Wells Fargo Targeting Up to 25% of Workforce in Mass Layoffs

Alan Johnson, managing director of New York-based compensation consultant Johnson Associates Inc., said that Wells Fargo’s announced cost-cutting plan will hurt the firm from a recruitment perspective, including in asset management.

“It’s not just the cost cutting, but years of instability at the bank,” since the 2016 sales scandal surfaced, he said. “It’s just one negative story after another. … (There’s) just a general malaise from bad news and instability,” Mr. Johnson added, noting that it could negatively impact Wells’ ability to attract new asset management clients.

Pensions & Investments / September 2, 2020

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Even Wall Street’s Biggest Bonuses Will Disappoint This Year

Equities traders at major U.S. banks largely succeeded in navigating the most tumultuous markets in a generation as the pandemic triggered lockdowns in March and sent stocks swooning, only to later rebound. But that performance was soon overshadowed by fixed-income trading. Federal Reserve intervention in credit markets helped banks arrange a slew of fundraisings for desperate companies, giving those traders ample chances to buy and sell newly issued bonds.

In the second quarter, traders at three top fixed-income trading houses — JPMorgan Chase & Co., Citigroup Inc. and Goldman Sachs Group Inc. — generated about $10 billion in additional revenue. The windfall helped keep JPMorgan and Citigroup profitable despite massive loan-loss provisions.

Fixed-income traders may see their year-end bonuses jump 25% to 30%, according to Alan Johnson, founder of compensation consultant Johnson Associates. Yet those traders are likely to expect increases of 50% or more, he said.

“They’re going to be paid somewhat less than their results on an isolated basis,” Johnson said. “They will be disgruntled.”

Bloomberg / August 12, 2020

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Bond Trading Seen as Bonus Bright Spot While Others Disappoint

“You’ll hear about some multimillion-dollar trader that got some multimillion-dollar increase in pay while you got less pay,” Alan Johnson, president and founder of Johnson Associates, said in an interview. “You’re not going to be able to make everybody happy and, unfortunately, this year you’re going to make many people unhappy. There are limited funds in a terrible environment.”

Along with the bonus disappointments, Wall Street should also brace for job cuts of as much as 10%, Johnson said.

“They’re figuring out they don’t need as many people as they did even in February,” he said. “The pandemic makes this so much worse from a personal, societal standpoint. So there’s a hesitancy to do this quickly.” He expects the cuts to come in the fourth quarter and the start of 2021.

Bloomberg / August 10, 2020

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Layoffs, Shrunken Bonuses Coming in Asset Management

The largest private equity funds have enormous amounts of cash to invest, but face portfolio company defaults. Alan Johnson, head of the compensation and consulting firm, said PE outfits benefit from leverage when markets are up. “Now they’re on the other side of leverage and it hurts,” Johnson told Institutional Investor.

“I won’t have a charity benefit for these people. They’re down 10 percent from the top of the mountain,” he pointed out…

“We have been pleasantly surprised at how companies can run efficiently and remotely. But asset managers have found they can operate with fewer people,” said Johnson. “We’re seeing that asset management and the U.S. economy can run a lot more efficiently. Working remotely exposed things like our long commutes. New York City hasn’t changed since the 1950s when it comes to commutes. Now we know we don’t need that. But then it also shows you don’t need as many people as well.”

Johnson expects many of the layoffs to disproportionately affect people of color. That’s because lost jobs will be in areas like operations and technology, many of which are held by Black and Hispanic professionals.

Institutional Investor / August 10, 2020

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Asset Managers to Shrink Bonuses, Slash Jobs Despite Market Recovery: Report

“It is going to be a disappointing year,” says Alan Johnson, managing principal at compensation consulting firm Johnson Associates. And lower comp isn’t the concern for industry workers.

“Headcount is going to be a big issue in the industry,” Johnson adds.

Effective remote work not only came as a surprise to asset manager business leaders, but it has also led them to rethink their firms’ operating models and staffing levels, Johnson adds.

“This working-from-home thing has worked out better than anybody ever thought,” he says. “I think they are wondering, do they need as many people they thought they needed in February? And a lot of asset management firms are going to decide ‘no, I don’t need as many people as I thought I did.’”

FundFire / August 10, 2020

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