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Broker Pay Up 13% to $422,000 in 2017; NYS DiNapoli Report

Traders Magazine Online News, September 18, 2018

John D'Antona Jr.

Cha-ching!

Itís the best time to be a broker in New York City, according to New York State Comptroller Thomas DiNapoli. In his most recent report on the state of the securities industry, DiNapoli reported that securities industry pretax profits totaled $13.7 billion in the first half of 2018, 11 percent higher than last year.

The average salary (including bonuses) in New York City's securities industry increased by 13 percent to $422,500 in 2017, the highest since 2008 and the third-highest on record after adjusting for inflation. The securities industry has the highest average salary of any industry in New York City, and accounted for 21 percent of all private sector wages in 2017 even though it accounted for less than 5 percent of employment.

"Wall Street has profited every year since the end of the recession in 2009, and compensation last year reached its highest point since the financial crisis. The momentum from last year's dramatic rise in profits has carried into 2018 and the industry is on track for another good year absent a setback later in the year," DiNapoli said in a prepared statement. "The securities industry is a major source of revenue for New York City and New York State, and is an important part of the city's economy. Ten years after Lehman Brothers' collapse it is clear that Wall St. does not need to return to the days of excessive risk-taking to enjoy rising profits."

Industry performance is traditionally measured by the pretax profits of the broker/dealer operations of New York Stock Exchange (NYSE) member firms. There are now about 120 firms, down from more than 200 before the financial crisis.

In 2017, pretax profits rose by 42 percent to $24.5 billion. This followed a 21 percent increase in 2016. Profits rose in 2016 because of lower costs, while profits grew in 2017 because of higher revenues. Net revenue (the preferred industry measure) grew by 4.5 percent in 2017, the largest increase in five years, and increased by 8.6 percent in the first half of 2018. Revenue growth was strongest in wealth management and account supervision, underwriting, trading and other income related to the securities business.

In March 2018, DiNapoli estimated that the average bonus for securities industry employees in New York City increased by 17 percent to $184,200. After adjusting for inflation, it was the highest average bonus in a decade and the fourth-highest on record. Bonuses accounted for an estimated 40 percent of securities industry wages in 2017, a larger share than in any other major industry in New York City.

Bonuses for industry employees in the city are likely to increase in 2018 for the third consecutive year based on compensation and profit trends in the first half, although it is too early to predict with certainty. DiNapoli will release his office's 2018 bonus estimate in the spring, based on tax withholding trends during the traditional bonus season.

New York state has more securities industry jobs (197,300 in 2017) than any other state in the nation, more than twice as many as second-ranked California and nearly three times those of third-ranked Texas.

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