If you work on Wall Street, chances are you stand to make a killing in bonus pay this year….unless, that is, you’re a broker or a financial advisor. If you fall into the latter group, you might be justified in going green with envy: Annual bonuses are expected to climb 10 percent to 15 percent in 2006 for money managers, senior managers and other top executives at financial-services firms, while rewards for investment bankers are likely to jump 20 percent, according to a study released by Johnson Associates, a New York compensation consultancy.
If you’re a financial advisor, chances are you won’t get squat in terms of a year-end bonus. “Brokers are on their own separate formula. They get paid throughout the year,” says Andy Tasnady, a compensation consultant and managing partner with Tasnady & Associates. With profits up at the major firms, FAs have brought home higher pay, but there is no firmwide bonus plan for reps with the exception of some of the boutique firms like JPMorgan, Tasnady says. (There are some instances of goal-oriented awards for individual reps at the discretion of their branch managers, however.)
The higher bonuses are, as one would expect, due to increases in revenue and profit rates for the brokerage firms this year, says Tasnady. “Solid earnings performances by the major brokerage and investment firms this year, combined with the ongoing war for top talent, are fueling the larger incentive awards,” wrote Alan Johnson, managing director of Johnson Associates, in an email. “And unlike the most recent years of higher payouts, this year's incentive awards are up across all sectors on Wall Street.”
The top five brokerage firms—Goldman Sachs, Morgan Stanley, Merrill Lynch, Lehman Brothers and Bear Stearns—are poised to reward their 173,000 employees with $36 billion in bonuses, according to a Bloomberg News report. That represents a 30 percent jump from last year's record amount, and it doesn't include the billions more that will be doled out by Citigroup, Bank of America and JPMorgan Chase, as well as the hundreds of hedge funds and private-equity firms that comprise the financial-services sector, the report says.