The Bonus Is Discretionary. So Is Your Decision to Stay.

When a private bank tells a relationship manager that the bonus is discretionary, it is also saying that their best year and their average year can end up in the same envelope. Most RMs hear the first half of that sentence when they sign. They hear the second half around March, when the letter arrives.

I've spoken with enough bankers in the weeks after that letter to know how those conversations go. They rarely start with money. They start with "I don't understand how they got to that number," and some of them end six weeks later with a resignation. The number is often defensible. What costs the bank the franchise is that nobody can explain it.

Discretionary is the default, and banks have reasons

Across private banking, the variable bonus is still mostly paid at the bank's discretion. When Bank of Singapore moved its RMs to a model tied to individual profit contribution, the coverage noted that at most private banks the bonus is predominantly discretionary.[1] That a change like this counted as news tells you where the baseline sits.

Banks aren't being perverse. In Switzerland, FINMA's remuneration circular pushes banks to align variable pay with risk and long-term performance, through deferral and adjustments linked to later results. It binds some institutions and acts as a guideline for others.[2] A bank that has promised a rigid formula has less room to move when the year goes badly, or when risks surface after the bonus has been awarded.

The regulatory direction is the same. On 12 August 2026, the Federal Council opened a consultation, running until 19 November, on Banking Act amendments. The toughest remuneration measures, retention periods and clawbacks, would target the most senior or highest-paid managers at systemically important banks. Broader principles on risk and moral hazard would apply to all banks.[3] None of it is law yet, and the final text may change. Most RMs wouldn't be directly covered. But the message to the industry is clear: variable pay isn't fully earned just because the revenue showed up on this year's books.

Where it breaks for the performer

The mechanics matter more than the intent. Bonus pools are often shaped by budgets, divisional targets and the bank's overall result before individual contributions get a proper look. Banks commonly translate top-down revenue objectives into front-office targets, and the RM's own numbers have little say in how much money is available to share out.[4]

Picture an RM who has an outstanding year in a division that has a mediocre one. That RM is competing for a slice of a smaller pie. Their performance helps decide the share. It doesn't necessarily decide the size of the pie.

Then comes the manager's instinct for peace. A team head who has to defend ten numbers upward would rather have ten defensible numbers close together than one outlier to explain. What I hear from candidates is compression far more often than differentiation, and the top performer pays for the calm.

Scorecards don't automatically fix this. J.P. Morgan's U.S. private bank states in its client disclosures that scorecards are used to evaluate team members, but that there is no prescribed relationship between a scorecard and compensation.[5] The scorecard tells the RM what to care about. The pay decision can still rest on a wider set of considerations.

Discretion is defensible. Discretion without an explanation is very hard to defend.

Why hunters pay the highest price

A hunter's year is front-loaded with effort and back-loaded with revenue. The client is won in spring, clears onboarding over the summer, funds in the autumn, and shows a proper revenue line the year after. A review that looks mainly at booked revenue for the calendar year finds a modest figure next to the hunter's name and a large, steady one next to the farmer's. The work sits in the pipeline, and the pay gets judged on the P&L.

That doesn't mean the hunter deserves more than the farmer. A farmer protecting a profitable CHF 500 million franchise may be delivering more immediate value than a hunter who has just brought in CHF 100 million of new assets. But the hunter's contribution isn't irrelevant either. The two create value on different timelines, and one annual measurement misprices both.

In my experience, banks buy a hunter's potential up front, through the package, and then judge the result on annual numbers and established revenue. It works like an option on growth, with the premium paid on day one and the payoff measured on the wrong clock.

The numbers show how much room there is. In our 2025 to 2026 mandate and placement data, a Senior RM or Director in Geneva sits at CHF 180,000 to 250,000 base, with a bonus of 50 to 100 percent of base. In Zurich it is CHF 170,000 to 240,000, with 50 to 90 percent.[6] Those are indicative ranges, not a market rule. But look at the width. A 50-point spread in bonus, on the same title, is what discretion looks like in practice. Where a banker lands inside it depends far more on the economics and portability of the book than on the label, and on how the bank chooses to read the year.

Attribution makes it worse. The hunter's new client may have come through a farmer colleague's referral, a CIO event, or the brand itself. Without clear attribution rules, who gets the credit can depend as much on internal advocacy as on economic contribution. And hunters are often out of the room, meeting the next client.

