[ad_1]
According to a recent survey, Wall Street firms are set to distribute larger bonuses this year in line with the strong recovery of investment banking, equity markets, and fixed income trading. Investment bankers advising companies on debt issuance are anticipated to see the most significant bonus increases of 15%-25%, spurred by a surge in company debt sales, says financial services compensation firm Johnson Associates.
Equally, equity underwriters are predicted to receive a 10%-20% bonus increase as initial public offerings (IPOs) bounce back. Alan Johnson, the founder of the firm, reported to Reuters that Wall Street pay raises are widespread this year, though global conflicts and US elections may pose risks.
Investment banking’s improved incentives remain down from their 2021 peak. Year on year, bonuses have only increased in private equity, yet with a considerably smaller workforce compared to banks. Greater trading volumes should uplift bond traders’ bonuses by 10%-20% and those for equity traders by 5%-15%. Executives in wealth management, asset management, and hedge funds can anticipate 5%-10% and 5% increases, respectively.
In asset management, despite the migration from higher-fee to lower-fee passive investment products, 2024’s stock market rise has boosted business profitability and asset volumes. In contrast, last year the average Wall Street bonus decreased by 2% to $176,500, following a 25% decline in 2022, despite a 1.8% increase in overall Wall Street profits.
In 2023, financial firms distributed bonuses from a pool amounting to $33.8 billion, similar to the total for 2022, but significantly less than the $42.7 billion distributed in 2021. This decline occurred as the Fed increased interest rates due to soaring inflation levels, leading to increased borrowing costs and market uncertainty.
Finally, any changes in Wall Street compensation have far-reaching implications for New York’s local economy, where one in eleven people work in the financial services industry. Annual bonuses typically represent a significant portion of these employees’ remuneration.
[ad_2]
