Traditional Asset Managers Rethink Incentives Amid Rising Pressure from Private Capital Giants

In a bold shift that reflects growing tension across global asset management, BlackRock and Goldman Sachs are reportedly revamping their executive compensation frameworks to better compete with alternative asset firms such as Apollo Global Management, Blackstone, and KKR. The move underscores an industry-wide recalibration of leadership incentives as traditional players strive to retain top talent and stay competitive in a rapidly evolving capital environment.

A Talent Tug-of-War with Private Equity

For years, Wall Street’s traditional compensation structures—heavy on base salary and annual cash bonuses—have lagged behind the long-term wealth creation models used by alternative asset managers. In contrast, firms like Blackstone and Apollo offer carried interest, equity stakes, and long-duration performance incentives that often dwarf traditional pay packages.

Now, sources within both BlackRock and Goldman indicate a pivot toward carried-interest-style structures, performance-linked equity grants, and deferred bonus arrangements—measures designed to retain rainmakers and prevent top-quants and dealmakers from migrating to higher-paying alt platforms.

Internal Pressure, External Competition

The pressure isn’t only external. Internally, rising stars within global asset managers have questioned the outdated bonus models that fail to reward long-term strategy, innovation, and cross-border dealmaking. With venture-style capital deployment and private credit emerging as key battlegrounds, the legacy model of “cash now, stock later” is losing traction.

Goldman Sachs, in particular, is said to be piloting new frameworks within its Asset & Wealth Management division, while BlackRock is rolling out updated long-term incentive plans (LTIPs) tied to performance in private markets, infrastructure, and sustainability-linked funds.

Strategic Implications for Industry Norms

This realignment isn’t simply cosmetic. Compensation reform sends a strong market signal that the old guard of asset management is embracing the playbook of alternative capital. With private equity firms eating into mandates that once belonged exclusively to mutual fund and ETF managers, the competitive stakes are growing.

Key outcomes include:

• Better retention of high-performance executives and portfolio managers

• Alignment of pay with long-term fund success and innovation

• Institutional repositioning as firms embrace more agile, alt-like structures internally

Risks and Governance Watchpoints

While the shift to alt-style compensation may enhance competitiveness, it’s also raising eyebrows among governance advocates. Critics argue that replicating PE-style incentives at publicly traded firms could blur transparency, inflate risk, and reduce investor oversight.

Shareholder advisory firms have already flagged potential red flags, especially where carried interest or private equity-style upside is granted without corresponding downside risk mechanisms.

Looking Ahead: A New Compensation Paradigm

This evolution in pay practices highlights a broader truth: compensation is strategy. In today’s market, where capital is abundant but talent is scarce, how firms pay their leaders often signals how they intend to grow.

As BlackRock, Goldman, and others pivot toward a more flexible, performance-driven model, the lines between traditional and alternative asset managers continue to blur—ushering in a hybrid future where talent, alignment, and innovation will define the winners.