Study projects declines at asset management, hedge funds, and private equity firms, and retail and commercial banks; larger payments in store for fixed income and equities professionals, and investment banking underwriters
NEW YORK, Nov. 12, 2020 (GLOBE NEWSWIRE) -- Year-end incentive payments on Wall Street are expected to be lower in most business segments compared with last year, according to a closely-watched analysis released today by Johnson Associates, Inc., a New York-based compensation consulting firm. The Johnson Associates third quarter compensation analysis shows overall year-end incentives, which include cash bonuses and equity awards, will generally decline, marking the second consecutive year of mostly smaller awards.
“The pandemic is wreaking havoc on many parts of the U.S. economy this year, and the financial services industry is no exception,” said Alan Johnson, managing director of Johnson Associates and one of the nation’s foremost authorities on Wall Street compensation. “And while many industry segments have bounced back, the majority of professionals at traditional and alternative asset firms as well as retail and commercial bankers will see smaller bonuses. Conversely, fixed income pros will be rewarded handsomely as uncertainty and high volatility contributed to record trading.”
According to the analysis, retail and commercial bankers will be the hardest hit, with their year-end incentive payments expected to decline by at least 25% - 30%, compared with last year’s payouts. Investment banking advisors can expect to see their payments decline by as much as 15% - 20%, while payments to asset management, hedge funds, and private equity staff will be smaller by 5% - 10% generally, compared with last year. Significantly larger incentive payments are projected for fixed income sales professionals and traders (40% - 45%), investment banking underwriters (35% - 40%) and equities sales and trading professionals (20% - 25%).
| Business Area | Percent Change from 2019 |
| Sales & Trading (Fixed Income) | 40% to 45%+ |
| Investment Banking (Underwriting) | 35% to 40%+ |
| Sales & Trading (Equities) | 20% to 25% |
| Private Equity (Large) | Minus 5% |
| High Net Worth | Minus 5% |
| Asset Management | Minus 5% |
| Hedge Funds | Minus 5% to Minus 10% |
| Firm Management/Staff | Minus 10% to Minus 15% |
| Private Equity (Small) | Minus 10% |
| Investment Banking (Advisory) | Minus 15% to Minus 20% |
| Retail & Commercial Banking | Minus 25% to Minus 30%+ |
Johnson Associates regularly monitors compensation trends among a wide range of commercial and investment banks, asset management firms, and other financial services companies. Its quarterly compensation analysis is based on the firm’s ongoing monitoring of the financial services industry, numerous proprietary data points, and public data from seven of the nation’s largest investment and commercial banks and nine of the largest asset management firms.
Outlook for 2021
“As compared to many sectors of the economy, select areas of financial services have rebounded. Unfortunately, as we look to 2021, even with an optimistic vaccine path, the pandemic will continue to negatively influence businesses, but perhaps to a lesser degree than in 2020. Headcount reductions will continue in the first half as companies transform and adapt. For 2021, we expect some stabilization with early projections for modest salary increases, and flat to slightly increased incentives,” said Johnson.
ABOUT JOHNSON ASSOCIATES
Johnson Associates is a boutique compensation consulting firm specializing in the design of annual and long-term incentive plans and establishing appropriate market pay levels. The firm is well-known for providing candid advice and for its expertise and in-depth knowledge of the financial services industry, including major investment and commercial banks, asset management firms, hedge funds and other alternative investments, insurance companies, and brokerages. For more information, visit www.jaiconsulting.com
Contact: Ed Emerman
609-240-2766
eemerman@eaglepr.com