Nearly 50% of Wall Street employees expect their bonus this year to be higher than in 2011, according to a new survey by eFinancialCareers.com. But how can you make sure you'll be happy come bonus season?
The employees who are most confident about their bonus prospects are those working for alternative and long-only asset managers. Those who are most downcast about their bonuses are those working for bulge bracket firms and broker dealers.
“It hasn’t been the easiest year for Wall Street, particularly for bigger firms,” says Constance Melrose, managing director, eFinancialCareers Americas. “The other part of it is that if you’re in an alternative asset management business or long only, there’s more opportunity to differentiate your performance. If you run a fund and it’s done well, you can show your performance.”
Another reason those working for alternative asset managers expect to get a bigger bonus this year than those at other firms is that they aren’t going through the same sort of structural compensation changes as bulge bracket firms, since they are not subjected to the same level of regulatory scrutiny. “They also don’t have to shoulder the same kinds of risk as larger companies do,” Melrose asserts. Employees, perhaps naturally, said their personal performance rather than their firm’s overall performance was the reason behind their expected bonus increase.
According to the survey, 41 percent of respondents said their performance was directly responsible for their expected increase compared to 38 percent who directly linked their bonus to their firm or department’s overall performance. Last year, only 31 percent expected their bonus to be tied to their firm’s performance.
Notably, employees who expect their bonuses to decrease typically attributed this to their firm’s performance, not their personal performance.
Ultimately, Wall Street professionals need to do a great job to get a higher bonus, but especially in today's economic climate, they must also prove they are strong team players.
“For you to drive your bonus higher, your firm has to perform well, but that’s not enough. You have to contribute to your team as well,” Melrose noted.
Meanwhile, the popularity of deferred compensation is increasing: among those who expect some of their bonus to be deferred, the proportion of those expecting a higher proportion of their bonus to be deferred has doubled in the last 12 months, from 13 percent in 2011 to 26 percent in 2012. The survey was taken by 911 professionals currently employed in the financial markets, including 48 percent working in the front office, 27 percent in the middle office and 25 percent in the back office.