The first quarter of the new year is when financial industry workers in New York City receive their Wall Street bonuses. This Wall Street bonus schedule, or these payouts, represents the performance of workers and the market in the previous year. Wall Street bonuses tend to be higher in years when the market does well.
Depending on the firm, employee bonus distributions may be paid anytime from late December through the end of February. This Wall Street bonus schedule time has been described as creating a sort of “March Madness” in terms of its euphoria and spending. After all, who wouldn’t want to celebrate such a financial reward? The 2018 bonus pool, paid in early 2019, was $27.5 billion. That amounted to roughly $153,000 per worker. Although down 9% from the previous year, that bonus is twice the average salary of a New York City worker. Let’s explore the impacts of these bonuses on the luxury market and how they can benefit your business.
Impact of Wall Street Bonuses on the Local Economy
This year’s Wall Street bonus schedule, based on market performance in 2019, is expected to be a bit lower for some Wall Street workers. However, for others, they may experience a slight increase. That’s according to Bloomberg. For example, investment banking advisors and hedge fund managers may see a 5% higher bonus. The Wall Street bonus for commercial bankers looks to be about the same. Fixed income traders could see 5% less, corporate management 10% less. And the Wall Street bonus for equity traders could dip as much a 15%.
Still, even if bonuses are down slightly, that’s a lot of money to be pumped into the area. The financial sector represents 5% of New York city’s private work force, according to Moira Boyle, Director of WealthEngine’s Luxury Sales Strategy. “Those large year-end paychecks have a disproportionate effect on the local and regional economy.”
It’s easy to see how Wall Street bonuses boost the economy of New York City. “People are going to spend most of that money where they live,” commented New York State Comptroller Thomas DiNapoli in a Newsday.com article. But Long Island, the northern suburbs and the entire state profit, he pointed out. Wall Street bonuses contribute a significant amount of tax revenue to the city and state.
Wall Street Bonus Purchasing Power
Spend it, save it, or donate it? Just what are the recipients of those Wall Street bonuses likely to do with that extra cash? “A prudent employee would treat it as salary,” replied Boyle. “However, history has shown that non-discretionary spending and real estate transactions increase during the first quarter of the year. “r
As Boyle pointed out, the more senior executives receive the largest payouts, several times larger than their salary. That’s enough to finance a high-priced investment. The average compensation, including salary and bonus, of Wall Street workers, was $399,000 in 2018. “Approximately 177,000 individuals will be buying real estate, cars, watches, bags, trips, and donating to their favorite charity,” said Boyle.
DiNapoli concurred. Wall Street bonus income is often spent on vacation homes in the Hamptons and on the North Fork. Or for luxury items such as boats and jewelry. East End restaurants and tourist attractions also benefit from stockbrokers’ spending.
The Luxury Market Is Growing
The luxury market grew 5% worldwide in 2018. That growth represents the sales of three major items: luxury cars, luxury experiences and personal luxury goods. Luxury experiences grew by 20% in two areas, high-end food and wine and luxury cruises.
Luxury product marketing targets consumers who have both the propensity and capacity to buy your luxury product or service. It may be apparent Wall Street bonus recipients have the capacity for a luxury purchase. But what about their interest? Are your targeted consumers interested in what you have to offer? It’s not enough to know that your prospect can afford it.
How well do you really know your customers and prospects? Consumers expect more from luxury brands. They want to do business with companies that know enough about them to provide a relevant and personal shopping experience. Luxury marketers must respond to consumer desires for those customers to take them seriously.
Getting Your Share of the Wall Street Bonus Market
If you’re a luxury marketer, this is your opportunity to get your share of Wall Street bonus spending. How are you engaging your customers, based on what you know about their purchasing influencers? ”We know from human nature that their attention will gravitate to what caught their attention most recently,” said Boyle, “so marketing and product visibility is key.”
To bring in new luxury customers you have to know as much about them as you can. And your existing customer data is your starting point. Understanding your current customers will help you determine who you want to reach and how to engage them. Here are some steps you can take to best identify your luxury buyers:
- Gain knowledge and insight on your customers. Segment them through analytics such as profiling and cluster analysis.
- Make evidence-based decisions on where to allocate your resources and the strategies to use to target prospects.
- Identify the data that supports your initiative. Determine the data you need to further understand your customer and create compelling offers.
- Approach prospects who have both the financial ability and behavioral characteristics to join your exclusive circle of customers.
A Look At Millennial Wealth
Download WealthEngine and Coldwell Banker’s A Look at Wealth 2019 to understand the motivations, behaviors, and trends of millennial millionaires.
Leverage wealth data to reach luxury consumers. And Wealth Engine can help you build a customer profile to target Wall Street bonus recipients.