Wall Street bonuses seen flat to slightly positive in 2026 as Iran war and private credit turmoil hurt

• Investment banking, trading, and advisory roles expected to outperform with bonus increases up to 10%, driven by volatile markets, strong M&A activity, and IPO momentum
• Private credit professionals face flat to 5% bonus growth due to fundraising challenges, lower returns, and investor concerns about valuations and lending standards
• Hedge fund bonuses projected to rise 2.5-10%, while wealth management and traditional asset managers expected to see 5% increases from market recovery and competitive talent demand

Wall Street Bonuses Forecast Flat to Slightly Positive in 2026 Amid Geopolitical and Market Headwinds

Wall Street bonuses are expected to remain flat to slightly positive in 2026, according to compensation consultancy Johnson Associates, as the Iran war and private credit market turmoil threaten economic growth and compensation levels.

Key Figures and Context

Overall Wall Street bonuses surged 9% to a record $49.2 billion in 2025, per New York State Comptroller estimates. However, 2026 presents a more challenging outlook due to geopolitical risks and sector-specific pressures.

Sector Performance Projections

Investment and commercial banking are expected to outperform with bonus increases up to 10%, driven by volatile market trading opportunities and strong momentum in M&A and IPO activity. Advisory and trading divisions are identified as the top performers.

Hedge funds are projected to see bonuses rise 2.5% to 10%, while traditional asset managers anticipate approximately 5% increases, supported by recovering markets and alternative investment partnerships.

Wealth management bonuses are expected up 5%, fueled by client inflows and competitive demand for private wealth talent.

Underperformers

The private credit sector faces significant challenges, with bonuses projected to decline 2.5% to 7.5% for illiquid alternatives professionals. Fundraising difficulties, lower returns, and investor concerns about valuations and lending standards are creating substantial headwinds.

Market Implications

The Iran war, which began February 28, has driven oil prices sharply higher, raising inflation concerns despite recent diplomatic progress. Geopolitical uncertainty remains the primary risk factor, according to Johnson Associates founder Alan Johnson, potentially constraining compensation growth across the financial sector.

The divergence between traditional banking activities and private credit reflects broader market stresses and shifting investor sentiment toward alternative investments.