Traders and bankers to see double-digit payouts amid revived M&A activity and market turbulence, but AI-driven job cuts loom ahead.
NEW YORK (Market Insider0 — Wall Street’s bonus season is shaping up to be its most lucrative in years, as a rebound in dealmaking and heightened market volatility fuel payouts for traders and investment bankers. According to compensation consultancy Johnson Associates, 2025 bonuses across major financial firms are expected to reach their highest levels since 2021, when record profits and deal volumes defined a post-pandemic boom.
Professionals in equity sales and trading are poised to receive the biggest paydays, with bonuses rising 15% to 25%, while M&A advisers and equity underwriters can expect increases of 10% to 15%, the firm said in its latest outlook. “Markets are at record valuations and there’s a large pipeline of deals that were paralyzed and are now being released,” said Alan Johnson, the firm’s managing director.
Volatility Reignites Trading Profits
Market swings sparked by new U.S. tariffs introduced by President Donald Trump this year have boosted trading desks across Wall Street. As volatility surged, investment banks rushed to rebuild deal teams and expand senior hiring in both M&A and capital markets divisions.
Incentives are also set to climb across other corners of finance: hedge funds, private credit, insurance, retail, and commercial banking professionals could see bonus increases of 5% to 10%, while wealth and asset managers are projected to earn 8% to 12% more than last year.
AI Disruption Clouds the Outlook
Despite the upbeat projections, Johnson warned that “the boom times may fade” if economic growth slows or credit markets weaken in 2026. He also noted that artificial intelligence is expected to reshape the industry’s workforce, potentially cutting up to 20% of jobs over the next five years. The first to go, he said, will likely be entry-level analysts, followed by mid-level operational roles as automation expands.
“Everyone is trying to understand how AI will change financial careers,” Johnson added. “With fewer juniors, the pool for promotions will shrink — it’s going to make career progression more competitive than ever.”
Salary Growth Slows as Firms Tighten Costs
Base salary growth across Wall Street is expected to slow to just 3–3.5% this year, as firms emphasize cost discipline and automation. Many banks have already slowed hiring and are quietly preparing selective headcount cuts in non-revenue roles.
Here’s how Johnson Associates expects 2025 bonuses to stack up across business lines:
| Business Area | Expected Change from 2024 |
| Equity Sales & Trading | Up 15% – 25% |
| Firm Management / Equity Underwriting | Up 10% – 15% |
| M&A Advisory | Up 10% – 15% |
| Wealth Management | Up 8% – 10% |
| Asset Management | Up 7% – 12% |
| Fixed Income Sales & Trading | Up 5% – 15% |
| Investment Banking (Debt Underwriting) | Up 5% – 15% |
| Private Credit | Up 5% – 10% |
| Hedge Funds | Up 2.5% – 10% |
| Corporate Staff | Up 5% – 8% |
| Insurance | Up 2.5% – 5% |
| Retail & Commercial Banking | Flat to Up 5% |
| Private Equity | Flat to Up 5% |
| Real Estate | Flat |
Even as Wall Street readies for its fattest bonuses in four years, the celebration may be short-lived. As Johnson put it, “This year’s payouts reflect a market running hot — but AI, efficiency drives, and cost cuts are already rewriting the playbook for the next generation of finance.”
