Empower, which manages $1.8 trillion across 401(k) and other retirement accounts for 19 million Americans, has aligned with established private markets managers and custodians, including Apollo, Franklin Templeton, Goldman Sachs, Neuberger Berman, PIMCO, Partners Group and Sagard, to offer these private investments through collective investment trusts (CITs) later this year. So far, five employers have signed on to offer private investments in their 401(k) plans when they become available in the third quarter.

“More alarmingly,” Sen. Warren continued, in her letter, “many of the companies that you are partnering with have been involved in enforcement actions taken by the SEC and other regulatory agencies. Franklin Templeton Investments, through its subsidiaries, has had at least 21 violations due to failing to meet investor protection standards and its duty as a benefits plan administrator that all resulted in fines by the SEC and the Department of Labor.”

The senator also laid out concerns with the funds’ expansion into private credit: “During a crisis or even momentary panic in the broader markets, private credit is more likely to experience liquidity freezes, inability to perform price discovery on their underlying assets, and lines of credit being terminated as traditional banks flock to safety.”

In April, Larry Fink, CEO of BlackRock, the world’s largest asset management firm, said "unlocking private markets" is key, and asks investors in his annual letter, “If private assets perform so well, why aren't they in your 401(k)?” He argued that retirement plan access needs to be expanded and, more specifically, 401(k) plans should invest more in private assets, in his annual letter to investors.

Related: Empower opens door to private market investments for its 401(k) plan participants

Empower’s “profound move” was designed to provide individuals with access to a broader range of investment options, enabling them to further diversify their portfolios and potentially maximize their retirement savings, said Empower President and CEO Edmund F. Murphy III.

Participants can only access these private investments through managed account services on Empower’s platform. A managed account adviser will ensure that allocations are aligned with an individual’s risk tolerance, time horizon and financial objectives, typically a range from 5% to 20%, depending on participant’s age.

However, “market volatility, the risk of inflation, and general economic uncertainty stemming from President Trump’s on-again, off-again tariffs have further exacerbated the risks of investing in the private markets,” according to Sen. Warrn. “Private equity funds are finding it increasingly difficult to sell their assets to payout investors or honor redemptions.”

Sen. Warren has asked Empower to respond to a series of questions about the company’s partnerships with private equity firms — including providing details about how the company will continue to “maintain high investor protection standards” and “educating plan sponsors on the risk of investing in the private markets” — by July 7.