On November 15, 2014 the New York Post reported:
This haircut really stings for Wall Street?s worker bees.
The huge swarms who do grunt work for the masters of the universe must rein in costs ? because their bank and brokerage employers need more cash for a slimmed-down bonus season, according to financial services pros.
From support staff to supervisors, firms are slashing expense accounts ? even pulling the plug on once-lavish holiday parties ? as they shore up finances for the annual ritual of payouts and year-end bonuses.
Overall comp, including cash and stock, will remain flat, according to one analyst, dipping as much as 10 percent from last year for equity, bond and many hedge-fund professionals. Of course, that?s not shabby compared to the traders in hard-hit sectors like commodities. Commodity payouts will be abysmal, said several pros.
Wealth management, bolstered by the expanding fortunes of America?s richest families ? and served by financial advisers who can earn multimillion-dollar annual pay packages ? is the most surprisingly tight-fisted, according to one recruiter.
Advisers will have a superlative year, but thousands who support them are mad as hell.
?It strikes me that the wealth management industry is still behaving and compensating their people as if we are still in a bear market,? recruiter Danny Sarch told The Post. Sarch pointed to Morgan Stanley, which apparently is acting like the Grinch who stole Christmas.
?I am hearing there?s a cap per person there on holiday parties, and on what employees can expense elsewhere,? he said. ?Employees have to submit an original receipt, say for a meal with a client, rather than a copy, that kind of thing. They are not trusting the employee.?
Sarch said employees must grin and bear it. ?They are comparing it to the pre-Crash days,? he said, adding that the pattern may be systemic across the Street.
?There are no changes here with regard to expense policies and holiday parties,? Morgan Stanley spokesman James Wiggins said.
Alan Johnson, the compensation expert who publishes a closely monitored survey of annual Street comp, is not surprised by this penny pinching in an era of Dodd-Frank and costly legal settlements. ?These banks are trying to walk down the beach carrying an anchor behind them,? he said. ?That anchor is the legal settlements, the extra capital they need and all the extra compliance, risk and technology people they must employ.?
Mark Longo, CEO of The Options Insider, an industry news outlet, said new regulations are weighing heavily on bonuses this year.
?It is having a tremendous chilling effect,? Longo, a former options trader, said. He added firms are reallocating budgets to pay for more compliance staff and lawyers, pulling huge resources away from capital investment in new machines and tech upgrades.