After years in private equity’s shadow, Wall Street’s biggest banks are reclaiming their status as some of finance’s top-paying employers.
A new report from compensation consultancy Johnson Associates found that major banks are projected to increase bonuses by 39% from 2022 levels, outpacing wealth management and hedge funds, which are expected to increase bonuses by 29% and 24%, respectively. Alan Johnson, the firm’s founder, said that banks’ M&A, equity underwriting, and trading units are doing particularly well.
The big banks’ luster marks a change from a few years ago, when private equity firms were considered the most lucrative places to work, Johnson said.
Now, Johnson Associates expects private equity bonuses to be flat or rise just 5% compared to last year, as fundraising is down and companies stay private for longer.
“One of the stars for a long time was private equity,” Johnson said. “The big compensation opportunities, which come through carried interest, have been delayed, or in some cases, may never happen. They were clearly the lead, and now banks and others have kind of caught up some or all the way.”
Private credit could also see bonuses decline between 2.5% to 7.5%, according to the report, amid high-profile redemption requests and concerns about AI affecting portfolio companies.
The six biggest Wall Street banks posted strong first-quarter earnings last month, reporting a combined $47.3 billion in revenue.
“The big banks have been kind of out of favor for a decade or more, in terms of being a place to work or comp opportunities,” he said.
Investment and commercial bankers are projected to see a 10% bump in bonuses compared to the record 2025 payouts, according to the report, driven by a healthy M&A pipeline and anticipated IPOs. Though the report noted that year-end projections are “fragile” given widespread uncertainty, like the war in Iran, “sentiment remains high.” Johnson was himself pleasantly surprised by the results, saying the war may be bad for everyday Americans, but is a mere “irritant” for the financial services industry right now.
The average bonus for Wall Streeters rose 6% to $246,900 in 2025, according to an estimate from New York State Comptroller Tom DiNapoli published in March.
AI is scrambling the talent pipeline
Though Johnson Associates found that bonuses are projected to be broadly flat or slightly up across sectors, not everyone is necessarily seeing green.
Johnson Associates found that advancements in AI are increasingly rewarding workers with AI-driven skillsets like quantitative analysis, while putting entry-level roles at risk.
Johnson said he expects the industry’s overall head count to shrink by up to 15% over the next two or three years. None of the six biggest US banks have announced mass layoffs related to AI, though some CEOs have said they’re slowing hiring and considering redeployment plans for affected employees.
“It’s amazing how fast this happened, but I don’t think anyone should be surprised that it’s happened,” he said of AI’s impact on talent and hiring. “These firms spend billions of dollars on this, and the only thing we know about financial services is that when they spend billions of dollars on something, they’re going to use it. And they’re going to use it aggressively.”
Johnson is especially concerned that financial leaders have not meaningfully considered how AI will impact a once well-established career path, as the technology eliminates much of the grunt work once synonymous with junior investment banking. Firms aren’t hiring as many people at the bottom or in the middle, he said, begging the question of whether employees will need to broaden their skillsets.
Tools are already available that have the potential to transform the job — on Tuesday, Anthropic announced a suite of AI agents that can perform many basic banking tasks, such as building models and pitch decks.
“All of these existential questions — I don’t think people have really figured it out at all,” Johnson said.
