Wall Street's Bonus Outlook Brightens
Things are certainly looking up when it comes to bonuses in the financial services industry, but not surprisingly US executives are the least optimistic when it comes to 2013 financial bonuses.
According to the Global Bonus Expectations Survey from eFinancialCareers.com, overall 6 in 10 (59%) of respondents expect a bonus in 2013, with 42% anticipating an increase. However, US respondents are the most reserved when it comes to the size of their bonus, with 40% predicting their bonus will grow by no more than 10%, and 3 in ten (29%) expect an increase of between 11% and 30%. In comparison, six in 10 (61%) of surveyed finance professionals based in the financial centers of the Middle East expect their bonuses to be bigger, as do 58% of those in the UK, 58% in Australia, 54% in Germany, 50% in Singapore and 53% in Hong Kong.
The US financial services space is still facing many challenges that have depressed revenues, including a drop in equities markets activity, many new regulatory constraints and new business models that hamper previously lucrative revenue streams.
While the 2013 bonus expectation results are a marked improvement from 2012, it still does not completely reverse the slide in earnings the industry has seen since the financial crisis began. For instance, according to a 2012 survey from eFinancialCareers, bonuses across the industry slipped 51% in 2011 compared to 2010. Overall in 2012, bonuses as a percent of compensation dropped rapidly and average salaries declined too, with average earnings for the financial sector down 18% in 2012 over 2011, according to the 2012 eFinancialCareers Compensation Survey.
[For more info on some of the hottest careers on Wall Street, read: Banks Face Big Data And IT Talent Shortage.]
In the 2013 survey, money (obviously) is important for a significant proportion of survey respondents: four in 10 respondents (41%) say that compensation is the most important reason in their decision to work in the financial services industry. Half of them (50%) also say the only way to earn a larger bonus in the near future is by switching employers. Interestingly, however, over half (55%) report they are open to a reduced bonus in exchange for additional benefits.
When it comes to why industry employees expect an increase in bonuses, personal and firm performance were the top reasons financial professionals cited for their higher bonus expectations. Meanwhile, those who do not expect a bonus change, or anticipate a lower bonus, blamed firm performance and market conditions as leading reasons.
Just a quarter (26%) of respondents expect a portion of their bonuses to be deferred this year. Of them, two in 10 (20%) foresee a higher portion of their bonus to be deferred as compared to last year, but 6 in ten (59%) do not expect to lose any of their deferred rewards at all this year.
Looking ahead, U.S. financial industry workers are split on the future of bonuses – 40% expect bonuses to stay the same over the next three years, 33% foresee an increase, and 27% anticipate a drop. Greg MacSweeney is editorial director of InformationWeek Financial Services, whose brands include Wall Street & Technology, Bank Systems & Technology, Advanced Trading, and Insurance & Technology. View Full Bio