advisor who really wants to keep it simple and look only at the cash portion of their compensation may be in for a couple of surprises.

For one thing, most of the regionals pay better than the wirehouses. And if you look at just the wirehouses, Wells Fargo Advisors offers the highest cash payout at all four levels of production that we analyze ($200,000; $400,000; $600,000 and $1 million).

Bank of America Merrill Lynch and Morgan Stanley Smith Barney usually get most of the attention as being the drivers of the industry on any number of fronts. But it's the quieter Wells Fargo that pays the most in cold, hard cash.

Indeed, cash was one of the objectives underpinning the plan, says Erik Karanik, director of Branch Incentives and Cost Management at Wells Fargo. The company wanted its compensation to be high in cash. Deferred compensation was regarded as a way for the FA to build a nest egg for himself. With its major acquisitions and mergers now behind it, the company's overall goal, like many of its competitors, is growth, he says. And the compensation plan is just part of that goal.

Looking Ahead

So if companies are looking for growth, and there hasn't been significant changes in compensation over the past year, what's next?

Cerulli Associates took a stab at answering that question with its most recent annual advisor survey, which shows that asset-based compensation will continue to take a greater share of an advisor's overall compensation in the next several years. Scott Smith, associate director at the financial services research and consulting firm, notes that the transition that this represents comes as firms emphasize recurring revenue over discrete brokerage commissions. This could ultimately better align shareholders and advisors.

But the move toward a more fee-based compensation model has taken time, even as some of the most dramatic industry changes took hold in the last several years. "I think that the industry moves at a glacial pace in these things," Smith says of the slow advisor pay changes. "For the most part, a lot of what we've seen over the past two years is a great deal of sound and fury, basically signifying nothing."

Part of the reason for the glacial move to a fee-based model lies with the advisors themselves.

For each advisor seeking to bulk up his fee-based business, it still comes down to a one-on-one conversation with each client.

Also, an advisor deciding to make the transition to a more fee-based business would likely take a hit to their income for the next year, as advisors work to meet multiple targets with clients, Smith says. "It's still an aspirational goal rather than one that we see being a sea of change over the next six to 12 months," he says. "You can't go to each client meeting and say, 'Here's the things I want to do: I want to get you back into equities, get you into a fee-based account and ask for a referral.' We're still in a hand-holding period where there is distrust in the markets and Wall Street in general."

Yet, there are those in the market who back the idea that fee-based strategies could come to dominate the industry.

One of them is Alois Pirker, research director at independent research and advisory firm Aite Group. Pirker contends that there will be more disclosure around compensation. "But it's still a little early to really say, 'Okay, this is what the future model of compensation is going to look like.' We're still in the process of figuring that out," Pirker says.

Compensation may be most affected by greater cross-selling measures, as firms like Bank of America Merrill Lynch try to capitalize on synergies across various areas of their firm such as banking products and mortgages, Pirker says. But that shift will likely take place over time, he says, and not just in the next two years.

Two factors influencing compensation now, Pirker says, are an increased emphasis on profitability and, in turn, on top producers at the firms. That focus comes with an emphasis on getting advisors to target a certain book size and focus on larger clients, as seen at large firms like Bank of America Merrill Lynch and Morgan Stanley Smith Barney. "The environment has been tougher to produce the numbers required," he says. "What we see is that the large firms are stepping up their minimum requirements, so that's increasing the heat again on advisors."

Andy Saperstein, head of U.S. Wealth Management for Morgan Stanley Smith Barney, sums it up the most succinctly: "We're trying to engender loyalty to the company, as well as motivate FAs to sell the best products for their clients and to grow their businesses," Saperstein says.

But a couple of the regional shops have taken the opposite approach. They pay one rate regardless of how the revenue is generated. Their theory: The freedom this gives the advisor will lead to better customer service. Hilliard's Metzger was quite proud that the firm pays the same rate. "We consider it a key point that we pay [the same rate] on all types of business, and all sizes of accounts," he says.

The Almighty Market

So how did Edward Jones get such an increase in its compensation? Ultimately, it was the same thing that drives compensation in most shops: the market. Much of the compensation at Edward Jones is pegged to company and branch profitability. And those metrics surged in 2010, after down years in 2008 and 2009.

Even in those down years, however, the firm gained a reputation for appealing to a certain stripe of advisor. Managing partner Jim Weddle says that it never laid anyone off in 2008 and 2009. And industry recruiters have said it's almost impossible to convince anyone to leave once they land there, despite the fact that's still just the middle-of-the-pack in terms of overall pay, even after the recent increases.

To an extent, it's the market and all its fluctuations that determine an advisor's pay regardless of where they work, Tasnady says. Instead of worrying about a percentage point here or there, it's really the trailing-12 production figure that matters the most in determining an advisor's final pay. And production, based on assets under management, is affected by the market.

Slightly deflating to the ego, perhaps, but here's to a strong 2011.

Morgan Keegan chart.

Wedbush chart.

Advisor compensation by channel.

Payout for $1 million in production.