Bankers assisting companies in obtaining capital could experience a decrease in their bonuses of up to 20 percent, according to Johnson Associates. Employees in wealth management services are also expected to see their incentives reduced by 7.5 percent due to high demand offset by market declines.
Additionally, asset management professionals could face a decrease of 5 to 10 percent in their bonuses, caused by market declines and capital outflows. Last year, bonuses on Wall Street reached a record of $47.5 billion, but this year they could be reduced by 5 to 10 percent due to lower credit activity and higher provisions for credit losses.
On the other hand, despite the high expectations generated by tax cuts and deregulation under the Trump administration, economic uncertainty and market volatility have created disillusionment in the financial sector. Stock market volatility has driven the demand for equity trading, which could lead to an increase of 15 to 25 percent in bonuses for traders.
Tariff turbulence is expected to maintain volatility in the markets and affect companies like retail and commercial banking. Bonuses in the advisory sector could decrease by up to 10 percent this year due to a lack of activity in mergers and acquisitions. On the other hand, fixed-income traders could experience a more modest increase of 10 to 20 percent due to market volatility.
Overall, bonuses on Wall Street are forecasted to decrease after a strong year in 2024, due to the economic upheaval generated by the U.S. trade war and geopolitical tensions. Investment bankers, hedge funds, and asset and wealth management professionals could receive lower pay incentives by the end of 2025, according to Johnson Associates Inc.
Despite annual bonuses significantly increasing in 2024, a downturn is expected by the end of 2025. However, with economic uncertainty and external factors at play, forecasts could change as the year progresses.
