There are five must-ask questions that retirement plan sponsors should ask themselves when it comes to addition of Private Assets in Defined Contribution (DC) Plans, according to T. Rowe Price.
What is the value proposition?
Why now?
Where are private assets like to be implemented?
What are the DC plan community’s current views on private assets?
What should plan sponsors be watching as they consider next steps?
See below for information how to request the PDF with the answers to each of the questions, along with additional supporting material for this topic.
For this 30-minute webinar, we partnered with Eric Milano, Regional Investment Consultant with T. Rowe Price, who has over 20 years of experience in the financial industry.
You will notice that the recording is not included for public access on this page. Due to the nature of the material covered in this education for retirement plan sponsors aka Institutional Investors, compliance only allows our clients to receive the video recording for this webinar.
NOTE #1: If you are a client, please submit the web form below to request access to this Understanding Private Assets On-Demand Recording. We will send it to you ASAP.
NOTE #2 : We have two PDFs from T. Rowe Price that are follow-up materials to this education. Any Retirement Plan Sponsor may request these PDFs. If you would like to receive “5 Must Ask Questions About Private Assets in Defined Contribution Plans” and/ or “What’s Changed / What’s Next for Private Assets in Defined Contribution Plans” you may request the PDFs using the second web form below. We will send the documents to you ASAP.
We included a detailed overview of the topics discussed in this webinar for non-clients, so that you can still learn about private assets in retirement plans and have the most current information about this topic. Eric Milano discusses the evolving role of private assets in retirement plans, highlighting their benefits, risks, and regulatory developments to aid plan sponsors in making informed decisions.
Key Insights:
Growing alignment between private asset investment structures and the operational needs of Defined Contribution plans is broadening opportunities to access private markets.
Return enhancement and diversification are driving interest in private assets, but fees, liquidity, and litigation risk must be sufficiently addressed.
Professionally managed multi‑asset solutions can offer a prudent pathway to private markets exposure by centralizing governance and managing liquidity.
Private Market Asset Classes and Their Characteristics
Private equity, infrastructure, private credit, and real estate are key private asset classes with unique features, considerations, and liquidity attributes.
Private equity involves equity stakes in private companies, often more leveraged, with a performance pattern called the J-curve, requiring management of cash flows.
Infrastructure investments include ownership in physical assets like toll roads and utilities, offering stable cash flows and inflation hedging but with low liquidity.
Private credit consists of loans with higher yields and fewer defaults, but is less transparent and less liquid than public debt.
Private real estate involves direct property investments, providing stable income and inflation hedge, but requires active management and has low liquidity.
These assets are less liquid than public counterparts, with longer-term commitments and operational risks.
Shifting Landscape of Private Market Opportunities
Private markets have grown significantly, nearly tripling public assets over 15 years, with private assets reaching $14,339 billion in 2024, a 618% increase since 2009.
The number of publicly listed U.S. companies decreased from 10,000 in 1996 to 4,010 in 2024.
Savings and loans, and commercial banks, declined from 20,000 in 1984 to 17,938 in 2024.
Private markets have expanded faster than public markets, offering potentially better outcomes and diversification opportunities.
Private markets can access different return premia, manage liquidity, and apply governance, making them valuable for multi-asset solutions.
Impact of U.S. Executive Order on Private Assets Access
The August 2026 executive order aims to facilitate greater access to alternative assets, including private equity, debt, real estate, digital assets, and infrastructure, in 401(k) plans.
It defines “alternative assets” broadly and acknowledges litigation as a barrier.
The order directs the Department of Labor to address regulatory issues within 180 days.
Potential outcomes include safe harbor regulations and best practices for implementation.
Regulatory and Policy Changes Affecting Private Assets
Evolving policies, regulatory environment, fee structures, and operational considerations influence private asset inclusion.
Increased focus on fees and liquidity as primary barriers to implementation.
Larger plans (> $1B assets) are more likely to adopt private credit, real estate, and private equity.
Smaller plans (< $1B assets) are more inclined toward private equity and cryptocurrency.
Concerns include operational complexity, valuation, participant communication, and litigation risks.
Benefits and Challenges for Plan Sponsors
Incorporating private assets can improve performance, diversification, and reduce volatility, but involves operational, cost, and fiduciary considerations.
Potential benefits: enhanced portfolio diversification, uncorrelated returns, better retirement outcomes.
Considerations: daily valuation, liquidity, investment costs, manager skill, litigation risk, operational complexity, participant communication.
Private assets can offer unique net-of-fee benefits and smoother return paths, aiding in risk management.
Future Trends and Implementation Likelihood
Private credit is the most likely private asset to be incorporated within 12–24 months, especially among smaller plans.
46% of plans with assets < $1B expect to implement private credit.
Larger plans (> $1B) are more likely to adopt direct real estate.
Private credit, private equity, and real estate are rated as most likely strategies for future implementation.
Diversification and return enhancement are key objectives for plan sponsors considering private assets.
Active Management and Impact on Retirement Outcomes
Active management of private assets can generate excess returns, significantly impacting retirement savings over time.
A 25 basis point (0.25%) excess return can add approximately $50,000 to a $1 million account over 40 years.
Small increases in returns can extend the time to portfolio exhaustion (the point at which your savings run out) and improve spending power.
Assumptions include a 7% pre-retirement return, 5% post-retirement, and contributions based on a 25-year-old earning $30k with 3% annual increases.
Key Takeaways for Plan Sponsors
Anticipate increased discussions on private market access, focus on implementation strategies, and understand the value proposition for better fiduciary decision-making.
Multi-asset portfolios are effective for private market exposure.
Private assets can improve diversification, performance, and risk management.
Fiduciary responsibility includes understanding costs, risks, and participant impact.