Wall Street Bankers As Cocky As Ever: Expect Big Bonuses This Year

Wall Street investment bonuses

By Linette Lopez

Ask an investment banker to tell you what they think their bonus will look like, and you're really asking about the health of their corner of Wall Street.

That's why eFinancial Careers' survey on Wall Street bonus expectations is so fascinating. Between September 25th and October 3rd, they polled 911 Wall Streeters, almost half of whom work in the front office, to get their feelings on compensation.

Just to give you a sense of how important this issue is to the Street, four out of ten people polled said that the entire reason they work in the industry is compensation.

And those people have a complicated way of looking at it this year. Almost 60% think their individual bonuses will be higher, but when it comes to the industry as a whole the picture is much more bleak.

Check out the numbers and the insights we can glean from them:
  • First off, the most optimistic people in the industry come from alternative asset managers (hedge funds and private equity) and the most pessimistic people are at bulge bracket banks and broker dealers.

  • 58% of the people surveyed (up 7% from last year) expect their bonus to increase.

  • 26% of people surveyed expect a decrease in their bonuses.

  • Industry wide, though 42% of people surveyed think bonuses will decrease across the Street and 31% of people think they'll stay the same.

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It's a weird disconnect (what will happen to the individual v. what will happen to the industry), but here's where it comes from:
  • Of the people who think they'll get a bigger bonus, 41% think the number is based on their individual merit.

  • Of those who think their bonus will decreased, a whopping 77% think it's due to market conditions or the firms performance - only 3% who expect a decrease think it's based on their own performance.

So get that? Bonus increase, it's based on me. Bonus decrease, it's the market or the firm - the biggest downward influence on those two factors being the U.S. domestic market, said 59% of respondents. Dodd-Frank comes a distant second at 12%.

In short, a lot of Wall Streeters think bonuses are out of their hands in a world of volatile markets and a changing industry.

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