Wall Street year-end incentive payments (cash bonuses and equity awards) are expected to climb across most of the financial services industry this year amid strong revenue growth, stock market appreciation and overall improved business performance, according to an analysis released Nov. 12 by Johnson Associates, a New York-based compensation consulting firm.
The larger projected increases will mark the first time since 2021 that year-end bonuses will be larger for some sections of the industry.
For example, according to the analysis, investment banking debt underwriters will be the happiest — they are expected to see their year-end incentives jump by 25% to 35%, followed by a 15% to 25% increase for investment banking equity underwriters.
Year-end payments to professionals at hedge funds are projected to climb by 5% to 15%; while traditional asset management pros will have their wallets fattened by 7% to 12%.
Johnson Associates noted that traditional asset management was boosted by “market appreciation and active ETF inflows.” Hedge fund professionals benefited from “inflows and strong performance.”
Investment professionals at private credit and private equity firms will see bonuses rise by 10% and 5%, respectively. Within private equity, professionals at smaller, single-strategy funds will see “flattish” bonuses, while those at larger funds will enjoy significant increases. Private credit is now a “hot sector” that is witnessing a surge for new talent, the analysis added.
“Wall Street professionals will have something to cheer about when their year-end bonuses arrive,” said Alan Johnson, managing director of Johnson Associates, in the analysis. “Virtually every sector in the industry is performing strongly this year, with the exception of retail and commercial banking. Firms are in a strong financial position to do what they haven’t been able to do since 2021 — reward their professionals with larger bonuses.”
Looking ahead to prospects for 2025, Johnson said Wall Street firms are optimistic.
“Banks are looking to extend and improve on the healthy pipeline specifically for M&A,” he said. “Assuming markets remain elevated, asset management will benefit as product evolution continues. Even with positive business indicators, head count and efficiencies continue to be a priority, especially with interest rates in flux. While voluntary attrition has moderated, the ongoing significant growth in alternative investments has a direct and indirect industrywide impact on compensation levels and opportunities.”
