Wall Street traders will get fatter bonuses after riding volatile markets, consultancy says

Wall Street stock and bond traders are projected to receive bonus increases of 10-30% in 2025, leveraging market volatility, according to Johnson Associates. While wealth management and hedge fund executives anticipate up to 5% gains and asset managers 2-7.5%, investment banking compensation is expected to remain largely flat or see only a modest 5% rise despite a potential H2 deal rebound. Private equity secondary offerings and private credit are also poised for 10% and 7.5% increases respectively, as 2025 is characterized as a 'regular' year with diminishing impacts from prior unpredictable U.S. policies.

Analysis

A clear divergence in compensation trends is emerging across Wall Street, driven primarily by market conditions and business line activity, according to a Johnson Associates report. Stock and bond traders are the primary beneficiaries, with projected bonus increases of 10% to 30% for the year, directly attributed to their ability to capitalize on market volatility stemming from tariff-related uncertainty. In contrast, compensation for investment banking advisory roles is expected to be subdued, remaining flat or rising a modest 5%, as a potential second-half rebound in M&A and IPOs will not translate into fees until deals close, potentially delaying a significant compensation uplift until 2026. Other segments show moderate growth, with wealth management and hedge fund executives seeing increases up to 5% and asset managers 2% to 7.5%, supported by recovering markets and client inflows. Notably, specialized areas within private markets are outperforming, with compensation for private equity secondary offerings professionals expected to grow 10% and private credit specialists by 7.5%, signaling robust activity and expansion in these alternative asset classes.

Key Decisions for Investors

• Investors should consider that financial firms with strong sales and trading franchises are best positioned to benefit from the current volatile environment, potentially outperforming those heavily reliant on M&A advisory fees in the near term.
• Monitor M&A and IPO deal announcement volumes in the second half of the year, as this will serve as a leading indicator for 2026 revenue and compensation performance for investment banks, given the lag in fee recognition.
• The strong compensation growth in private equity secondaries and private credit highlights sustained momentum in alternative assets, suggesting investors should evaluate asset managers who are successfully expanding their private market platforms.