Wall Street’s Profits, Jobs, Compensation Are On the Rise
Wall Street had its third best year ever in 2003, and 2004 is shaping up to be at least as good, according to the Securities Industry Association.
Despite falling 24 percent below the record $31.57 billion in 2000, profits in the U.S. securities industry more than doubled from last year, to $24 billion. The SIA says that number will reach $30 billion by the end of 2004.
“The industry will continue its gradual recovery from a three-year recession,” the Washington-based trade association says in its annual industry outlook report, though it hastens to add that forecasting full-year results this early in any year can be “a humbling experience.”
The report notes that U.S. broker/dealers had a strong finish in 2003, pulling in $6.69 billion in profits in the fourth quarter—31 percent above the previous quarter, and a 240 percent increase for the same period in 2002. That makes it the second best quarterly performance for the brokerage industry in 3.5 years—after the $7.69 billion in the second quarter of 2003, according to the SIA.
The good news is traveling fast throughout the industry and it’s translating into jobs.
“Employment growth at the national level has been underway for months,” says Frank Fernandez, chief economist at the SIA. “The securities and financial services industry has been lagged a bit, but it seems to have turned.”
The profit boom has the SIA predicting about 17,500 new hires by the end of the year. The association also is predicting continued increases in pay. While all other costs continued to decrease along with headcount, compensation, the single largest cost item—accounting for 40.7 percent of total expenses—rose in 2003 after two years of declines. Compensation increased 3.5 percent for the industry as a whole and for registered reps in 2003. It still sits at 17 percent below 2000 levels, but it’s now traveling in the right direction.
