A recent report by investment firm recruiter and research provider Options Group details shifts in compensation to employees at a variety of top-tier financial and investment services companies. The 2016/2017 Global Financial Markets Overview and Compensation Report is designed to assist these companies in making broadly informed decisions regarding compensation for their employees, and Options Group focuses on the top 25% of employees in various roles, excluding the top 1% of compensation levels. What does the report show about overall compensation levels, including bonuses, and which areas have seen the biggest climbs in overall average compensation last year?

FICC Compensation

Employees in FICC institutions have generally seen an increase in overall compensation in 2016. Those employees focusing on rates have experienced an average increase in compensation of 5%, as have those working in securitized products and fixed income electronic trading. These three areas have seen the largest gains in terms of percentage. Foreign exchange-focused employees have experienced a climb of 4% in compensation overall, while those in the emerging markets area have gained by 3%. Those employees focused on credit are the only ones in this group to have seen a general decline in compensation levels, experiencing a 1% loss in the past year. However, compared with 2015, in which the decline was a precipitous 15% over the previous year, this is a much better situation.

Equities Compensation

Those employees working at equities-focused institutions have experienced a general downswing in overall compensation last year. Cash equities areas have been hit hardest, with an average drop in compensation of 13%. Overall, equities employees have experienced on average 9% declines in their total compensation last year.

Investment Banking and Private Wealth Management

According to Options Group, employees in the investment banking area have experienced a general decline in compensation of 6%, on average, in 2016. However, those working in private wealth management have seen their compensation climb by 5%.

What is contributing to these shifts? Options Group explains that years of overall attrition in some areas has forced some companies to entice new hires, often with higher premiums. On the other hand, banks have generally elongated their promotion cycles and limited the number of promotions, making job promotions within a firm more difficult to attain. Still, at the same time, on average more investment world professionals are reluctant to switch between firms at this point. These employees are wary of a more stringent vetting process taking place across the board and more eager to hang on to previously attained positions. How these factors play out in terms of overall compensation certainly will depend upon the individual institution and its current standing, but they nonetheless indicate some of the factors influencing compensation levels across the industry.

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