Bull Bear Report Dec 17 2009

FINS Exclusive Bonus Survey: We Are Not Evil!

By julie steinberg

Over the past several months, the public has had its uncontested say about the finance industry, and the time has come for a rebuttal. A recent survey conducted by FINS.com and The Wall Street Journal in partnership with survey panel eRewards asked 635 finance pros what they would say to Americans if they could tell them one thing about the industry -- and respondents didn't hold back.

"We aren't all evil!" one wrote in. "Not all of us make millions," said another. Other comments ranged from "we're not all greedy" to "we're not all corrupt" to "many hard working people get decent 'bonuses' that form a part of their compensation, but are not the incredible sums you read about in the news." In fact, 40% of respondents gave similar answers.

The next most popular answer? Free advice: save, manage and understand your money. Bernie Madoff notwithstanding, finance workers aren't so bad after all, according to our survey.

Read on for the rest of the results.

Keeping it Frugal

The shops may be open and the bells may be ringing, but come bonus time, finance foot soldiers may not be barging down retailers' doors. Indeed, 64.3% of respondents said they plan to save their bonuses. Even at a time when bonuses for many industry professionals are projected to recover to their 2007 levels, frugality may have become the name of the game.

For most respondents, spending the dough that is coming to them seems to be the last of their priorities. Consider: 45.6% of respondents said they will invest their bonuses, 21.3% intend to save and invest, and 14.4% will use their bonus to pay down debts and accumulated bills.

Professionals working in different sectors plan to do different things with their bonuses. Sales and trading professionals intend on saving the most, with 72% of them choosing that option. They're also planning on investing the least, with only 24% taking the plunge. Talk about not eating your own cooking.

The least likely to put away some money for a rainy day? Wealth managers and insurance employees -- tied at 59% of respondents from these sectors. This number is surprising, since wealth managers are usually good at persuading their clients to plan for the future.

Asset managers intend to invest the most -- 61% indicated as such, which makes sense given their capacities.

Overall, the crop of respondents seems relatively focused on prudent money-managing strategies. Contrary to expectations of a wild material goods shopping spree, just 3.5% said they're going to use their bonus to buy a home, 4.5% will use it to buy a car, and only 2.8% will use it to buy a luxury item. Are the window displays at Barneys losing their sparkly allure?

Not quite. This year, the very mention of the word "bonus" has riled the public and outraged politicians, and the finance industry found itself at the center of a populist storm. Bonuses have become a symbol for everything that's supposedly wrong with the financial system. As a result, political interference has cranked up the pressure on firms to scale back bonuses -- leaving finance pros in a state of uncertainty and more willing to save.

Going Up or Going Down

A growing number of employees are unsure of how bonuses will pan out this year. Half of respondents expect an increase in their bonus, while half expect a decrease. The most optimistic? Investment bankers: 72.5% of them think they're on track for the same or bigger bonus than last year. In comparison 65% of retail bankers are anticipating a decrease in their bonuses when envelopes are handed out.

And there's still a bevy of respondents for whom gloom and doom might be their (or their firm's) new middle name -- 6.7% of respondents aren't expecting a bonus at all this year. Out of those who think they will get a bonus, 81% think it will amount to $50,000 or less, 15% think their bonus will fall between $50,000 and $250,000, while 4% are looking forward to $250,000 to $1 million and up.

The way bonuses are distributed will differ from years past, according to those set to receive one. Only 66% said they expect their bonus to be more than 50% cash. Of that number, 75% predict their bonuses will be paid out entirely in cash. Overall, the average respondent thought that the cash percentage of their bonus would be 63.8%, with the rest coming in vested stock and equity. That's down from 2007, when finance execs could count on 75% to 80% in cash and the rest in stock, according to compensation experts.

Don't Worry, Be Happy

Despite the criticism leveled at them by the public, most finance pros are surprisingly happy at work. On a 1-10 scale provided in the survey (1 being "very unhappy" and 10 "very happy"), 61.6% of respondents selected 7 or above.

Some sectors are jollier than others. Wealth managers are the cheeriest, with 68% selecting a number between 7 and 10 on the happiness scale. Retail bankers were the least likely to report being this happy; only 52.5% of them put it down.

Those who selected 7-10 cited "challenging work" that enables them to "help people." A seemingly altruistic current ran through the thread of comments: "I like educating clients about finances and how to be smart with their money," for example.

On the other hand, some respondents are less than thrilled to be working in finance. For the 10.4% of them who reported being on the low range on the work-happiness gauge, most cited long hours and stress, being forced to do more work in light of job eliminations, market/current conditions, boring aspects of the job, and not wanting to be in the field altogether. "The times are uncertain and financial companies are completely at the whim of the markets -- bad financial performance results in layoffs, which is terrible for morale," one respondent wrote.

That morale has only decreased in an era in which it's become popular to bash bonuses on the evening news.


One survey respondent seemed to speak for them all, whether they'll take home paltry sums or large checks this bonus season, when he said this was the message he wanted to send America: "The face of the financial industry has become Bernie Madoff or Gordon Gekko -- when in reality, many of us are more like George Bailey. We aren't all crooks."

Write to Julie Steinberg


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