While retirement savers may be eager to invest in private assets in their employer-provided retirement plans, plan sponsors are wading in more cautiously.
According to a new report from consulting firm Cerulli Associates, a small number of plans are rolling out offerings this year. But it will be roughly a decade before even 20% of defined-contribution plans have a target-date product or managed account that allocates to private market assets.
The selling points of private investments are potentially higher returns over time and diversification. The fervor, however, is out of proportion to the reality of when and how these kinds of investments — including private equity, venture capital, hedge funds, and real estate — are going to become mainstream.
“I wouldn’t say they are deliberately slow-walking it, but interest does not equal immediate adoption,” Chris Bailey, a Cerulli director, told Yahoo Finance. “Sponsors tell us they have concerns about fees and potentially being sued over adding these options to their plan menus. It makes for a slow adoption process.”
More than 8 in 10 plan sponsors reported that cost was a significant concern when it comes to incorporating private market assets into their employee plans. Liquidity and valuations were mentioned as other major concerns, according to the report.
The zeal to open the doors for millions of retirement savers in employer plans to tap private assets grabbed headlines last summer with President Trump’s executive order instructing the Department of Labor and the Securities and Exchange Commission to draft guidance for defined-contribution plans to incorporate these types of investments, which are already permitted in retirement plans.
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Goldman Sachs (GS) scooped up a $1 billion stake in global asset manager T. Rowe Price (TROW) with the goal of opening the doors to offer private assets to US retirees by mid-2026 via co-branded target-date funds that blend private assets alongside public bonds and stocks.
BlackRock (BLK) previously had announced a target-date fund consisting of private credit, private equity, and other investments. Empower, the second-largest retirement services provider in the US, also jumped in with plans to offer private equity, credit, and real estate in some of its retirement portfolios, as did Voya Financial and alternative asset manager Blue Owl Capital.
Real estate and private equity giant Blackstone (BX) announced a similar partnership with Vanguard and Wellington Management to jointly develop “multi-asset investment solutions” that offer individual investors exposure to both private and public markets.
In fact, half of the sponsors Cerulli surveyed said that the president’s order increased the likelihood they would consider an investment option that allocates private market assets for their plan.
The key word is consider. While the big players are hot to trot, it doesn’t make it mainstream yet. “It’s going to be a really slow process, especially in the first couple of years,” Bailey said. “It’s the nature of how plan sponsors operate, especially with a new product.”
To break it down: About 4 in 10 plan sponsors are very interested in learning more about the pros and cons of target-date and managed account options that allocate to private market assets, according to Cerulli’s research. Much of this interest comes from the large market — plans with $250 million to $1 billion in assets.
Investors, for their part, are getting stirred up about the prospect. Nearly half of investors participating in 401(k) and similar workplace retirement savings plans say they would invest in private equity and private debt if their plan offered them, according to investment manager Schroders’ 2025 US Retirement Survey. More than 3 in 4 say they would increase their paycheck contributions to their plan to fully take advantage of the opportunity.
Learn more: How does a 401(k) work?
While retirement savers are yearning for them, many plan sponsors aren’t in that same space. “There is no demand for these options” is a common refrain in the industry, according to the researchers.
“A groundswell of plan sponsors are not clamoring for private market assets; it is difficult to imagine the average plan sponsor specifically asking asset managers to develop a new investment option that allocates to private market assets for their DC plan,” per the Cerulli researchers..
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There’s a lot sponsors need to learn about these products, Bailey said. Namely, what they are intended to do and who they are a good fit for.
“There’s also a degree of education that needs to happen because plan sponsors haven’t really had to wrestle liquidity. For example, are my participants going to be able to get the money out when they want it? And you’ve got questions about valuation — private equity isn’t valued on a daily basis,” he added.
Importantly, there’s the underlying challenge to provide investment options that can meet the fiduciary requirement plan providers must adhere to, such as acting solely in the interest of the participants and their beneficiaries.
While these assets aren’t roaring in any time soon, they will eventually be embedded in professionally managed investment options, including target date products, managed accounts, advisor-managed accounts, and multi-asset investment options such as fixed income combined with private credit and real estate, per the researchers.
Moreover, the rollout will not mean that the average 401(k) retirement saver is investing directly in private market assets. The plan sponsor’s asset manager will divvy up how much of the investment option is parsed to private market assets, not the participant, according to Bailey.
“Plan sponsors do take the responsibility seriously,” he said. “They’re interested in learning more about them and considering them because they can provide higher returns and less volatility, but they aren’t going to take immediate action.”
Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist and the author of 14 books, including “Retirement Bites: A Gen X Guide to Securing Your Financial Future,” “In Control at 50+: How to Succeed in the New World of Work,” and “Never Too Old to Get Rich.” Follow her on Bluesky and X.
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