Wall Street set for holiday bonus bonanza

Some years it’s better to be a bonus-driven banker than an eat-what-you-kill broker or RIA.

At least when it comes to year-end incentive payments.

It’s shaping up to be the merriest Christmas on Wall Street in years, according to a report released today by compensation consultant Johnson Associates. Year-end bonuses for financial services employees are set to rise due to strong industry revenue growth, stock market appreciation, and overall improved business performance.

“Wall Street professionals will have something to cheer about when their year-end bonuses arrive,” said Alan Johnson, managing director of Johnson Associates in a statement. “Virtually every sector in the industry is performing strongly this year, with the exception of retail and commercial banking. Firms are in a strong financial position to do what they haven’t been able to do since 2021 – reward their professionals with larger bonuses.” 

The average Wall Street bonus in 2023 was $176,500, down about 2 percent from the prior year, according to the Office of the New York State Comptroller. Both those average payouts were far below the $240,000 paid out in 2021.

As to which areas within the financial services industry will see their pockets stuffed the most, the report said investment banking debt underwriters will likely see their cash bonuses and equity awards jump 25 percent to 35 percent, followed by a 15 percent to 25 percent increase for investment banking equity underwriters. Year-end bonuses for equity sales and trading professionals are expected to increase 15 percent to 20 percent.

Moving down the scale, payments among asset management and wealth management professionals are projected to increase 7 percent to 12 percent, while incentives for most other corporate staffers are projected to rise 5 percent to 10 percent. Only retail and commercial bankers are expected to receive smaller to flat year-end payments, the report says.  

As for the outlook for the coming year, Johnson says firms are optimistic about their prospects in 2025 as they look to extend and improve on the healthy pipeline specifically for M&A.

“Assuming markets remain elevated, asset management will benefit as product evolution continues,” Johnson said. “Even with positive business indicators, headcount and efficiencies continue to be a priority, especially with interest rates in flux. While voluntary attrition has moderated, the ongoing significant growth in alternative investments has a direct and indirect industry-wide impact on compensation levels and opportunities.”