Banker Bonuses Are Expected to Increase Except in Advising, Report Says

(Bloomberg) -- Incentive compensation should increase an average of 5 percent to 10 percent across financial services this year with the exception of merger advisory, according to Johnson Associates.

The biggest increase will likely be in equity sales and trading, where bonuses could climb as much as 20 percent, the compensation consulting firm said Friday in a report. Increased volatility and heightened client activity are behind the boost, the company said.

The only position not reaping the benefits is advisory within investment banking, where incentives could fall as much as 10 percent. Managing Director Alan Johnson said the decrease is due to the cyclical nature of the business.

“They did better last year, so you're doing this year-over-year comparisons,” Johnson said. “It's just the luck of the draw.”

Hedge fund bonuses could be flat to up as much as 5 percent from 2017, according to the report, with those in asset management and private equity seeing average increases of 5 percent to 10 percent.

Still, Johnson cautions not everyone in financial services should plan on a big pay bump.

“It's going to be challenging to manage people's expectations,” he said in an interview. “As we get toward the end of the year I think people will expect to get paid more than they will. How do you manage people who get 5 percent more but maybe they were thinking they would get 10 to 15?”

To contact the reporter on this story: Emma Kinery in New York at ekinery@bloomberg.net

To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Steven Crabill, Steve Dickson

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