Market awards for Wall Street are expected to decrease due to market instability, according to a consultant's report.
Johnson Associates, a leading compensation consulting firm, has forecasted a modest decline in year-end bonuses for retail and commercial bankers in 2025. This prediction is part of the firm's July 2025 quarterly report, which outlines a general trend of compensation decreases across various banking sectors.
Alan Johnson, the managing director of Johnson Associates, highlighted in the report that the initial optimism for 2025 has reversed, and the current expectation is for pay, including bonuses, to be "down, moderately, off of a high level."
While specific percentage changes for retail and commercial bankers have not been detailed in the report, the overall tone suggests a moderate reduction consistent with other banking groups. For instance, investment bankers are anticipated to face reductions between 5% and 20%.
This prediction of a slight decrease in bonuses for retail and commercial banking roles is in line with the expected changes for other sectors, such as a 5% to 10% drop in year-end payments for bankers in the advisory market and a 5% to 15% rise in debt underwriting.
Equity underwriting, on the other hand, is anticipated to drop by 10% to 20%. Wealth management will see a decrease of between 2.5% to 7.5% in bonuses for bankers, and bankers in traditional asset management will experience a 5% to 10% decline in their bonuses.
Year-end bonuses for equity sales and trading bankers, however, are projected to increase by 15% to 25%. This increase reflects Wall Street's very strong performance in 2024, as evidenced by the average bonus paid to employees in New York City's securities industry for 2024 reaching $244,700 - up 31.5% from the previous year.
However, increasing uncertainty in the economy amid significant federal policy changes may dampen the outlook for parts of the securities industry in 2025, according to Johnson. For instance, JPMorgan Chase CEO Jamie Dimon has expressed concerns about proposed tariffs pushing inflation, as stated in his annual letter to JPMorgan shareholders in early April.
These predictions come as Wall Street giants grapple with the potential impact of President Donald Trump's tariff plans on the financial sector. The lack of predictability has spurred questions surrounding mergers and acquisitions.
Johnson Associates published this quarterly report on Thursday, providing insights into the expected changes in the financial industry. The report's findings suggest that while some sectors may see a decline in year-end bonuses, others, like traders, may see a surge due to market volatility.
Investing in various banking sectors might face challenges in 2025, as Johnson Associates predicts a moderate decrease in year-end bonuses for retail and commercial bankers, similar to trends in other sectors like advisory and debt underwriting. Conversely, bankers in equity sales and trading roles could see an increase in their year-end bonuses, especially since Wall Street's performance in 2024 was very strong.
