Financial industry compensation experts are forecasting modest growth for Wall Street bonuses in 2026, as ongoing international conflicts and market volatility create economic headwinds.
According to compensation consulting firm Johnson Associates, bonus payments across the financial sector will likely remain steady with minimal upward movement next year. This projection comes after Wall Street executives received a 9% increase in bonuses during 2025, reaching a record total of $49.2 billion, based on data from New York State Comptroller Tom DiNapoli released in March.
Johnson Associates had previously predicted that the 2025 bonus distribution would mark the highest levels seen since 2021.
Alan Johnson, who founded the consulting firm, identified international tensions as the primary concern for the industry. “The biggest risk continues to be geopolitics,” Johnson explained. “Last year we had the tariffs, this year we got the war.”
The conflict involving Iran, which started on February 28, has created significant market uncertainty. Iran announced Wednesday that officials are examining a new proposal from the United States, with sources indicating that Washington and Tehran are working toward a brief agreement to halt Gulf region hostilities while postponing complex matters like Iran’s nuclear activities.
While diplomatic progress suggests the conflict may be approaching resolution, Johnson warned that elevated oil prices will persist, contributing to continued inflationary pressures.
Energy markets have experienced dramatic price increases since the Iran conflict began, as concerns about potential supply interruptions have driven costs higher, affecting fuel and transportation expenses across multiple sectors.
Despite broader economic challenges, certain financial sectors are positioned for strong performance. Investment banking and commercial banking divisions could see significant gains as traders capitalize on market volatility, while merger and acquisition activity along with initial public stock offerings maintain robust momentum.
“The two leaders are going to be — the advisory business, and trading,” Johnson noted, highlighting substantial expansion in both IPO activity and M&A transactions. Financial advisors working on merger deals and stock offerings may receive bonus increases as high as 20%, according to the consultancy’s analysis.
Banking professionals specializing in investment and commercial services could see compensation increases reaching 10% as revenue growth accelerates and trading activity continues its upward trajectory.
However, the private credit sector faces significant challenges due to recent market disruptions, creating difficulties in fundraising efforts and reducing investment returns. Johnson Associates projects that professionals in what they term “illiquid alternatives” will experience bonus decreases ranging from 2.5% to 7.5%. Average compensation for these specialists is expected to remain flat or increase by no more than 5%.
Private credit companies have encountered substantial pressure from recent market declines, with many investors pulling back from these investment vehicles due to concerns about asset valuations and lending practices.
Hedge fund managers are anticipated to receive bonus increases between 2.5% and 10%, while traditional asset management professionals will likely see 5% improvements, supported by market recovery and new opportunities through alternative investment partnerships.
Wealth management sector bonuses are projected to increase by 5%, driven by increased client assets and intensified competition for skilled private wealth advisors, Johnson Associates reported.
