The Talent Crisis Driving 6 Critical Shifts in Alternative Investments

The alternative investment landscape is undergoing structural evolution, not cyclical adjustment. Recent insights from Seward & Kissel’s annual Private Funds Forum indicate that fund managers who treat these changes as temporary headwinds risk obsolescence. What separates thriving firms from struggling ones? Increasingly, it’s not just strategy—it’s having the right people to execute in unprecedentedly complex situations.

1. A Talent Problem Disguised as a Technology Challenge

AI has moved beyond experimentation in alternatives. The forum notes that AI is evolving from general-purpose tools to highly specialized applications, delivering a measurable competitive advantage—identifying mispriced assets across illiquid markets, modeling complex scenarios in real-time, and detecting subtle counterparty risks.

But here’s the uncomfortable truth: most fund managers lack in-house expertise to evaluate, implement, and optimize specialized AI applications. The technical talent required differs substantially from that of traditional investment professionals. Winning firms aren’t just investing in technology—they’re fundamentally reimagining organizational structure, hiring data scientists who understand alternative assets, and creating cultures where investment professionals and technical specialists collaborate rather than operate in silos.

2. Digital Assets and the Specialized Expertise Gap

As regulatory ambiguity shifts toward cautious embrace, digital asset opportunities multiply. However, direct digital asset investing requires talent that barely existed five years ago: professionals who understand both traditional investment analysis and blockchain technology, who can assess smart contract risks, and who operate comfortably in markets that never close.

This scarcity creates the ‘make-versus-buy’ decision: build internal capabilities or partner with specialists. Success requires honest team assessments and strategic talent investment. The viability of a digital asset strategy depends on assessing and closing the expertise gap within your team.

3. Succession Planning: The Leadership Development Deficit

Despite aging leadership demographics, most private fund managers lack concrete succession plans. The forum notes that a majority of top asset managers have entered strategic capital arrangements, recognizing succession as existential.

Yet succession fundamentally comes down to people—identifying, developing, and positioning next-generation leaders to earn the confidence of investors. This requires deliberate talent development over years: structured mentorship, executive coaching, and progressive responsibility that prepares successors for a full leadership scope, not just investment decisions. Most fund managers are exceptional investors, but they often lack formal training in leadership development, creating a vulnerability that capital alone cannot address.

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4. Extended Fundraising: The Relationship Management Imperative

Managers should now prepare for fundraising processes that span 18 months or more, even for established firms. This extended timeline creates talent challenges—firms must maintain dedicated investor relations capabilities over longer periods while managing existing portfolios.

Successful fundraising depends on professionals who sustain complex stakeholder relationships, articulate strategies to diverse audiences, and maintain organizational energy during prolonged uncertainty. Relationship management, communication excellence, and emotional resilience—must be explicitly evaluated when building investor relations teams, rather than assumed based on investment credentials.

5. Regulatory Complexity and the Strategic Compliance Officer

Enhanced privacy rules, cybersecurity threats, trade sanctions compliance—the regulatory burden expands across jurisdictions. Chief Compliance Officers must now possess technical expertise across multiple domains simultaneously, while also having the business acumen to influence senior leadership.

As compliance becomes strategic rather than purely defensive, firms face critical decisions: build comprehensive internal teams or leverage external specialists. Either way, you need compliance professionals with both deep technical expertise and business acumen to translate regulations into competitive advantages. Strong compliance talent enables firms to turn regulatory demands into strengths.

6. Reputational Defense Requires Crisis–Ready Leadership

The forum emphasizes that reputational threats demand gathering complete facts before responding, coordinating legal strategy with investor relations, and maintaining disclosure discipline. But effective crisis management depends entirely on having the right people in place before a crisis strikes.

Many fund managers have built teams optimized for steady-state operations, rather than crisis response. They lack professionals with experience in crisis communications or relationships with external advisors necessary for a rapid response. Protocols alone are insufficient—you need people with judgment, experience, and emotional resilience to execute under extreme pressure.

The Bottom Line: Talent Determines Outcomes

Across all six shifts—AI adoption, digital assets, succession planning, fundraising, regulatory compliance, and reputational management—success depends on having the right people in the right roles with the right capabilities.

Technology, regulatory frameworks, and market structures create the operating context. But people determine results. As alternative investments become more sophisticated, talent strategies are often still reactive – focused on filling immediate gaps rather than systematically building long-term capabilities. Systematic talent development is necessary to keep pace with the increasing complexity of the industry.

The alternatives industry stands at an inflection point. The firms that emerge stronger will be those that recognize talent as their most valuable asset—and invest accordingly.

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Source: Seward & Kissel LLP, “Key Takeaways from Seward & Kissel’s Eleventh Annual Private Funds Forum” (2024)