For the third year in a row, most finance and investment professionals are set to receive higher year-end bonuses. A survey of projected year-end compensation estimates from Johnson Associates, released Tuesday, finds that year-end incentives for some professionals will be up 30%.
“The takeaway is that it’s going to be a positive year from an incentive perspective across financial services,” says Chris Connors, managing director at Johnson Associates. “In general, incentives are going to be up, whether it’s in banking, private markets, traditional asset management, insurance or the hedge fund space.”
The one group that may not see any increase in compensation—and possibly a decrease in year-end incentives—are individuals working in private credit, Johnson Associates stated.
“Private credit is kind of the lone outlier here, and perhaps the only declining sector of private markets,” Connors says. “You know what’s going on in the private credit part of the world, in terms of redemption pressures, fundraising, returns. But there really is a bifurcation between the biggest firms [that] are [multi-strategy], they will be probably be more flattish. And then smaller firms [that] are experiencing those same pains, but they might be single strat, all they do is private credit. They’re probably going to be down.”
The firm projected year-end incentives for private equity professionals to be flat to up 7.5% from 2025 levels, depending on the size and scale of specific firms, with higher compensation coming for professionals working in secondary markets.
“Secondaries is leading the way,” Connors says. “[They] benefited pretty significantly from delayed [distributions] in private equity and [limited partners] needing liquidity and private equity firms turning to the secondaries market as opposed to the IPO market or another private equity firm. So, secondaries talent’s really hot. Incentives will be up [around] 10%.”
Compensation increases at the largest buyout shops, Connors notes, will be up about 5% at the high end, while smaller shops will see compensation flat.
Among all financial professionals, investment bankers will see the highest increases in year-end bonuses, Johnson Associates forecasts, with equity sales and trading as well as equity underwriting professionals seeing compensation increases of 20% to more than 30%.
Asset management professionals within equities will see increases of 10% to 15%, Connors notes. “Traditional asset management market appreciation is a big driver of top-line growth for these firms. The flow story is mixed, I would say, but there’s a lot of positive momentum in [exchange-traded funds], particularly active ETFs, particularly in Europe,” Connors says. “So a good story in traditional asset management incentives will be up … [8% to 14%] is our range, but again, a lot of variance there too. We have some boutique active-equity shops that are really struggling from a flows perspective, and they’ll be kind of flattish to up a couple points [higher than last year] and really lagging the market.”
Tags: Johnson Associates