Market bonuses on Wall Street expected to decrease due to market instability, as per findings of a consultant
In a recent quarterly report published on Thursday, Johnson Associates has forecasted that retail and commercial bankers may not see significant increases in their year-end bonuses for 2025. This prediction contrasts with the larger increases expected in other financial sectors, such as trading and investment banking.
The report highlights that while equity traders could see bonus increases of 20-30%, and fixed income traders 10-20%, bonuses for M&A advisors are expected to be flat or rise only about 5%. The commercial and retail banking sectors are not highlighted for significant bonus gains.
This prediction comes amidst a growing uncertainty in the economy, as JPMorgan Chase CEO Jamie Dimon wrote in his annual letter to shareholders in early April that the proposed tariffs may slow down growth and push inflation. President Donald Trump's tariff plans have caused Wall Street giants to assess their impact on the financial sector.
Despite the lack of predictability surrounding mergers and acquisitions, the report notes that increasing uncertainty in the economy amid significant federal policy changes may dampen the outlook for parts of the securities industry in 2025.
However, the overall uptick in year-end bonuses in the financial services industry marks the first wide-scale increase since 2021. The average bonus paid to employees in New York City's securities industry for 2024 reached $244,700 - up 31.5% from last year, according to New York State Comptroller Thomas DiNapoli's annual estimate.
Alan Johnson, managing director of Johnson Associates, told Bloomberg that the expectation is pay will be down, moderately, off of a high level. He also noted that bankers in traditional asset management will see a decline in their bonuses, with a predicted drop of 5% to 10%.
The report also predicts a decline in equity underwriting, with a decrease of 10% to 20%, and a 5% to 15% rise in debt underwriting. Wealth management is expected to see a drop between 2.5% to 7.5% in bonuses.
In conclusion, Johnson Associates' forecasts suggest that retail and commercial bankers are not expected to receive significantly higher year-end bonuses in 2025. The changes are likely to be flat or only modest at best, with the growth in bonuses concentrated mainly in trading and certain investment banking activities rather than broader banking roles.
- In contrast to the anticipated growth in other financial sectors, such as trading and investment banking, the report predicts that personal-finance roles in traditional asset management will see a decline in their bonuses by 5% to 10%.
- The banking-and-insurance sector may not witness substantial increases in their year-end bonuses for 2025, as indicated by the forecast made by Johnson Associates, a notably contrasting prediction to the larger increases expected in sectors like equity trading and fixed income trading.
- Despite the overall uptick in year-end bonuses in the financial services industry, traditional banking roles, including retail and commercial banking, are expected to see minimal growth, with changes likely to be flat or only modest, as per Johnson Associates' forecasts.
