Retirement savers are eager to invest in private assets in their employer-provided retirement plans, but plan sponsors are proceeding cautiously. A new report from Cerulli Associates shows that it may take about a decade for even 20% of defined-contribution plans to offer target-date products or managed accounts with allocations to private market assets. The selling points of private investments include higher returns over time and diversification, but the reality of when and how these investments will become mainstream is uncertain.
Plan sponsors are concerned about fees and potential lawsuits over adding private market assets to their plans, with more than 8 in 10 citing cost as a significant worry. Liquidity and valuations are other major concerns. President Trump’s executive order last summer pushed for incorporating private assets into retirement plans, but the adoption process remains slow.
Goldman Sachs acquired a $1 billion stake in T. Rowe Price to offer private assets to US retirees by mid-2026. BlackRock, Empower, Voya Financial, and Blackstone are also entering the private asset space. Despite investor interest, plan sponsors are not rushing to add these options due to lack of demand and concerns about education and fiduciary responsibilities.
While retirement savers are interested in private assets, plan sponsors are not as enthusiastic. The rollout of these assets will be gradual and will be managed by the plan sponsor’s asset manager, not the participant. Education, liquidity, valuation, and fiduciary requirements are key factors in the slow adoption process.
There is a lot for plan sponsors to learn about private market assets, including who they are suitable for and their intended purpose. The process of integrating these assets into retirement plans will be slow and methodical, with a focus on providing higher returns and less volatility over time.
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Read more at Yahoo Finance: Retirement plan sponsors slow-walk private asset adoption, new report finds