Arbitrage Andy senses a vibe shift.
It’s bonus season on Wall Street, and a rich one at that, but people aren’t spending like they used to, says Andy, an anonymous financier turned Instagram financial influencer.
On hold, for many, are the usual bonus-time baubles: bespoke Brionis, Rolex Daytonas, Porsches 911s and so on.
Instead, in these days of pandemic, war and financial uncertainty, more Wall Streeters are temporarily banking their 2022 bonuses. Some, alarmed by the surge in inflation, are seeking shelter in cryptocurrencies. Others are sniffing out real estate in work-from-home-friendly locales, hunting up pied-à-terres in the city so they can split their time.
And some, burned out by two awful years of Covid-19, just want to take the money and run: They’re talking about early retirement, financial advisers say.
“Three years ago it was awesome to have a nice custom suit. That's obviously changed," says Arbitrage Andy, speaking on the condition his real name not be used in order to maintain his “finfluencer” mystique. “Because of the way things have played out, priorities have shifted.”
More money — a lot more — is sloshing around Manhattan. Wall Street is handing itself its biggest collective windfall in decades.
The average Wall Street bonus increased 20% to $257,500, according to an analysis by New York State’s comptroller. Payouts at Goldman Sachs Group Inc. are up by an average of 23%, with bonuses for top earners approaching $30 million. At Jefferies Financial Group Inc., pay for some of the best performers has surpassed $25 million. The bump for dealmakers is roughly twice that.
Bump in Bonuses
For obvious reasons, few are willing to talk openly about their bonuses or how they will or won't spend them. But privately, some say spending priorities have changed, at least for now.
At Bank of America, a vice president said he was splashing out on a family vacation in Vail after being cooped up together for two years. At Houlihan Lokey, where payouts are due in May, one banker said he wanted to see if New York finance returns to the office and a traditional five-day workweek. If not, he said, he might consider moving somewhere cheaper. For now, he plans to sock away his new cash and keep an eye on anxious financial markets.
“The way clients are thinking about their bonuses and talking about them is different from the past,” said Liz Miller, president at Summit Place Financial Advisors. “It's an outcome of a couple of years of the pandemic and ongoing uncertainty in general.”
Miller has been providing financial advice to Wall Street-types for years. When bonus money arrives, the first thing many want to talk about is how they’re going to spend it.
But Miller says 2022 is the first time she’s hearing people talk about not spending bonus money — or even about walking away from Wall Street careers after a single, lump-sum payout. Early retirement is what one client mentioned to Miller when the bonus conversation came up.
“We haven’t really heard that before,” Miller said.
Of course, Wall Street's traditional courtiers — real estate agents, private-jet services, purveyors of luxury goods — are still dreaming of the golden crumbs that might fall off the bonus cake. Predictably, everyone tends to say that Wall Street is buying the very thing that they’re selling.
Pamela Liebman, chief executive officer of the Corcoran Group, predicted that real estate will remain a favored destination for bonus money. More people are thinking about ways to escape from city life. Perennial favorites like Aspen, Miami and New York’s Hudson Valley and Hamptons areas are always a draw.
“You will see plenty of money go into second and third homes,” Liebman predicts.
Miller said a senior level client told her they were considering a pied-à-terre in New York City. In a hybrid Covid world, where the habits of workers across all industries have changed, a second home in the city offers convenience.
But some New York neighborhoods that traditionally have been popular with well-heeled bankers — Tribeca, the West Village or Soho, for instance — may not be quite the draw they used to be, said Tanner McAuley Homlish, leasing director at Douglas Elliman. Given the prevalence of hybrid working arrangements, people tend to want more space and amenities, like an extra room they can turn into an office, a building lounge they can work from, a rooftop and a gym.
“Their apartment and their building are essentially working as an office for now,” Homlish said.
At The Jolie on Greenwich Street, a luxury high-rise in the Financial District, one sales pitch is aimed straight at Wall Street.
“The biggest bonus season since the financial crisis is right around the corner,” a marketing brochure reads. “Investment in real estate is a key consideration of the bonus set.”
Ryan Serhant, founder of Serhant LLC and the head of sales at the Jolie, said interest is brisk.
“Our fear with bonus season was everybody’s going to put their cash into vacation homes or cryptocurrency,” Serhant said. But New York finance still loves New York real estate, he said.
For those with money to burn, other luxuries beckon. Brent Moldowan, president of Mayo Aviation, a charter private-jet company in Denver that handles Wall Street clients, said he’s booking as much as two months in advance.
Arbitrage Andy, who has 249,000 Instagram followers, said he often gets messages during bonus season about how Wall Streeters plan to spend their money. Many young bankers, he said, are talking less about picking up luxe items like shoes, bags or coats when time spent at the office has decreased. Instead, they’re wondering about moving to Florida or Texas, or maybe taking a vacation to the Caribbean or somewhere like Montana. They are also eying investment markets.
“With the rise of the retail investment phenomenon, a lot of people are just investing,” Arbitrage Andy said. “For the younger crowd, it’s redundant but watches is usually the biggest thing without a doubt.”
But Wall Street-types who are still hankering after a fancy Rolex might have a tough time finding one soon. Given demand and pandemic supply snags the prices of second-hand Rollies are rising, according to João De Brito e Faro, watches supply manager at online retailer Farfetch. The waiting list for Daytonas, Submariners and GMT Master IIs can run as long as six or seven years unless people have a long-standing relationship with a dealer.“Right now, the big problem is that even if they want to get one of those watches, they are probably not going to be able to,” he said.