Bonus Havens: FX, Private Wealth

Foreign exchange and private wealth management professionals may enjoy a bit of a cushion for year-end bonus payouts that are expected to plunge 40 percent or more for most other business segments within financial firms.

That's one conclusion of an annual survey by Armstrong International, a London-based headhunter. The latest in a recent string of surveys focused on bonus expectations that are grabbing worldwide media attention, Armstrong polled more than 500 people working at 30 investment banks and financial institutions within the City of London.

The overall findings are broadly in line with surveys released during October and November by eFinancialCareers, Johnson Associates and the Options Group, among others. "About a quarter" of respondents told Armstrong they expect no bonus for 2008, according to New York Times DealBook. The majority expect their payments to drop as much as 70 percent from 2007 - a fact that led Armstrong's survey coordinator to characterize the bonus outlook as "back to 2003 levels." The outlook for 2009 is no better.

Hardest Hit: Fixed Income, Corporate Finance

"One of the businesses hardest hit is fixed income and credit derivatives, where most employees expect to walk away with no bonus at all," DealBook says. In corporate finance, meanwhile, jobs are being slashed and "even the top rain makers will see their bonuses reduced by as much as 50 percent."

Foreign exchange and wealth management, apparently the lone areas where banks' business is holding up fairly well, will see bonuses shrink from 2007 levels as well. However, banks are expected to strengthen their FX desks in 2009. That "may afford some protection from the heavy bonus cuts," according to Armstrong's survey.

In private banking, bonuses could be backstopped by large banks' efforts to dissuade clients and bankers from defecting to smaller firms or family offices. Throughout 2008, boutique wealth management firms have lured top talent away from the private client units of bulge bracket institutions.

Globalization of wealth also is noticeably impacting private bankers' compensation, Armstrong says. Private client advisors in Dubai, for instance, earn 40 percent more than in London and 25 percent more than in Geneva, the survey says.