NEW YORK, Nov. 12, 2019 (GLOBE NEWSWIRE) -- Year-end incentive payments on Wall Street are expected to be modestly 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 annual study projects modestly smaller payments across the asset management, and investment and commercial banking sectors. Slightly larger payments are projected at hedge funds and private equity firms.
The Johnson Associates third quarter compensation analysis shows overall year-end incentives, which include cash bonuses and equity awards, will decline by 5% compared to last year. Year-end payments generally increased throughout the industry since 2016.
“All signs are pointing to an overall disappointing and lackluster year on Wall Street,” said Alan Johnson, managing director of Johnson Associates and one of the nation’s foremost authorities on Wall Street compensation. “The major investment and commercial banking firms struggled as equity trading and underwriting activity continued to fall throughout the year. Conversely, the alternatives asset sectors are performing well, with assets near record levels.”
Equities sales and trading professionals will be the hardest hit, with their year-end incentive payments expected to decline by 10 to 15%, compared with last year’s payouts. Investment banking underwriters and those in staff and management positions can expect to see their payments decline by as much as 10%, while payments to asset management staff and fixed income professionals will smaller by as much as 5%, compared with last year. The largest increases – as much as 5% – are projected for hedge funds and private equity professionals, and investment banking advisors. Payouts for the rest of the industry are expected to be flat.
| Business Area | Percent Change from 2018 |
| Hedge Funds | 0% to 5% |
| Private Equity | 0% to 5% |
| Investment Banking (Advisory) | 0% to 5% |
| High Net Worth | Flat |
| Commercial/Retail Banking | Flat |
| Asset Management | 0% to Minus 5% |
| Sales & Trading (Fixed Income) | 0% to Minus 5% |
| Firm Management/Staff | Minus 5% to Minus 10% |
| Investment Banking (Underwriting) | Minus 5% to Minus 10% |
| Sales & Trading (Equities) | Minus 10% to Minus 15% |
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 2020
“Looking ahead, we expect 2020 to be particularly challenging as myriad issues persist including revenue pressure and ongoing geopolitical uncertainty. Within financial services broadly, there exists a real tension between business costs and the drive for high end talent as market fundamentals and dynamics evolve. Additionally, we expect selective layoffs and less hiring to continue as firms buckle down on expense management. The confluence of these factors creates business and talent challenges that signal a downward impact on compensation in 2020,” 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