Private Markets Face Talent Risk in Compensation and Carry

Half of alternative investment firms surveyed admit to not managing compensation with the same rigor applied to other core business functions — a gap that Allvue and its research partner, Major, Lindsey & Africa (MLA), say is becoming increasingly dangerous as competition for experienced professionals intensifies. Only 11% of firms believe their carry administration capabilities are ahead of peers, and 58% still rely on Excel spreadsheets to run carry programs.

The transparency deficit compounds the operational problem. Fewer than half of firms provide total rewards statements that give employees a consolidated view of salary, bonus, carry, and co-investment. Only 36% invest in education and training on carried interest compensation, and just 16% say employee sentiment is a meaningful input into compensation decisions.

Over half of firms rely on discretionary carry to some extent, meaning most participants cannot trace award decisions to defined criteria — a setup that breeds skepticism and erodes trust.

“Asset managers and GPs want to understand how their contribution connects to their compensation, and firms that cannot clearly communicate this will lose ground to those that can,” Richard Change, head of FirmView, Allvue Systems.

Looking ahead, firms identified three primary forces expected to shape compensation and carry programs: intensifying competition for talent across strategies (47%), rising employee expectations for transparency and communication (46%), and difficulty aligning incentives with outcomes as return environments become more challenging (35%).

More than half of respondents could not confirm that their compensation practices are data-driven, and 42% lack well-defined compensation bands by role or level.