Published on by Denis Lapalus
2021, a historic year. Never have bonuses for traders and investment bankers been so high since the depression of 1929. The record dated back to 2006 with $191,400. The year 2020 could have beaten this record, but limitations had been imposed, due to the pandemic. In 2021, the average amount was then $ 184,000, according to the State of New York, which reviews the declared amounts. For 2021, a new record with $257,000, since the limitations have been lifted. The total amount of bonuses would be 142 billion dollars (up from 45 billion in 2022, for the year 2021). Obviously, for 2022, the case is not yet heard, it looks much more complicated.
28,000 traders and investment bankers on Wall Street
This average of Wall Street bonuses is based on 28,000 employees, mainly from the major New York investment banks (Goldman Sachs, Morgan Stanley, Centerview Partners, EverCore, JP Morgan, Bank of America, Greenhill, Perella Weinberg, etc. .). Although algorithmic trading has made its breakthrough on the financial markets in recent years, it is still many human beings who program them and reap the benefits. Autonomous artificial intelligence and their robot-investors remain in the realm of pure fantasy. A computer program remains incomparably stupid, and learning new rules based on past facts does not make it anything tainted with intelligence. Investment banks make their biggest profits on corporate mergers and acquisitions, far from day trading, as many budding investors still believe. Trading activities on interest rate products are on their side in decline. The rise in interest rates should bring new strategic opportunities to the fore in 2022.
A totally unreal year 2021
The rise in 2021 was completely artificial, due to the very fact that the planet was plunged into medieval confinement. The end of this health crisis, still partial, has given a boost to the financial markets, beyond all expectations. We see in 2022 the backlash. The global economy has still not recovered.
Salary increases of $100,000 after one year
The big names in finance have all announced salary increases for their young employees, with average annual earnings of $100,000 in the first year. If you spend your first year in an investment bank on Wall Street, your career is off to a great start! You will see an increase. Suddenly, with an average bonus of $257,000, life may seem cheaper, even in New York.
Outlook for 2022
“En addition to a positive outlook for the year ahead, there is a growing concern for the retention of key talent. With high results comes high expectations, coupled with a healthy and mobile recruiting environment and an as yet undefined “new normal”. Fortunately, the upward momentum in 2022 provides limited runway for decisions with the looming macroeconomic pressures of rising inflation and interest rates and a perceived market bubble. In the medium term, companies should put at least some stakes in the ground to creatively align compensation programs and workforce management with the desired compensation culture and philosophy. To inform the way forward, metrics such as the role and magnitude of base salaries, diversity and inclusion metrics and targets, geographic pay differences, and flexibilitysays Johnson Associates and one of the leading national compensation authorities on Wall Street.