This is how your pay will shrink in investment banking, asset management, hedge funds and private equity in 2016
If you work in financial services, your overall compensation is most likely about to change, but it's not going to be moving in the direction you'd like, regardless of whether you work on the buy-side or the sell-side. In fact, your bonus is expected to decrease anywhere from 5% to 20%.
Johnson Associates, the well-regarded compensation consultants, have released a report analyzing first-quarter 2016 trends and making year-end projections, and pretty much across the board, the outlook for bonuses is not good.
Its CEO Alan Johnson is calling it as he sees it. This follows predictions that there would be a reduction of 50k financial services jobs over the next year across the U.S., with approximately 10k of those redundancies in New York.
Johnson Associates projects that asset management firms' incentive compensation will decrease modestly, despite industry-wide headwinds such as fee pressure on active managers and the continued trend toward passive/index products, with fixed income outperforming equities.
For major investment banks and commercial banking firms, Johnson predicts that incentive compensation will be down broadly across most business units, most significantly in IBD equity underwriting and trading. The lone bright (or at least relatively stable) spot? Retail and commercial banking, buoyed by solid growth of deposits and loans.
Why such pessimism? Johnson cites a mixture of lackluster business activity, volatility, the U.S. election year, a unique interest-rate environment and ongoing market uncertainty worldwide.
The longer-term trends don't bode well, either.
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