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Bonus Boost—Wall Street Pay Gets Back on Track

August 17, 2009
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Related Topics: Managing Change, Career Development, Compensation Design and Communication, Employee Career Development, Latest News
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After a dismal 2008, bonuses in the financial services industry are on pace to increase 25 to 35 percent this year, according to a report from Johnson Associates Inc., a compensation consulting firm based in New York.

“The industry is getting back to some degree of health,” said Alan Johnson, managing director of Johnson Associates.

“The industry is moving from pneumonia to a bad cold,” he said. “Six months ago, things were looking a lot more gruesome.”

Some in the financial services world will, of course, be awarded significantly higher bonuses than will others, Johnson Associates predicts. Bonuses for traders at investment and commercial banks, for example, are expected to be 20 to 50 percent higher in 2009 than last year.

Financial professionals in the asset management business, however, should expect to see a drop of 25 to 35 percent in bonus compensation this year, the report found.

“In the asset management space, compensation is linked to asset levels,” Johnson said. “The industry is based on fees based on the assets. The markets are down, and they are not managing the same amount of assets.”

Those in the business of trading equities or fixed-income securities are not as affected by the markets, Johnson said.

“Trading businesses are trading to make money for their clients,” he said. “They are not managing assets. They are not directly impacted by the ups and downs of the market.”


Filed Sue Asci by of InvestmentNews, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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