The U.S. investment services industry should see improved profits over the next year according to a forecast from Standard & Poor’s.

S&P foresees improved financial results for the sector due to a rebound in corporate earnings, continued strength in the fixed-income securities markets, steady growth in U.S. mutual fund assets of 11-15%, and increased M&A activity.

In addition, companies’ compensation costs should be much more manageable over the next year, since the competition for talent from “new economy” firms has ended with the drop-off in technology sector growth.

“While the brokerage stocks have been hard-hit by the negative publicity surrounding potential research analyst conflicts of interest, over the longer term these firms are likely to benefit from an improving economy and improving investor confidence following regulatory efforts to reduce or eliminate potential conflicts of interest,” says Robert McMillan, S&P’s equity analyst for the investment services industry and author of the survey.