Wall Street Heads Into Another Robust Bonus Season

The outlook for Wall Street bonuses in 2026 is murkier. (Spencer Platt/Getty Images)

Key Points

• Year-end bonuses for 2025 are projected to be robust, with some businesses seeing double-digit increases in incentive pay.
• Equity sales and trading workers could see incentive bumps of 15% to 25%, while M&A advisory workers may see 10% to 15% increases.
• The outlook for 2026 is less clear because of a slowing global economy, elevated market valuations, and heightened credit risk.

Wall Street’s bankers can expect a little something extra in their stockings this year, but there’s a murkier outlook for 2026.

Year-end bonuses are projected to be robust for the second-straight year, with double-digit increases in incentive pay in some businesses, according to financial services compensation consultancy Johnson Associates.

A soaring stock market has fired up the revenue-generating engines in some of Wall Street’s biggest businesses: sales and trading, underwriting, and advisory.

Some equity sales and trading workers could see incentive bumps of 15% to 25%, including cash bonuses and equity awards, from 2024, the consultancy projects.

“The financial services industry has rebounded from a dismal first quarter and is on track to finish 2025 strongly despite continued geopolitical uncertainties and tariffs,” said Alan Johnson, managing director of the New York-based firm.

Johnson Associates’ closely watched year-end analysis is based on its ongoing monitoring of and conversations with clients in the financial services industry, proprietary data points, and public data from 15 of the nation’s largest investment and commercial banks and 20 of the largest asset management firms.

Johnson told Barron’s that the projected percentage increases represent ranges rather than absolutes, and that individual payouts would depend on the company and the employee’s performance.

Mergers-and-acquisitions advisory workers could see increases of 10% to 15%. Those in wealth management could see bumps of 8% to 10%, and those in asset management could see 7% to 12% increases.

Fixed-income sales and trading and debt underwriting desks could see somewhat smaller increases of 5% to 15%, while equity underwriting workers could see 5% to 8% bumps.

Private-credit employees could see increases of 5% to 10%; hedge fund workers could see increases of 2.5% to 10% or more.

Those in retail and commercial banking and in private equity could see flat to 5% increases, while insurance workers could see bumps of 2.%% to 5%.

Real estate is the only sector where bonuses might be flat from a year ago. The real estate industry is showing some “encouraging signs,” but it’s not fully recovered, Johnson said.

This year’s expected payouts are smaller than last year’s bonuses, when Johnson Associates said debt underwriting workers would see their year-end bonuses jump by 25% to 35%, while equity underwriting departments were expected to see a 15% to 25% spike.

The forecast for 2026 looks less optimistic. “Firms are entering the year with measured caution amid signals of a slowing global economy, elevated market valuations, and heightened credit risk,” Johnson said. As artificial intelligence redefines operating models, he expects workplace structures to “contract, evolve, and reorient around new efficiencies.”

“Demand for talent is likely to remain resilient in select segments, particularly within private wealth, where top producers will continue to command premium compensation,” Johnson said, adding that firms will need “customized but adaptive compensation strategies” to attract and keep specialized talent.

Artificial intelligence is “absolutely” influencing financial services companies’ outlooks on headcount and employment, he said. “I think it’s coming sooner rather than later.”

Some companies are spending billions of dollars investing in AI. It’s not as dramatic as Amazon’s plans to replace workers with robots, but the effects are showing up in the reduced numbers of recent graduates and MBAs that firms are recruiting from campuses.

Johnson Associates predicts a 10% to 20% reduction in headcount over the next three to five years because of AI and technology-driven reductions, which it expects will largely affect operational and entry-level roles, but noted that most individuals and firms “must evolve.”

For Wall Street workers in technology, finance, and human resources, “these jobs are going to be significantly impacted,” Johnson said.

Write to Janet H. Cho at janet.cho@dowjones.com