Banker pay will be up in 2017. Or it won’t. It depends on how many former colleagues of yours got busted doing something shady, among other factors.
Recruiting firm Options Group’s latest pay report found that investment bankers, traders and wealth managers should, as a group, will see a 2% downtick in total compensation this year.
However, the study didn’t factor in legal costs, which were enormous for many banks this year. Goldman Sachs, Morgan Stanley, Wells Fargo, Deutsche Bank, Citigroup and Bank of America have each inked sizeable settlements this year, for example.
So, total comp will be highly dependent on whether or not banks dip into the bonus pool to offset those losses, something they are likely to do. After the dust settles, compensation is projected to be flat in the U.S. but slightly down globally, according to the firm.
Still, there will certainly be winners and losers. Not accounting for legal costs, That percentage includes a 3% uptick for fixed income, currencies and commodities (FICC) professionals (5% in the U.S.) and a 5% raise for private bankers and other wealth management pros. On the other hand, Options Group is predicting a 9% drop for equities pros (-5% in the U.S.) and a 6% skid for investment bankers (-4% in the U.S.)
If bonus payments are indeed flat this year, bankers expecting to receive a bigger bonus this year than they did last year are in for a rather rude awakening.
The Options Group report projects that only one business unit – securitized products trading – is expected to dole out double-digit comp increases, and that’s mostly due to the fact that the business has been relatively lousy in past years.
Long story short, there are likely to be more than a few unhappy bankers come February. Many will have their colleagues – or former colleagues – to blame.
It's not your fault – unless it is
While 2016 has certainly had its bright spots on both the buy side and the sell side, there are going to be a lot of lousy bonuses in particular areas across the industry, regardless of whether or not your employer had to pay a settlement. You may be upset, but ask yourself, is it lousy because you are bad at your job and you didn’t perform well compared to your peers? Or is it because your company didn’t perform well even though you did great? Is it me? Is it the industry I’m in now? Or is it my company?
“It shouldn’t be hard to figure out – if your company did really, really well, your group or division did well, and your peers got a good bonus but you didn’t, then it’s your performance that was lacking,” said Jeanne Branthover, a managing partner at DHR International, a recruitment firm. “You have two choices, leave or stay, but if you stay and they think you’re a bad performer and that’s why you didn’t get a good bonus, then maybe it’s better to leave, work harder and improve your performance to get a better bonus next year.
“If it’s company-driven and the part of the industry you’re in didn’t do well and no one else at the company got a good bonus, and if other companies in your industry did better, then could be worth making a move, but if the whole industry struggled, then there’s no sense in moving for same base salary,” she said. “Bonuses used to be part of your overall compensation, but now you have to do something better than your regular job to get a bonus.
“What did you do that was so good that you deserved this additional money?”