Wall Street: Whose Bonuses Will Be Bigger?

Based on estimates from consulting firm Johnson Associates, bond traders on Wall Street won’t be looking at the same bonuses as money managers, with only the latter likely to see a solid bonus hike. As reported by Reuters, the consulting firm believes bonuses across Wall Street may see an average rise of 5 to 10 percent, but it’s likely that the rises will be unevenly distributed, demonstrating new priorities for Wall Street, according to what Alan Johnson, head of Johnson Associates, told the news service.

Johnson said to Reuters that workers in lower-risk jobs like asset management and retail brokerages are looking at a rise in bonuses more akin to 15 percent and up, while those working in fixed-income trading may see declines at an equal rate in bonuses.

Bonuses are still recovering since the 2007-2009 financial crisis, and Johnson told Reuters that he believes banks are more interested in safe businesses these days — ones that risk very little monetarily, with consistent profits, as opposed to those that rise and fall unpredictably. “From a regulator’s perspective, that’s what you want. You want the banks to be in client businesses that use people’s money so that they’re not to dependent on trading,” said Johnson to Reuters.

Because so much weeding out has been happening in banks in the past three years — especially among high-paying positions — mid-level employees are able to receive better bonuses without banks needing to increase their compensation costs overmuch, according to Johnson.

“When the number of people who make a lot goes down, it really moves the needle,” he said in his interview with Reuters. He also noted that 2014 is looking sunny in the business world, with calculated hiring expected in the U.S. and highly motivated hiring abroad due to changing operations.

Johnson estimates that underwriters in investment banking will see a 10 to 15 percent spike in their bonuses, prime brokerage and private equity will see a 5 to 10 percent rise, equities traders and hedge fund workers will see a 5 to 15 percent rise, and bankers in commercial and retail sectors will see a 0 to 5 percent increase in bonuses.

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