Wall Street bonuses are projected to rise for the third year in a row in 2026, fueled by increased market volatility driving trading demand and a resurgence in dealmaking. Incentive pay for investment bankers advising on corporate deals is expected to climb by 10% to 20% or more compared to the previous year, according to Johnson Associates. This trend follows record first-half earnings by major Wall Street banks, which capitalized on active markets and robust consumer spending and borrowing.
Equity traders and equity capital markets bankers are anticipated to see the most significant bonus increases, ranging from 20% to 30%. Advisory bankers, including M&A dealmakers, are projected to experience a 15% to 20% rise. This surge is attributed to a 46% increase in overall investment banking fees, reaching $12.9 billion in the second quarter, with equity underwriting fees at major U.S. banks up by 87% from last year. Johnson Associates, a financial compensation consultancy, notes that "most of the excitement is coming from the equity side, with stock markets at record highs and volatility increasing trading volume."
Beyond equity and M&A, various other financial professionals are also slated for bonus hikes. Senior bank executives and M&A bankers are expected to see increases around 17.5%. Broader corporate staff in operations, IT, finance, and human resources are projected for double-digit increases. Bond underwriters and fixed-income traders are looking at 7.5% bonus growth, while commercial and retail bankers are expected to receive a 5% bump. Even excluding carried interest, bonuses in infrastructure investing are trending up 7.5% and large private equity firms by 5%.
However, this bonus boom is not universally distributed across the financial sector. While Wall Street is celebrating a year of mega deals, a surging stock market, and the AI frenzy, the landscape for private markets is more varied. Private credit is expected to see bonuses drop by as much as 10% due to investor redemptions and fundraising pressures. Professionals in real estate asset management, venture capital, and smaller private equity shops are not projected to receive any aggregate pay increase. This marks a shift where the advantage previously held by alternative asset management firms, such as private equity, credit, and hedge funds, has diminished.
Despite the substantial bonus increases, Wall Street's workforce is not growing. The collective headcount at the six largest Wall Street banks has remained stagnant over the past five years. A PwC survey indicated that 8 out of 10 financial services executives expect their workforces to shrink by at least 20% over the next five years, with AI's impact cited as a significant factor. Alan Johnson, founder of Johnson Associates, commented, "What's different now than other past surges in pay is that none of our clients are really in hiring mode...They think AI is already having an impact, and everybody believes it will have a bigger impact going forward."
