Private Markets Compensation Wars: How BlackRock Is Reshaping Asset Manager Pay

The global asset management industry is undergoing a fundamental transformation. As capital increasingly flows toward private equity, infrastructure, real estate, and other alternative investments, the world’s largest asset managers are fundamentally rethinking their compensation structures. BlackRock, with $14 trillion in assets under management, is leading this shift by introducing profit-sharing arrangements that mirror private equity practices—a move that signals how intensely traditional asset managers now compete for talent in the private markets space.

The Private Markets Boom Reshaping Asset Management

The scale of this transformation is staggering. Private markets now account for $660 billion of BlackRock’s total assets, but industry projections suggest this is just the beginning. KKR forecasts that the alternatives sector will reach $24 trillion in assets by 2028, nearly double the $15 trillion recorded in 2022. Bank of New York has labeled this phenomenon an “alternatives renaissance,” predicting that private wealth investors’ assets under management will triple from $4 trillion to $12 trillion.

This seismic shift reflects a deeper change in how institutional investors allocate capital. What was once a niche strategy for specialized firms has become central to any comprehensive investment portfolio. Steven Kaplan, finance professor at the University of Chicago Booth School of Business, describes this as the “market portfolio”—the complete spectrum of investable assets increasingly weighted toward private vehicles.

For traditional asset managers like BlackRock, Vanguard, and State Street, offering robust access to private markets is no longer optional. Clients worldwide demand exposure to these high-yield opportunities, and firms that cannot deliver comprehensive alternatives solutions risk losing relationships to specialists like Apollo, Blackstone, and KKR.

BlackRock’s Carry Strategy: Competing for Talent in Private Markets

BlackRock’s response has been multifaceted and aggressive. In early 2025, the firm launched an executive carry program that grants selected senior leaders a direct share of profits from its flagship private markets funds, provided those funds achieve strong returns over a ten-year horizon. The structure mirrors arrangements long used in private equity, where compensation tied to fund performance is standard practice.

This initiative reflects a broader strategic repositioning. Between 2024 and 2025, BlackRock executed a series of transformational acquisitions that fundamentally reshaped its private markets capabilities. The firm acquired Global Infrastructure Partners in 2024 and HPS Investment Partners in 2025 for combined cash and stock consideration exceeding $15 billion. It also completed the purchase of Preqin, a leading private markets data provider, for $3.2 billion in 2025. These investments have consolidated BlackRock’s position among the world’s premier alternative asset managers.

CEO Larry Fink has set ambitious targets to match this expanded capacity. BlackRock aims to generate over 20% of total revenue from private markets and technology within the near term, with a fundraising target of $400 billion in private markets by 2030. “2026 will mark our first full year operating as a unified platform with Global Infrastructure Partners, HPS, and Preqin,” Fink announced, emphasizing the company’s commitment to this strategic direction.

The profit-sharing program for executives represents one of the most visible symbols of this commitment. By offering carry—equity-like stakes in fund profits—BlackRock signals to its top performers that success in private markets will be rewarded substantially. This is critical because the compensation gap between traditional asset managers and private equity specialists remains stark. According to Heidrick & Struggles research, senior executives at leading private equity firms can receive carry allocations valued between $150 million and $225 million over a fund’s lifetime. By contrast, investment bank CEOs typically earn $30 million to $40 million annually.

R.J. Bannister, partner and Chief Operating Officer at Farient Advisors, explains the dynamic: “There’s been a migration of talent from public to private investment sectors, largely driven by the more attractive compensation offered through carried interest programs.” The financial incentive is reinforced by tax advantages. Carried interest is typically taxed at approximately 20% as partnership interest, compared to regular compensation taxed at rates up to 37%. As Eric Hosken, partner at Compensation Advisory Partners, notes: “This structure is highly appealing to employees, as it treats them more like owners within the investment entity.”

The Forfeiture Factor: BlackRock’s Iron-Clad Retention Mechanism

Beyond the profit upside, BlackRock’s carry program includes provisions designed to lock executives in place. If a selected leader departs for a competitor, launches a rival fund, or engages in any activity deemed competitive, the entire carry stake—both vested and unvested portions—is forfeited. This dual-forfeiture provision is unusually strict compared to some industry practices.

“These rules are designed to keep key people in place,” Bannister emphasizes. “Leaving means giving up substantial value.” Aalap Shah, managing director at Pearl Meyer, observes that such provisions serve a dual purpose: retaining teams while simultaneously deterring competitors from poaching, since replacing a departed executive becomes prohibitively expensive in terms of lost carry.

Another distinctive feature is the backloaded vesting schedule. Executives do not vest until the third year of a five-year period, ensuring continuity through the initial fund distributions. Steffen Pauls, founder of Moonfare, describes this as “unusual but investor-friendly,” as it guarantees that core teams remain stable during critical phases of fund deployment and early portfolio maturation.

These retention mechanisms reflect the competitive pressure that asset management firms now face. A recent survey by Magellan Advisory Partners found that 29% of asset management leaders expect to lose key staff due to increased poaching efforts, organizational changes, and reduced bonuses. Yet over half of respondents also indicate plans to expand their executive ranks this year, suggesting firms are actively competing for top talent on multiple fronts.

Goldman Sachs Follows Suit: An Industry-Wide Transformation

BlackRock is not pioneering this shift in isolation. Goldman Sachs introduced a carried interest program for CEO David Solomon and select senior leaders last year, covering seven alternative funds launched in 2024. Goldman’s program mirrors BlackRock’s structure in several ways: it includes forfeiture provisions for both vested and unvested carry upon departure to a competitor, reduces cash compensation for eligible executives, and requires participants to invest personal capital (typically $1 million for top executives, $50,000 for others).

These parallel developments underscore a fundamental industry transformation. As private equity, venture capital, infrastructure investment, private credit, and real estate become increasingly central to portfolio construction, traditional asset managers must evolve their talent strategies accordingly.

Steven Kaplan sums up the underlying imperative: “Asset management firms have lost considerable talent to private equity. If you don’t adequately reward your top performers, they’ll leave—and that’s the worst outcome. There’s substantial profit potential, which is the main motivator. But there’s also strong demand, as these assets represent a large segment of the market. To provide a comprehensive portfolio, firms must participate in this space.”

What This Means for the Future of Asset Management

The competitive intensity around compensation in private markets reflects deeper market realities. The alternative investment landscape has matured beyond a specialty niche into a core component of modern portfolio theory. Institutional investors, pension funds, and sovereign wealth funds now expect their asset managers to deliver meaningful private markets exposure alongside traditional public market investments.

For firms like BlackRock, Goldman Sachs, Vanguard, and State Street, the stakes are existential. Those that successfully attract and retain top talent in private markets will capture an outsized share of what is projected to become a multitrillion-dollar market segment. Those that fail will see their most capable professionals migrate to specialists where carry-based compensation is the norm rather than the exception.

BlackRock’s aggressive carry program, supported by substantial acquisitions and elevated fundraising targets, represents a calculated wager that the future of asset management belongs to firms that can compete credibly across both public and private markets. Whether other traditional asset managers will follow remains to be seen, but the trajectory is increasingly clear: private markets expertise and talent retention in this domain have become competitive necessities in global asset management.