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Despite news reports that Wall Street bonuses will be down, more Wall Streeters are expecting them to be higher

There seems to be a disconnect between what Wall Street execs have been reading lately and what they believe.

Nearly half (48%) of them surveyed by eFinancialCareers expect their bonus to be higher this year despite recent news reports to the contrary.

What's even more disconcerting is that the number is seven percent higher than the 41 percent who believed their annual bonus would increase last year.

Wall Street firms will reduce bonuses rather than cut jobs to control expenses this year, said Betsy Graseck, a Morgan Stanley bank analyst in New York.

In an interview with Bloomberg, Graseck said compensation "will probably drop from a year ago as banks attempt to avoid further headcount reductions. Cuts will come from bonuses rather than base salaries."

What appears to be contributing to the higher bonus expectations is the fact that not all financial services sectors are hurting as much as others.

High expectations from employees working for alternative asset and long-only asset managers are contributing to this result while lower expectations are being registered at the bulge brackets and broker-dealers, where respondents were the most pessimistic.

Firm and department performance have gained in importance in driving anticipated bonus increases, capturing 38 percent of respondents’ votes vs. 31 percent last year.  But personal performance still calls the shots, with 41 percent of respondents holding their own performance responsible for the expected increase.

More respondents believe that bonuses will be as big a share, or more, of total compensation this year compared with last, but with the deferred compensation component increasing: among those who expect some of their bonus to be deferred, the proportion of those expecting a higher proportion of their bonus will be deferred has doubled in the last 12 months, from 13 percent in 2011 to 26 percent in 2012.

The mood is lifting with more respondents believing that  bonuses will increase and less believing they will decrease. Of those who believe bonuses will increase in the next three years, over half (53%) are convinced bonuses will return to 2006-2007 levels. Fifty-eight percent of respondents say they expect bonuses to increase or remain the same over the next three years, up from 54 percent a year ago.

On the flip side, 42 percent say they expect bonuses to decrease between now and 2015, compared 46 percent last year.

Compensation seems nearer and dearer to Wall Street’s hearts.  Over 4 in ten (44%) Wall Street professionals tell us that money is the most important reason why they work in the financial markets. That’s 5 percentage points more than last year.

About the Survey

The 2012 eFinancialCareers Bonus Expectations Survey took place in the United States between September 25 and October 3, 2012 with 911 currently employed financial markets professionals, with 48 percent of those working in the front office, 27 percent in the middle office and 25 percent in the back office.

AUTHORFred Yager Insider Comment
  • le
    10 October 2012

    given that i participated in this survey, I dont have much faith in its results

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