Hedge fund, private equity managers to see uptick in incentive awards, while other Wall Street pros to see slump

While year-end incentive payments have been on the rise over the past few years, 2019 could be different.

Analysis from Johnson Associates, Inc., a compensation consulting firm, found Wall Street year-end incentive pay, including cash bonuses and equity awards, is expected to decline by five per cent for 2019, compared to last year.

“All signs are pointing to an overall disappointing and lacklustre year on Wall Street,” said Alan Johnson, managing director of Johnson Associates, in a press release. “The major investment and commercial banking firms struggled as equity trading and underwriting activity continued to fall throughout the year. Conversely, the alternatives asset sectors are performing well, with assets near record levels.”

Indeed, in a lacklustre year, hedge fund and private equity professionals are expected to buck the trend, seeing better rewards, with a rise of five per cent.

Meanwhile equities professionals are expected to be hit hardest with a 10 to 15 drop in their year-end incentive payments. Fixed income professionals, while seeing a decline, will suffer a more modest setback, with a five per cent slump expected.

“Looking ahead, we expect 2020 to be particularly challenging as myriad issues persist including revenue pressure and ongoing geopolitical uncertainty,” added Johnson. “Within financial services broadly, there exists a real tension between business costs and the drive for high end talent as market fundamentals and dynamics evolve. Additionally, we expect selective layoffs and less hiring to continue as firms buckle down on expense management. The confluence of these factors creates business and talent challenges that signal a downward impact on compensation in 2020.”