Bonuses are poised to recover on Wall Street this year, fuelled by strong equity market gains and recovery in investment banking, according to financial services compensation firm Johnson Associates.
Investment bankers helping companies issue debt are expected to have the highest raises in bonuses this year, from 15 per cent to 25 per cent, as companies sell record volumes of debt.
As initial public offerings come back, bonuses for equity underwriters are expected to rise 10 per cent to 20 per cent this year.
“We are seeing almost all segments on Wall Street raising compensation”, said the firm’s founder Alan Johnson. “This should be a good year, although there are risks stemming from elections in the U.S. and global conflicts”.
Although improving, incentives in investment banking are still far from their peak in 2021. The only segment where pay is above the 2021 level is private equity, but the work force at these companies is considerably smaller than in banks, Johnson said.
Higher trading volumes are expected to increase bonuses for bond traders between 10 per cent and 20 per cent, and 5 per cent to 15 per cent higher for equity traders. Executives working at wealth management will probably have 5 per cent to 10 per cent higher compensation, whereas asset management and hedge fund employees are expected to receive 5 per cent higher bonuses.
In asset management, although clients have been migrating from higher fee products to passive investment products with lower fees, the rise in stocks in 2024 has increased the volume of assets and profitability in the business.