Does A Record-Breaking Year Affect My Bonus?

It has been a record-breaking year for bankers or bond counsels - what does that means for their bonus? Here is some insight on trends we are seeing.

As I am continuing to recuperate from my emergency surgery, I started getting phone calls since people knew they could now reach out. A good amount of phone calls was for well wishes; but, there were many exploratory conversations about where they stood financially. Public finance bankers as well as bond counsels are coming off a record-breaking year, but many are concerned. Because of COVID-19, bankers or bond counsels bonuses may be affected due to the formula, or lack of formula, that is to be applied. 

What Does A Record Breaking Year Mean For Bankers Or Bond Counsels?

In essence, even though our bankers or bond counsels had a record-breaking year, their firms may not have for obvious reasons. The professionals are somewhat concerned that their financial packages are not going to be what they were expecting come bonus time. Many of these calls were full of curiosity regarding what I am expecting to see as it relates to bonuses being paid this year as well as projections for next year. I could only share that the individuals that reached out to me at the senior level have not been pleased with their bonus. Especially if the firm does not have a formula for creating an annual bonus rather, they treat this as a “black box.” Totally discretionary.

The Trends Of Firms & Compensation Packages With Bankers Or Bond Counsels

The firms that we represent are all formulaic based when it comes to a complete compensation model. When there is a formula, you are able to determine almost to the penny what your bonus should be. With no formula, it becomes an extremely sophisticated guessing game. One that I highly recommend you extricate yourself from as soon as possible, whether you are bankers or bond counsels. Generally speaking, the smaller regional type firms are offering formulaic bonuses while the larger bulge bracket firms tend to be discretionary based. We have also seen that salaries for the regional based firms have leveled out. They are truly emphasizing the bonus aspect of the compensation model. While on the other hand, the bulge brackets seem to pay a higher salary but do not incentivize the bankers as well as the regionals.  A producing banker will clearly do much better, compensation-wise, leaving the bulge brackets behind.

A New Trend In Making A Move: The Office Vs. Remote

A new trend that I am aware of is with partners and bond counsels. They desire not to go back to an office but to work full time from their homes. I have had numerous conversations with partners requesting they must have the ability to work predominantly out of their home if they are going to make a move. I do not know how this is going to play out, but I did want to share this as it may become a new trend law firms are going to have to address.

A Final Trend With Making A Move: 5 to 7 Years

There is a final trend that I want to share with anyone – from bankers or bond counsels and more.  If a banker has been at a firm for five to seven years and has never made a move, the firm tends to undervalue that individual. I have seen this trend consistently over the last 5 to 10 years. As much as I do not advocate leaving their current firm solely due to financial reasons, there is one exception to this.  Specifically, when you have only been at one firm while your compensation has been artificially reduced because the firm currently does not value you as an employee being there for five to seven years. They would rather see you as an employee that just joined the firm within the last couple of years. This is not anything negative. However, when banks and law firms start an individual right out of college, they tend to not value them as much in years 5 to 7 as they would if they hired a new employee with similar seven years’ experience.

Conclusion

If you would like to discuss your options, please reach out for a confidential conversation at 760-477-1284 or email at harlan@hfriedmansearch.com. He can also be reached on LinkedIn. Subscribe to our monthly newsletter here, which is a compilation of our weekly blogs, so you never miss one. You can find our listing in the “supplier and services” section of the Red Book under the title of “executive recruiting”.

About Harlan Friedman, JD & Founding Member, H. Friedman Search LLC. Harlan is a thirty-year veteran Public Finance Banker turned recruiter who specializes in the placement of all levels Public Finance Bankers, Healthcare Bankers, Municipal Financial Advisors, Compliance Officers, Issuers, and Bond Counsels.

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