Some banks do split the tracks. In Luxembourg, hunters may receive performance bonuses linked directly to net new money, while farmers get a blend of base pay and retention-based incentives.[7] The design exists. It just isn't standard.

A formula isn't the rescue either

The tempting answer is to pay on a formula. Bank of Singapore's move gives RMs a clearer link between contribution and pay, and a number you can follow beats one you can't. But formulas fail in their own way.

Pay on net new money alone and you risk rewarding volume that is temporary, thin in margin or expensive to service. Pay on profit contribution and the RM gets judged on lines they don't fully control: cost allocation, funding charges, credit appetite, pricing decisions made two floors up. A formula tells people exactly what to optimise, and they do. Then a bad year arrives, the bank adjusts the formula, and trust breaks anyway.

Compensation consultants make a related point about bank executive incentive plans. Discretion tends to be unpopular with investors, but used inside a defined structure it can improve the link between pay and performance.[8] That is about executives, not RMs, but the logic carries over.

The workable middle is a scorecard where measurable performance carries most of the weight and discretion works as a bounded override that has to be explained in writing. If discretion decides most of your pay, it isn't an override. It is the system.

The scorecard also has to reward the right things. Net new money matters, and so do the quality and durability of those assets, the revenue they generate, client retention and risk-adjusted profitability. A bank that rewards asset gathering without asking what the assets earn has swapped one compensation problem for another.

What to ask before you sign, or before you stay

If you're weighing an offer, or your own bank's letter, start with who decides the number and who can see the calculation. Ask whether the pool is set before the year, adjusted afterwards, or decided entirely at year-end. Ask what share of the pool went to the top quartile last year, not just what the average payout was.

Ask how a client you bring is attributed, and over what horizon new money gets recognised. Ask whether the bank distinguishes between assets gathered, assets retained and revenue actually generated. And ask what happens to deferred compensation if you leave, because forfeiture can be the hidden price of a move. In our placements, replacement awards for that forfeiture are commonly sized at 6 to 18 months of prior total compensation, which is why they sit at the centre of so many senior transfers.[6]

A bank that answers these cleanly is telling you something. A bank that says "it depends on the year" is also telling you something.

For banks, the fix doesn't need a grand redesign. Explain how the pool is funded and adjusted, so people know what they're competing for. Give hunters a multi-year recognition window for sustainable net new money, so the client won in spring is credited when it finally pays. Use a scorecard that separates asset gathering from profitable asset gathering. Bound discretion, and require the reasons for using it to be written down.

None of this takes away the bank's ability to cut variable pay in a bad year, which sound risk management and regulation may require. It only means the decision can be explained.

A bonus nobody can explain is a retention budget spent for the benefit of your competitor. Someone will explain it to your best banker eventually, and they'll do it with a package in hand.

If you are weighing a move and want to see how much of your book would travel with you, the EP Portability Score takes a few minutes. And if this was useful, subscribe at execpartners.ch/subscribe.

Sources

[1] Bank of Singapore profit-linked variable bonus model, via Caproasia: https://www.caproasia.com/?p=68735 [2] FINMA Circular 2010/1, Remuneration schemes: https://finma.ch/en/~/media/finma/dokumente/rundschreiben-archiv/2010/rs-10-01/finma-rs-2010-01-30-06-2017.pdf?la=en [3] Federal Council consultation of 12 August 2026 (Mondaq): https://www.mondaq.com/federal-council-launches-consultation-on-amendments-to-banking-act-and-liquidity-ordinance-on-too-big-to-fail-regulation/1830164 and CDBF analysis: https://cdbf.ch/en/1474/ [4] Simon-Kucher, Revenue Management Excellence: https://alumni.simon-kucher.com/news/60061 [5] J.P. Morgan Private Bank, Compensation and Potential Conflicts: https://investment.jpmorgan.com/private-bank/compensation-and-conflicts [6] Executive Partners observed mandate and placement data, 2025 to early 2026: https://www.execpartners.ch/en/insights/private-banking-salary-geneva-2026 and https://www.execpartners.ch/en/insights/private-banking-salary-switzerland-2026 [7] Investment Officer, reporting on the Morgan Philips salary guide: https://cms.investmentofficer.com/en/news/private-banks-race-growth-hunters-return-favour [8] Bank Director, Compensation Advisory Partners: https://www.bankdirector.com/article/discretion-in-incentive-plans-taboo-or-a-must/