The financial services industry has been pulling in solid profits lately, but experts say firms should be mindful about how they dole out year-end bonuses and to keep the focus on rewarding long-term performance.

Taxpayers were nearly ready to bring out "le guillotine" in March after the American International Group awarded the top executives in its financial products unit $165 million in bonuses just months after the firm received $173 billion in government bailouts.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.