Alternative investment firms are underinvesting in the management of compensation and carry programs at a time when competition to attract and retain specialized talent is intensifying, according to the 2026 Alternatives Compensation & Carry Survey conducted by Allvue Systems in collaboration with Major, Lindsey & Africa (MLA).
The report reveals a growing gap between the strategic importance firms place on talent and their operational readiness to manage compensation and long-term incentive programs. Half of the surveyed companies admit that they do not administer compensation with the same level of rigor applied to other critical business functions, a situation that could put the retention of experienced professionals at risk.
Only 11% of firms state that their carry administration capabilities are ahead of their peers, even as investment professionals increasingly demand greater transparency regarding how their contributions translate into economic incentives.
“This year’s survey highlights a growing risk for private market firms. The management of carry and compensation is not receiving the necessary attention at a time when talent is increasingly mobile and demanding,” noted Richard Change, Head of FirmView at Allvue Systems.
According to Change, asset managers and general partners seek to understand the relationship between their contribution and their remuneration, and firms that fail to communicate this clearly will lose ground to those that do. “Integrating compensation and carry into a single, transparent view is a key factor in attracting talent and enhancing performance,” he added.
For her part, Allison Rosner, Managing Director in MLA’s In-House Counsel Recruiting Practice, emphasized that in hiring processes for senior executives in the alternative assets sector, compensation goes far beyond salary and bonus.
“Candidates increasingly evaluate how firms structure, communicate, and align long-term incentives with the value they contribute to creating,” Rosner explained.
A Growing Gap in Employee Experience
The study shows that many firms have yet to achieve the level of transparency, education, and visibility that employees expect regarding compensation and carry programs.
Fewer than half of the surveyed companies provide Total Rewards Statements (TRS)—documents that consolidate information on salary, bonuses, carry, and co-investments.
Furthermore, only 36% admit to investing in education and training programs on carried interest-linked compensation, while barely 24% offer formal mechanisms to gather feedback on their carry programs.
The study also points out that merely 16% of firms consider employee feedback a relevant factor in compensation decisions.
Another challenge is the widespread use of discretionary carry: 56% of firms acknowledge relying on this mechanism to some degree. This implies that, for many participants, outcomes depend largely on individual judgment rather than clearly defined parameters, which can raise concerns about the consistency and fairness of allocations.
Manual Processes and Lack of Data Limit Program Evolution
The research identifies major operational shortfalls that hinder the modernization of compensation and incentive systems.
58% of firms still use Excel spreadsheets to manage carry, a practice that can limit their ability to deliver consolidated, up-to-date information to employees. In terms of compensation planning, only 18% of companies consider themselves leaders relative to their competitors, while more than half cannot confirm that their practices are data-driven. Likewise, 42% admit they do not have clearly defined salary bands by function or professional level.
As firms expand participation in carry programs and develop more complex compensation structures, these operational limitations become harder to manage. Reliance on manual processes reduces the ability to make transparent, consistent, and well-founded decisions.
Competition for Talent Will Shape Incentive Trends in 2026
Alternative investment firms anticipate that several factors will continue to shape their compensation and carry programs over the coming year.
- Among the primary challenges identified are:
- Intensifying competition for talent across firms and investment strategies.
- Rising expectations among professionals regarding communication and transparency.
- The difficulty of generating returns and aligning incentives with effort and performance achieved.
The report concludes that, in an environment marked by higher labor mobility and growing professional expectations, firms that enhance their compensation, communication, and carry administration processes will gain a competitive edge in attracting, motivating, and retaining key talent.
