Despite earlier worries about shrinking fundster bonus pools, the 2025 outlook now looks decidedly rosier, according to the folks at a New York City-based, financial services-focused compensation consulting firm. Yet they don't expect incentive compensation to match its early pandemic peak.

The team at Johnson Associates predicts, in their freshly released "Financial Services Compensation Second Quarter Trends and Year-End Projections" report, that traditional asset managers' incentive compensation will be 2.5 percent to 7.5 percent higher than in 2024, thanks to market appreciation. That's a dramatic improvement from the Johnson team's Q1 report, when they predicted that fundsters' 2025 bonus pools would shrink by between 5 and 10 percent thanks to "market declines and active equity outflows."

The Johnson team also seems to expect that the year will treat traditional asset managers better than other types of financial services companies. They predict hedge fundsters' bonus pools will rise by 0 to 5 percent this year, while wealth management and family office firms' pools will rise by 2.5 percent to 5 percent, and insurers' bonus pool changes will range from down 5 percent to up 5 percent.

Yet despite the picture improving for asset managers, the Johnson team still expects 2025 fundster bonus pools to lag those of the early pandemic. They predict that bonus pools this year will be higher than in 2024, 2023, and 2022, but still 12 percent below the 2021 peak.

The Johnson team expects "continued differences" in asset managers' fee levels between ETFs and private markets. And the team also expects continuing margin pressure as well as "headcount reductions" aimed at optimizing "cost structure and scale." 

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