President Trump. Credit: The White House via Wikimedia Commons
Retirement portfolios have been largely dominated by stocks and bonds to alleviate high risk. Historically, private market investments or private assets – that is, private equity, venture capital, real estate and hedge funds – have shown the potential to be a high-performing asset class but remain largely inaccessible for most retirement plan participants. However, things are about to change.
Private market fund managers have been lobbying the Trump administration to advance efforts for inclusion of their products in 401(k)s, and now President Donald Trump is expected to sign an executive order in the coming days that would pave the way for private equity to become a bigger piece of $12.5 trillion 401(k) market, according to numerous reports.
During President Trump’s first term, the Labor Department issued an “Information Letter” saying companies can responsibly offer private-equity investments in target-date funds, as long as they carefully consider issues such as fees and risk. However, the Biden-era DOL responded that it “did not endorse or recommend such investments.”
The upcoming Trump executive order would instruct the DOL and the Securities and Exchange Commission to provide guidance to employers and plan administrators on including investments like private assets in 401(k) plans.
In June, the Office of the Investor Advocate at the SEC announced that it would prioritize the risks and benefits of “Private Market Investments in Retirement Accounts” as an objective for 2026, in its Report to Congress.
“As part of an ongoing focus on the growth and evolution of the private markets, the Investor Advocate will explore some of the issues surrounding the inclusion of alternative investments, such as private equity and private credit, in retirement savings plans and their implications for retail investors,” read the report.
“For instance, if more plan sponsors offer plan participants exposure to private market investments through target date funds or managed accounts under defined contribution plans, there may be risks, as well as benefits, for retirement savers that include alternative investments as a component of their retirement accounts.”
“As detailed in this report, our office continues to research and listen to all investors’ concerns and act as a constructive liaison between those investors and the Commission,” said Cristina Martin Firvida, the SEC’s Investor Advocate.
In last few months, private market investments in retirement plans have become a huge topic of discussion, as Larry Fink, CEO of BlackRock – the world’s largest asset management firm with more than $11 trillion in assets under management in 2024 – called for more private asset in 401(k) plans, in his annual letter to investors in April.
Then in June, BlackRock deepened its push into private assets by partnering with Great Gray Trust Company, which offers 401(k) investments, to provide a target date with a 5%-to-20% allocation to private investments, depending on an investor’s age, in the first half of 2026.
Related: Private market investments in 401(k)s is key priority for SEC, in new report
Last month, Empower, the nation’s second largest 401(k) plan provider, launched a new program that will pave the way for private markets investments to be included within defined contribution plans. Earlier this week, retirement services provider Voya Financial and Blue Owl Capital, a $273 billion credit-focused alternatives manager, announced they are partnering to develop private markets investment products in all-in-one target date funds for employer-sponsored retirement savings plans.
“Private investment offerings and alternatives have been overlooked in DC plans for some time,” said Jeremy Stempien, Portfolio Manager and Strategist for PGIM DC Solutions. “The importance of these investments is as great as ever given the size of the DC market, the increased focus on investors nearing or in-retirement, and some of the key risks such as inflation that are more present than we’ve seen in decades.”
However, the decision to offer private equity as an investment option in workplace retirement plans has been met with criticism, particularly by Senator Elizabeth Warren (D-MA), Ranking Member of the Senate Banking, Housing, and Urban Affairs Committee. She wrote a letter to Empower’s CEO asking what safeguards the plan provider will put in place to protect Empower’s plan participants who choose to invest in private markets.
Empower’s CEO Edmund F. Murphy III formerly responded to Sen. Warren’s inquiry, in a 3-page letter: “Empower serves more than 19 million Americans, and our mission is clear: to help all individuals— regardless of income or net worth—build lasting financial security through access to well-designed, responsibly managed investment opportunities,” wrote Murphy in a letter to the Senator. “In our view, this should now include carefully structured access to private markets.”
However, Sen. Warren is doubling down on her efforts, following up on her initial letter after Murphy’s initial response failed to adequately answer all her questions about private market investments, and has requested answers from Murphy to her original questions by July 25, 2025.
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