Despite its effort to reduce costs by eliminating staff, decreasing bonuses, and implementing robots to replace workers, Wall Street is preparing for higher costs in the upcoming months.
Six of the largest banks in the country are expected to spend $183 billion on compensation and personnel expenses this year, which will drive overall costs to $320 billion. The significant increases in spending will affect profits, according to AdvisorHub. For example, costs at JP Morgan Chase warned investors that expenses are expected to rise to $81 billion, partially because the bank added more than 20,000 people to its payroll and intends to add more staffers in the next few months. As personnel costs rise, shareholders will expect bank executives to find ways to reduce expenses.
Rising costs throughout the industry have caused some banks to implement a hiring freeze. Bank of America will pause hiring for its more critical roles as it expects expenses to rise to $16 billion this quarter. On the other hand, Wells Fargo & Co. plans to give out $1 billion in raises for staffers, which will increase total expenses to $50.3 billion this year, excluding any losses tied to resolving litigation and regulatory matters, according to CEO Charlie Scharf. Many banks are struggling to keep expenses low while keeping talented employees on their roster happy.
Financial Advisor Transitions consults advisors nationwide to explore employment transition options and to preserve and protect their practice in any transition that they make.
