Bankers who underwrite debts may see payouts swell as much as 25% as deals pick up this year, according to a report Tuesday from compensation consultant Johnson Associates Inc. For bond traders and equity underwriters, incentives may rise 20%.

“In general, employees in financial services should be pretty pleased: The amount of money they earn will match the results,” Alan Johnson, the firm’s managing director, said in an interview. “If you are in a business that manages costs, and generates significant profits, pay will follow along.”

Financial industry bonuses last swelled so much when the pandemic set off a tidal wave of trading and dealmaking. But that proved temporary, leading to “unrealistic expectations” among employees about future compensation, and then disappointment in the years that followed, Johnson said.

“This should be more sustainable growth, as businesses move ahead at a moderate rate,” Johnson said.

Beyond wealth management, people working in asset management may see a bump of about 5% on the back of market appreciation. At hedge funds, incentive compensation is also likely to be up 5%, helped by returns and inflows.

“Fifteen years ago people thought financial advisers were the dinosaur, which has made a full recovery, and is now a business people want to be in, with steady fees and diversified clients,” Johnson said.

Bloomberg / May 7, 2024