Wall Street Bonuses Surge for First Time Since 2021

You get a bonus! And you get a bonus! Everybody gets a bonus!

After two lackluster years and one intense election, Wall Street bonuses are on track to climb across almost all sectors of the industry for the first time since 2021, according to a new report from compensation consultant Johnson Associates. And the good times could keep right on rolling. With former president Donald Trump stepping back into the White House come January, most executives believe the next administration will help boost bottom lines, said Johnson principal Chris Connors.

“The general post-election sentiment amongst industry executives is that the regulatory environment will be more advantageous for financial services in 2025,” he told The Daily Upside.

The Big Winners

The past two years haven’t been too kind to those on Wall Street … well, relatively speaking. The average salary had fallen below $500,000 in both 2022 and 2023, and it was largely due to smaller bonuses. Now, it appears the fat cats are off their diet.

Asset managers will enjoy bonus increases of between 7% to 12% this year. Firms have been topping revenue estimates thanks to the juggernaut that is the active ETF market and a growing enthusiasm for alternative investments, according to the report. Active index products have seen greater inflows in recent years and are charging higher fees than passive competitors. The report also found that hiring and turnover have slowed, meaning more employees are cashing in on those lucrative year-end incentives.

How Much? Wealth managers will share similar bonus increases because the sector has become a strategic priority for banks and other firms looking to attract ultra-rich clients, according to the report.

The runaway winners are the debt underwriters that should expect to see the largest bonus increase, with projections up 35%. That was driven by a surge in debt issuance, which is projected to rise 17% to approximately $9 trillion globally this year, according to S&P Global Ratings. “The increase in incentives is primarily driven by the underlying business results, which are strong,” Connors said.

The Exceptions: Not all sectors are seeing green. Retail and commercial bankers may see flat or even lower bonuses, as loan demand has weakened amid high federal interest rates. Real estate asset managers will also see little to no bonus growth, as the US housing market faces sluggish demand and limited inventory.