Wall Streeters are probably going to get a bigger bonus this year

Traders
react to the Supreme Court’s decision at the post that trades
WellPoint on the floor of the New York Stock Exchange, June 28,
2012.
REUTERS/Brendan
McDermid

• Wall Street workers from almost all sectors are poised
  to receive higher incentive payouts this year, and equity
  traders may see their bonuses surge as much as 20% from last
  year, according to a new report from Johnson
  Associates.
• The report, however, painted a less rosy picture for
  2019, citing a string of challenges – from falling fees to
  geopolitical issues to technological disruption – that might
  negatively impact compensation and headcount numbers.

Wall Street professionals in almost all sectors are likely to
receive bigger bonuses for the second year in a
row, according to compensation consultant Johnson
Associates.

The firm published its latest projections for Wall Street
compensation on Monday. Incentive payouts are expected to be up
across sectors this year, and Wall Street workers on average may
see their year-end incentive payouts – including cash bonuses and
equity awards – increase 5-10%, the report said. 

Bonuses for investment banking underwriters and private equity
professionals are projected to be 5-10% higher than last year,
while equities traders could see an even bigger jump, as much as
20% from last year.

The only exception are investment banking advisors, who may see
an up to 5% cut in bonuses this year. The rest of the industry –
including commercial and retail banking, fixed income sales and
trading and hedge funds – are poised to see an up to 5% increase
in incentive payouts.

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Equities personnel are benefiting
from the volatility in the market, said Alan Johnson, managing
director of Johnson Associates. 

“The volatility we have this year
was good for equity sales and trading,” he said. “The market, for
the last four or five years, was unusually subdued. [There was] not a lot of volatility and opportunities for equities and
equities trading.”

As to investment banking
advisors, Johnson said they might still be well-paid this year,
but just not quite well-paid as they were last year. 

“They simply had such a good year
in 2017,” he said. “They are still doing well but it was a little
bit less than 2017.”

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The report, however, painted a less rosy picture for 2019, citing
a string of challenges from geopolitical influences to fee
compression to technological disruption, which are poised to have
an “industry-wide, downward impact on compensation and
headcount.”

In a statement, Johnson wrote: “Beginning now through the first
quarter of 2019, we expect to see headcount reductions through
both natural attrition and selective terminations. While
financial sector businesses are still inherently healthy, the
business challenges are expected to catch-up with them.” 

He expects asset management firms, in particular, to see
headcount change in the upcoming year, and employees working in
operations, sales, and general management could be
impacted. 

“I think firms are going to take a very hard look at their
headcount,” he said.

He said: “Certainly, the banks, for example, continue to cut
people, but that is now old news so we stop to notice it that
much. I think in asset management, that would probably come as
more of a surprise for some people. But if you look at their
revenues or where their products are going, I think they have too
many people.” 

Here is how the bonus pool for every other business is expected
to perform this year, according to the Johnson Associates report:

Johnson Associates

And here is how bonus payouts have changed since the 2014:

Johnson Associates