While fund performance remains the number one driver of who wins mandates, the operating model beneath your funds is becoming critical to scaling profitably.
With global alternatives assets forecast to reach $32 trillion in AUM by the end of the decade (Preqin), private markets have never been bigger - and winning in them has never been harder.
Record inflows and a generational private wealth opportunity should feel like a tailwind, but with increased competition from new market entrants, many managers are forced to lower management fees and concede higher portions of profits to win mandates.
In this new competitive landscape for asset managers in private wealth, it will be more difficult to differentiate. How do you win profitably when everyone is chasing the same capital? The firms that answer that question well will compound their lead over the next five years; those that don't risk stalling, even in a growing market.
This blog explores that shift, and considers where the next competitive edge for asset managers will be found - and why, while fund performance remains the number one driver of who wins mandates, the operating model beneath your funds is becoming critical to scaling profitably.
The battleground is broadening. Growth is still on the table, but it is getting harder to stand out on returns, access, and brand alone. As those traditional differentiators converge, the firms that pull ahead are increasingly those that can operate at scale without their margins collapsing.
| What has traditionally set firms apart | Where firms should look to pull ahead |
| Strong returns and track record | An operating model that scales profitably |
| Access to deals | Ongoing client service |
| Brand and reputation | Growth without a matching rise in cost-to-serve |
Retail allocations to private markets are projected to grow to $3.7 trillion through 2029 (Cerulli). This represents a structural reshaping of demand that shifts the greatest opportunity from institutional to private wealth investors.
The result is crowding: more managers chasing the same allocations through the same channels, where brand and track record are now table stakes rather than differentiators.
The pressure is visible in the numbers. Private equity fundraising recorded a second consecutive year of decline in 2025 (S&P Global), while deal value rose 19% (McKinsey) - but that growth concentrated in the largest deals and sponsors, leaving smaller and mid-sized funds with a shrinking share. Management fees fell to a record low of 1.61% (Preqin), squeezing margins hardest for firms with more than $500bn but less than $2trn in AUM (Exante). Where firms don't differentiate, products become interchangeable and price is the only lever left.
As those traditional differentiators converge, the firms that pull ahead are increasingly those that can operate at scale without their margins collapsing.
The shift to private wealth sharpens all of this. Smaller tickets and higher investor volumes mean more onboarding, compliance, reporting and support for every penny raised. Firms now need either real scale or genuine specialisation, and are rewarded when they can grow their investor base without growing their cost base in tandem. So if returns, access, and brand are harder to separate the winners on alone, where does the additional edge come from?
One increasingly important way firms can differentiate themselves in today’s market is through the operating model. Alongside fund performance, a growing edge in the next phase of private markets is the ability to onboard, comply, transact and report at scale - profitably - without adding headcount in lockstep with growth. Operating infrastructure has become a strategic differentiator in its own right.
Every extra strategy, structure or jurisdiction multiplies the work going on behind the scenes - more reporting to produce, more investors to keep informed, more regular questions to field on governance, liquidity, and how a valuation is reached. Every win adds operational weight that has to be carried somewhere, and for many firms it is still carried manually. This holds until volumes step up; then the cracks show as reporting slows and errors rise.
Now set fee compression alongside this. When margins are tightening, you can’t simply hire your way through every growth spurt. Each new addition to AUM has to cost less to service than the last. The real bind is rising demands on one side, and thinner margins on the other.
When margins are tightening, you can’t simply hire your way through every growth spurt. Each new addition to AUM has to cost less to service than the last. The real bind is rising demands on one side, and thinner margins on the other.
Much of the answer lies in the operating model, not just in the funds running on top of it. The firms pulling ahead are the ones that can say yes to more investors and more channels without breaking their unit economics. Operating infrastructure does double duty here: it’s a growth enabler and a margin protector. It lets you expand distribution reach while holding the line on cost-to-serve, which is exactly the combination the private wealth opportunity demands.
The operating model is now a board-level question about whether you can win the next five years profitably. And because that model is underpinned by the technology and processes running beneath your funds, profitability has become a technology question: can your systems carry more investors, channels and reporting without your costs rising to match? Framed this way, technology becomes the layer that makes scalable growth possible. We explore this further in our related article on unlocking scalable growth for private funds.
Operating infrastructure does double duty here: it’s a growth enabler and a margin protector.
So, what are the most forward-thinking managers actually doing about this?
These managers treat digitisation and AI implementation as a competitive strategy. The goal isn’t to remove people, but to decouple growth from headcount so the business can scale without the operational drag that usually comes with it.
The shift is moving fast: in State Street’s 2025 private markets outlook, the share of institutions that recognise the value of GenAI for turning unstructured data into usable insight across their operations jumped to 83%, up from 58% a year earlier. And this is no longer a fringe experiment: 84% of private equity funds now expect AI to have a transformative impact on their business, according to EY, while PwC finds that half of PE firms expect generative and agentic AI to be the most transformative technologies in their industry over the next three years.
In practice, this means automating the high-volume, repeatable work - like onboarding, data extraction and KYC - while keeping humans firmly in control of judgement calls. Goji’s CEO David Genn spoke recently about how decoupling growth from headcount is the central operational unlock. At Goji, we have been helping firms automate KYC with AI to support increased investor volumes.
84% of private equity funds now expect AI to have a transformative impact on their business.
The effect of digitisation and AI implementation is to turn operations teams from manual executors into strategic supervisors, and to build the operational backbone for the distribution reach you want rather than the investor base you have today.
The next phase of private markets will be won not only on performance, but also on the operating model that lets you deliver it at scale.
Private markets are still growing fast, but specialisation is getting harder and margins are getting tighter. As that happens, the operating model becomes increasingly important: alongside strong performance, the firms that can profitably service and distribute private funds at scale are best placed to keep winning allocations while others stall.
The next phase of private markets will be won not only on performance, but also on the operating model that lets you deliver it at scale.
This is exactly the problem Goji was built to solve. We give asset managers the operating infrastructure to onboard, comply, transact and report at scale - automating the high-volume work with supervised AI so you can grow your investor base and distribution reach without growing your cost base in step.
If you want to pressure-test whether your own operating model is ready for the private wealth surge, get in touch via our contact form for a short operating model review. We'll map where your biggest cost-to-serve pressures sit today, and where automation could protect your margins as you scale.