An opinion piece by Erns Loubser, CFA, CPA (CA).

Once upon a time, securing that coveted Goldman Sachs internship or landing a top-tier investment banking associate role was the ultimate badge of honor—worth any sacrifice. Formatting presentations at 1 a.m., surviving on caffeine, and embracing the “work-hard, play-hard” lifestyle were almost rites of passage. 

But here’s the plot twist: today’s generation isn’t as enamored with the idea of sleepless nights and pure monetary incentives. The new wave of talent is questioning whether the traditional grind truly aligns with their values and aspirations. 

While well-structured monetary incentives still matter, today’s young talent is after more—they want purpose, a diverse culture that feels inclusive, a sense of community, and a career that contributes to a sustainable future, not just the big year-end bonus.

In an industry often synonymous with prestige and rigor, finance and investment management face an urgent, evolving challenge: a shortage of junior talent. 

At a time when economic volatility demands skilled financial strategists, finance and investment management firms are struggling to attract and retain new talent. This trend, marked by shifting demands among young professionals and a surge in technological advancements, presents an opportunity for the sector to innovate both its recruitment strategies and long-term retention incentives. 

To compete in today’s talent market, firms must rethink traditional roles and cultivate a culture of work-life balance and sustainability that allows young professionals to feel part of something bigger—something meaningful. This new generation expects more than the old “just do it, you’re getting paid” mindset and cringes at phrases once common when older millennials entered the workforce, like “vacation is a privilege, not a right.” They seek a compensation strategy that genuinely reflects their values and acknowledges their contributions.

Generational Shifts and New Talent Expectations

For decades, finance and investment management have been seen as pathways to lucrative careers with a clear progression. However, Gen Z and younger Millennials now prioritize factors beyond salary and status. According to a recent Deloitte survey, 44% of Gen Z and Millennial professionals report choosing employers that align with their personal values, such as diversity and work-life balance. While previous generations might have accepted rigid work structures, today’s emerging professionals demand flexibility, faster career progression, and a meaningful work culture.

Given this shift, firms are increasingly incentivizing talent through initiatives that align with these preferences. However, they must also address another growing need among their young workforce: opportunities to work with cutting-edge technology and automation tools, including artificial intelligence (AI) and data analytics platforms. Many of today’s junior professionals enter the field with digital-first mindsets, and they expect work environments that not only support but also enhance this proficiency.

The Need for Tech-Savvy Talent: Automation, AI, and Beyond

A major factor intensifying the need for young, tech-savvy talent is the increased adoption of automation and AI across financial services. Technologies such as AI-driven data analysis and machine learning are reshaping back-office functions, risk assessment, and even investment strategies. For instance, McKinsey found that companies using AI for financial analysis achieve faster, more accurate insights, significantly improving decision-making processes.

Investment management firms now find themselves not only vying for the best talent but also searching for professionals fluent in these technologies. Gone are the days when traditional skills alone were sufficient for success in finance; today’s talent must possess a hybrid skill set that combines financial acumen with technology proficiency. 

“Sweetening the Pot”: Increased Compensation and Broader Incentives

To attract young talent, alternative investment managers, such as private equity firms are enhancing their compensation structures. High salaries, generous signing bonuses, and flexible work conditions have become standard offerings, with firms racing to “sweeten the pot.” Some firms, for instance, are introducing unique packages that include career development programs or access to high-level mentorship, which research from PwC suggests is a top priority for Gen Z professionals.

Among these competitive incentives, one particularly compelling tool is carried interest, or “carry.” 

Traditionally reserved for senior partners, carry is now being extended to more junior professionals, offering them a direct stake in the firm’s long-term growth and success. This strategy—often termed “broadening the carry pool”—not only fosters loyalty but also provides a tangible, meaningful connection to the firm’s achievements. By granting junior talent the opportunity to share in the “fruits of their labor” through an investment structure aligned with sustainable growth, firms create a sense of purpose and lasting value. 

However, while carry is an attractive incentive, extending it to a wider audience introduces complexities. In an era of rapid scaling, investment firms face mounting challenges in effectively managing carry allocation as the firm expands.

The Complexity of Administering Carried Interest: A Call for Automation

As firms “broaden the carry pool,” they also face a pressing need to streamline the administration of carry. Traditional methods for managing carry—typically relying on spreadsheets and manual calculations—are cumbersome, error-prone, and impractical at scale. This complexity intensifies as firms grow, demanding more transparent and efficient systems that ensure fair and accurate allocation.

Fortunately, technology is beginning to alleviate these challenges. A growing number of firms (like HRSoft) are adopting automated solutions for carry administration, using platforms that integrate accounting, investment tracking, and real-time reporting. These platforms make it easier to manage and track carry allocations while reducing administrative burdens, enabling firms to scale without sacrificing accuracy or transparency. 

The benefits extend beyond operational efficiency, these platforms also address a critical need for better communication—providing real-time updates, clarity, and insights that bridge the gap between current performance and future potential. By offering intuitive and mobile-friendly interfaces, these tools empower all participants, from senior partners to junior professionals. In today’s fast-paced, tech-savvy world, the expectation for seamless, real-time, and mobile experiences is non-negotiable. 

Building a Sustainable Talent Strategy

The current shortage of junior finance talent represents a profound challenge—but also an opportunity for transformative change. By adopting strategies that prioritize next-generation expectations, finance and investment management firms can reimagine their talent models and build a more resilient workforce. 

Extending carried interest opportunities to more junior employees, investing in cutting-edge technology and automation, and aligning incentives with the values of both young professionals and the organization can do more than attract top talent. By offering a compensation and talent management strategy that genuinely aligns with emerging values, the investment management sector can shape the next generation of leaders equipped to navigate an increasingly complex world. This commitment will not only nurture talent but reinforces the industry’s critical role in driving sustainable growth, innovation, and economic stability in modern society.

To learn more about HRSoft’s Carried Interest software, get in touch.