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 — an approach that 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.
- 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.
- Valuation and Data Transparency. Opaque or inconsistent valuation data makes it harder to assess performance and manage risk. Firms stress the need for standardized, granular data to restore clarity.
- 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.
- Operational and Technology Challenges. Many firms still rely on legacy systems, spreadsheets, and manual workflows that slow processes and raise error risk. AI is often poorly integrated, with weak governance controls and low-quality data limiting its benefits.
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: "One 'single platform' approach to serving multiple business units has enabled mid-sized firms to compete effectively with larger players."
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.
Conclusion
A modern operating model that unifies data, automates workflows, and connects teams is not just helpful — it is essential. For asset managers and private market firms, real-time, firm-wide insight is the key to staying competitive and surviving disruption. By rethinking how data flows, who owns processes, and how decisions are made, firms can position themselves for growth.
Alt360 is built for this moment. We unify data, automate workflows, and cover the full lifecycle with tools that simply work. We help firms build operating models that deliver real-time insights and lasting resilience.