More or Less: Wall Street Professionals Split on Bonus Expectations

As Wall Street trudges to close out 2010 in a "sideways" year, 50 percent of U.S.-based financial services professionals are expecting higher bonuses as a reward for this year's performance as compared to last year. In fact, higher bonuses are anticipated with greater frequency by finance professionals toiling at bulge-bracket banks, long-only asset managers and boutique banks, than at hedge funds, commercial banks, independent trading or research firms and professional services companies.

While personal (34%) and firm performance (33%) are the leading reasons for the anticipated bonus increases, nine percent of respondents indicated changing employers is the primary reason their bonus will increase versus last year – driven largely by front office professionals who've switched firms.

"The signs of bonus euphoria may be hard to find, but Wall Street employers will have to deal with professionals who believe they are in contention for fatter paychecks and the inevitable retention issues should their expectations be dashed. Recruitment activity on Wall Street is solid and talented professionals always have options particularly in compliance, risk management, technology and operations," said Constance Melrose, Managing Director, eFinancialCareers North America.

Compensation is frequently the primary retention tool firms utilize. However, the majority of Wall Street professionals (61%) indicate that money, while important, isn't the most important reason they work in financial services. A little more than a third of financial services professionals (37%) say compensation is the most important reason to work on Wall Street, while just two percent indicate it's not important at all.

When asked about potential downward influences on bonuses, market conditions top the list of current concerns, followed by the Dodd-Frank Act and voluntary restraint by firms. Likewise, the majority (64%) of financial services professionals aren't expecting accelerated bonus payments before year-end. This finding is even more pronounced at regulated firms – with 87 percent of bulge-bracket respondents and 84 percent of commercial bank respondents expecting their payouts in 2011.

Global Comparison

Significantly more financial services professionals in Asia are expecting a bonus rise of some kind. In Hong Kong, 71 percent of those questioned are anticipating a bigger payout, along with 69 percent of financial services professionals in Singapore. Likewise, 57 percent of finance colleagues based in the U.K. are expecting a higher bonus. However, Germany slightly trails the U.S., with 47 percent of financial services professionals anticipating a bonus increase versus last year.

And for many, the expected bonus increase will be significant. In the U.K., nearly one in five (17%) of all those surveyed believe their bonus will be over 50 percent higher than last year; and in Hong Kong and Singapore 14-15 percent reckon they will be in line for an increase of over 50 percent. In the U.S., Germany and Australia, however, a more measured one in ten are anticipating a 50+ percent rise.

And for banking industry regulators, the eFinancialCareers.com global survey results offer little comfort. Despite the recommendation to limit cash payments to less than 50 percent of a total bonus - regardless of the bonus size - the results suggest this is yet to happen. Of those expecting to receive a bonus who work in regulated areas of the banking industry in the U.S., Singapore and Hong Kong, the average expectation is that over three quarters of their bonus will be paid in cash. In the U.K. and Germany a similar trend emerges amongst bankers with over half expecting the greater part of their bonus to be paid in cash.

About the Survey

The eFinancialCareers Global Bonus Expectations Survey took place in the U.S., U.K., Germany, Australia, Hong Kong and Singapore between September 15-28, 2010 with 5,671 currently employed bankers and finance professionals responding. In the U.S., 2,145 financial services professionals responded with 56 percent of those working in the front office, 26 percent in the middle office and 18 percent in the back office.

Table 1: What do you expect to happen to your bonus this year compared to last year?

71%+ more
7%

51-70% more
4%

31-50% more
8%

11-30% more
15%

0-10% more
16%

No Change
21%

0-10% less
7%

11-30% less
7%

31-50% less
4%

51-70% less
1%

71-99% less
1%

I will have no bonus
9%

Table 2: What is the primary reason you anticipate your bonus will increase versus last year?

Personal Performance
34%

Department Performance
9%

Firm Performance
33%

Changed Positions within Employer
7%

Changed Employers
9%

Pay Structure Changed
4%

Other
4%

Table 3: How important is compensation in your decision to work in the financial services industry?

It’s the most important reason
37%

It’s important, but not the most important reason
61%

Not an important reason
2%

Table 4: Which concerns you most currently about potential downward influence on total financial services compensation?

Market conditions
59%

Dodd-Frank
17%

Basel Accord
2%

Voluntary restraint by firms
14%

I have no concerns
8%

Table 5: When do you expect your bonus this year will be paid?

On or before December 31, 2010
26%

Partly in 2010, partly in 2011
10%

In 2011
64%

About eFinancialCareers

eFinancialCareers, a Dice Holdings, Inc. service, is the leading global career site network for professionals working in the investment banking, asset management and securities industries. The website provides financial services professionals with job opportunities, job market news and analysis, salary surveys and career advice. Recruiters and employers can post jobs targeting specific sectors within the financial services industry, both buy-side and sell-side, and can search the resume database for highly qualified and specialized professionals. eFinancialCareers has a network of co-branded career sites with industry-leading trade publications and offers local websites in 18 markets and five languages primarily across North America, Europe, the Middle East and Asia-Pacific. www.eFinancialCareers.com

Media Contacts:

Jennifer Bewley

212-448-8288

efcmedia(at)efinancialcareers.com