Many investment bankers and traders who received big bonuses are putting just 16.5 percent into their savings and investments. Instead, they're spending on houses, jewelry, art, wine and their hobbies. Industry veterans say these folks are being short-sighted, at best.
A poll of about 200 bankers and traders, who received at least $2 million in 2006 bonus cash, found they're spending 16 percent of their awards on homes and 10 percent on home improvements. About 12 percent is buying art or collectables. Fourteen percent goes into "other" expenses, such as hobbies or "mistresses and other lovers."
The survey was conducted by Prince & Associates, a Connecticut wealth-research firm, and reported in The Wall Street Journal. Bonuses last year ran about 17 percent higher than they had in 2005, and are expected to total around $23.9 billion, according to the New York State Comptroller's office.
Russ Alan Prince, the president of Prince & Associates, said the survey results indicate "Wall Street expects the good time to continue." A savings and investing rate of 16.5 percent, after all, is low for people bringing home millions of dollars in compensation.
Peter Solomon, who chairs investment bank Peter J. Solomon Co., was blunt in his assessment: "Some of this generation of bankers are in la-la land," he told the Journal. "This is a cyclical business. We're in a period of easy credit and people throwing money around, and no one in investment banking should assume that next year will be better than last year."