Market bonuses for Wall Street are expected to decline, as indicated by a consultant, in light of ongoing market volatility.
In a recent quarterly report, Johnson Associates, a leading compensation consulting firm, has predicted a mixed outlook for bonuses in the financial sector for 2025. The report, published on Thursday, highlights a range of potential changes across various roles and sectors.
The report suggests that overall bonuses could range from a 20% decline to a minimal 2.5% increase, depending on economic conditions and policy factors like tariffs. For certain roles, such as ECM bankers, bonuses are expected to decline between 10% and 20%, while M&A dealmakers might see a decrease of 5% to 10%.
On the positive side, year-end bonuses for equity sales and trading bankers are expected to increase by 15% to 25%. Conversely, bankers in traditional asset management will see a 5% to 10% decline in their bonuses. Debt underwriting is set to see a 5% to 15% rise, while equity underwriting is expected to decrease by 10% to 20%.
Alan Johnson, managing director of Johnson Associates, stated that the expectation is pay will be down, moderately, off a high level. He also noted that increasing uncertainty in the economy amid significant federal policy changes may dampen the outlook for parts of the securities industry in 2025.
The overall uptick in year-end bonuses in the financial services industry is the first wide-scale increase since 2021. However, the report also highlights a pause in M&A activities among financial institutions, potentially spurred by the lack of predictability.
The record high bonus pool reflects Wall Street's very strong performance in 2024, according to New York State Comptroller Thomas DiNapoli. The average bonus paid to employees in New York City's securities industry for 2024 reached $244,700 - up 31.5% from last year.
JPMorgan Chase CEO Jamie Dimon expects proposed tariffs to push inflation. In his annual letter to JPMorgan shareholders in early April, he wrote that whether or not the tariffs cause a recession remains in question, but they will slow down growth.
The report does not provide specific predictions for retail and commercial bankers' bonuses. Therefore, any predictions for these sectors would need to be inferred from broader sector trends or sought from more detailed reports directly from Johnson Associates or similar sources.
The Trump administration's easing of regulations and pro-growth stance were expected to cause a surge in mergers and acquisitions. However, the current uncertainty in the economy may have put a damper on these expectations.
In light of the mixed outlook, individuals with ECM banking roles might need to reconsider their personal-finance plans due to the projected decline in their bonus earnings, while those in equity sales and trading banking roles could potentially see a growth in their personal-finance assets with the predicted increase in year-end bonuses. Remarkably, the increase in bonuses across the financial services industry is the first wide-scale ascent since 2021.
