Healthcare and technology jobs are poised for biggest pay swings on Wall Street

By Hugh Son & Michael J Moore

This was a great year on Wall Street to help buy and sell drug companies. Distressed debt and mortgagelinked securities? Not so much.

Financial firms are preparing to lavish this year’s biggest raises on healthcare bankers, who will probably see a 20% bump on average, according to an Options Group report projecting this year’s biggest pay swings. Other winners include telecommunications, media and technology bankers and traders of rates options and equity derivatives — all getting 15% more than last year. Traders of distressed debt and fixed-rate collateralised mortgage obligations may see their compensation tumble 25%.

A wave of healthcare and tech deals has helped propel total corporate takeovers past $3.1 trillion so far this year, threatening to break 2007’s record. While equities traders may see compensation rise by 7% on average, the picture is mixed for employees on fixed income desks: Credit and commodities traders may suffer double-digit declines while rates and currency traders get a 5% boost, according to Options Group.

“Healthcare and technology-media have been quite active this year, and so naturally compensation for these two areas in investment banking will be higher,” Michael Karp, the recruitment firm’s chief executive officer, said in a phone interview. “Equity derivatives will be the star performer within equities, as there’s always a war for talent because there’s a limited pool of talent — and the best traders often leave for the buyside.” Among others who can expect 15% increases: Electronic trading programmers.

Pay will probably drop 20% for traders of high yield debt, crude oil and loans, according to Options Group. It will probably fall 15% for people handling nonagency mortgage-backed securities, collateralised debt and loan obligations, and sales of mortgage-backed securities.

TRADE YOUR RAISE?

Compensation often dominates discussions at the biggest investment banks this time of year, as top managers start to determine the size of bonus pools. Individual employees usually find out their total pay early in the new year after annual results are finalized.

Options Group’s forecasts are based on public and proprietary data about revenue for the year’s first nine months, and bonus expectations from a survey of about 3,000 Wall Street workers. The New Yorkbased firm has conducted the survey for more than a decade.

When Options Group asked what change would most improve the financial industry, the top response across businesses and job titles was lowering capital requirements for market making. Other popular answers included raising interest rates and boosting oversight of non-bank entities, which can include hedge funds and Internet lenders.

The firm also posed this hypothetical question: What would you trade a 20% pay raise for? Among junior employees in bond trading and investment banking, about one-third said they’d choose a better work-life balance. Most vice presidents, directors and managing directors simply opted for the money.