Discover your dream Career
For Recruiters
Last year's performance had very little to do with individuals, says this Wall Street veteran.

Stop complaining that you deserved a bigger bonus. You didn't

So, people in finance are complaining about this year's bonuses, and resigning because their bonuses were more "disappointing" than expected. Surprise, surprise. - Or not. 

Complaints about bonuses are endemic in finance. But complaints about last year's bonuses are particularly unjustified. When anyone in sales and trading or capital markets talks about their firm's revenues in 2020, and how much they were up from 2019, they need to remember that most of the increase came from the Fed and from other central banks lowering interest rates to zero and pledging support for the entire corporate bond market because of the pandemic. Jay Powell should get most of the credit for year-over-year revenue gains in 2020 at all investment banks!

In these circumstances, the only realistic measure of how a firm did in 2020 is changing market share. - Did your desk outperform rivals? If it did, well done. But if you grew revenues in line with, or by less than, the rest of market, then it's right that your bonus should fall.

Much the same applies to people in private equity, who benefit from payments of carried interest. They might work hard but high returns in PE are generally the result of the amount of leverage they can impose on companies and their investment horizons. Ideally, they want a highly leveraged firm with a 10 or even 15 year horizon so that they can work through a global, national or sector down-turn, restructure or recapitalize if necessary, and live to fight another day. - Is that really due to their own skill?

There are studies that show you can duplicate average PE fund returns (or perhaps even top-quartile returns) by putting the same amount of leverage that PE funds use on a simple S&P 500 index fund. And, of course, PE has benefitted from the long-term decline in interest rates and the long periods since 2008 in which rates have remained close to zero...

So next time you voice the opinion that you should have been paid more, take a moment to reconsider. Too many people in finance tend to think of their own good performance as brilliance. In fact, it's usually the result of a bull market in whatever financial instrument, sector, or commodity they work in.

Bryce Davis is the pseudonym of banker who's spent decades on Wall Street 

Have a confidential story, tip, or comment you’d like to share? Contact: in the first instance. Whatsapp/Signal/Telegram also available. Bear with us if you leave a comment at the bottom of this article: all our comments are moderated by human beings. Sometimes these humans might be asleep, or away from their desks, so it may take a while for your comment to appear. Eventually it will – unless it’s offensive or libelous (in which case it won’t.)

Photo by Markus Winkler on Unsplash


AUTHORBryce Davis Insider Comment
  • Ja
    16 March 2021

    True for some people but not for everyone.

    For quant, strats and technologist, it’s tech companies that Wall Street are competing against.

    If you are a experienced technologist or quant, when a financial firm only willing to pay you 200k-300k but tech companies can pay you 300k-500k. How will you choose?

    Pay was never about performance, it is always about supply and demand. People can compliant their bonus if they can find a better job, that new job doesn’t necessarily need to be in the same industry. If financial companies want to keep talents, they’d better increase compensation.

Apply for jobs

Find thousands of jobs in financial services and technology by signing up to eFinancialCareers today.

Boost your career

Find thousands of job opportunities by signing up to eFinancialCareers today.
Latest Jobs
Selby Jennings Buyside
Credit Analyst (IG, HY, Leveraged Loans
Selby Jennings Buyside
Chicago, United States
Selby Jennings Technology
AWS Windows Engineer
Selby Jennings Technology
New York, United States
Selby Jennings
Software Engineer - C++, Low Latency
Selby Jennings
Austin, United States
Selby Jennings Technology
VP Product Manager
Selby Jennings Technology
Meriden, United States
Asian Infrastructure Investment Bank
Procurement Specialist (4973) (Base in Beijing)
Asian Infrastructure Investment Bank
New York, United States
Asian Infrastructure Investment Bank
Social Development Associate (4972) (Base in Beijing)
Asian Infrastructure Investment Bank
New York, United States