Traditional siloed approaches, where front, middle, and back offices work in isolation, are no longer suited for today’s volatile markets. Operating model transformation has become essential for asset managers who want real-time, enterprise-wide visibility of investments, risk, and performance.
Why Transformation Matters?
- Profitability Pressures
Average returns on assets in the asset and wealth management sector fell by almost 3% annually between 2018 and 2021, showing the urgency for change.
- Survival at Stake
Industry forecasts warn that up to 16% of firms could be acquired or forced to shut down by 2027 if they do not modernize.
- Agile Adoption on the Rise
About 30% of leading managers now use agile, cross-functional teams. This approach cuts product development timelines in half and improves responsiveness to client needs.
The Private Markets Pressure Cooker
Private markets face even bigger challenges:
- Illiquidity and Return Pressures
Nearly $1 trillion in unsold private equity assets remain stuck as high rates and frozen deal flow delay exits. Longer hold periods are frustrating LPs and dragging on returns (LinkedIn, FT, Reuters).
- Fundraising Strains
Fundraising has dropped to levels not seen since 2016. Only about 28% of LPs expect to increase allocations, pointing to low returns, high fees, and global uncertainty (McKinsey, FN London, WSJ, Reuters).
- Valuation and Data Transparency
Opaque or inconsistent valuation data makes it harder to assess performance and manage risk. Firms such as CEPRES stress the need for standardized, granular data to restore clarity (FT, CEPRES, LinkedIn, FN London).
- Regulatory Uncertainty
The Fed, SEC, and ECB have all raised concerns about systemic risks tied to private funds and private credit, signaling tougher oversight ahead (McKinsey, FT, Bloomberg).
- Operational and Technology Challenges
Many firms still rely on legacy systems, spreadsheets, and manual workflows that slow processes and raise error risk (ETF Express, CSC Global, SS&C, SEI).
Tech talent is also scarce. Shortages of developers, data engineers, and security professionals are holding back digital transformation (Bloomberg, Deloitte, Finbourne). At the same time, AI is often poorly integrated, with weak governance controls and low-quality data limiting its benefits (Broadridge, Aberdeen, SEI).
In short, private markets are squeezed on every front: returns, fundraising, regulation, and operations.
What Experts Say?
- PwC: “Operating model overhauls that combine technology with organizational restructuring can drive both immediate cost savings and long-term growth.”
- Boston Consulting Group (BCG): “One ‘single platform’ approach to serving multiple business units has enabled mid-sized firms to compete effectively with larger players.”
These insights reinforce the need to integrate technology with smarter organizational design.
Actionable Recommendations
- Map Your Target Operating Model
Identify inefficiencies and overlaps across departments. Redesign processes around a central hub with real-time data sharing.
- Adopt Integrated Platforms
Use unified front-to-back solutions so information from trading, risk, compliance, and client engagement flows seamlessly.
- Foster Cross-Team Collaboration
Form teams that combine IT, operations, and product expertise. Agile frameworks can help accelerate decision-making.
- Scenario Planning
Test how the redesigned model performs during market shocks, liquidity crunches, or regulatory changes to make sure it is resilient.
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