Advisors Increasingly Support Private Market Funds in 401(k) Plans
Off the heels of President Donald Trump signing an executive order that would reevaluate usage of private equity in 401(k) plans, new research shows growing support among advisors for alternative assets.
Empower’s July 2025 survey of financial advisors found that 68% are already using private market investments like private equity, private real estate, and private credit, mainly in wealth-advised or high-net-worth accounts, and 58% of advisors who utilize these investments say they would recommend them within retirement plans. This figure rises to 75% for advisors who also service pension or defined benefit (DB) plans and 43% of advisors overall.
“With most U.S. companies privately held and trillions of dollars from individuals already invested, expanding access to these markets through defined contribution plans presents a significant opportunity to enhance long-term retirement outcomes. Advisors have a crucial role to play in responsibly guiding that evolution,” said Edmund F. Murphy III, president and CEO of Empower. “Aligning the 401(k) system to private markets investing normalizes the U.S. retirement system with the rest of the international and defined benefit investing universe.”
Advisors are favoring these investments for their diversification (62%), higher return potential (48%), and lower correlation to public markets (48%), yet say they struggle with liquidity (68%), fees (48%), and investment complexity (33%).
As agencies like the Department of Labor (DOL), the Treasury Department, and the Securities and Exchange Commission (SEC) reevaluate guidance and regulatory items, respondents to Empower’s survey note an eagerness to engage with alternatives once policy matters shift. Sixty-six percent of advisors say that greater ERISA/regulatory clarity would increase their likelihood of recommending private markets in retirement plans.
“As regulatory guidance develops, we see advisors playing a pivotal role in helping plan sponsors evaluate private investment options,” Murphy added. “Professionally managed accounts and prudent exposure limits can help mitigate risk while offering retirement savers access to a broader investment universe.”
In May, Empower announced a new initiative that would allow private market investments into its defined contribution (DC) retirement plans, partnering with investment fund managers and custodians like Apollo, Franklin Templeton, Goldman Sachs, Neuberger Berman, PIMCO, Partners Group and Sagard in the process. Empower said its initiative is designed to provide investors “with access to a broader range of investment options, enabling them to further diversify their portfolios and potentially maximize their retirement savings.”
Empower’s move would later draw pushback from legislators concerned over volatility in private markets. Following news of the offering, Senator Elizabeth Warren (D-MA) issued a letter requesting answers from Murphy on the company’s partnerships with private equity firms.
SEE ALSO:
Trump Signing EO Today Enabling Private 401(k) Investments
Trump: Regulatory Overreach, Opportunistic Lawsuits Have Stifled Investment Innovation
DOL, Industry Leaders React to Trump’s EO Signing on Private 401(k) Funds
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with nearly a decade of experience and a passion for telling stories and reporting news. She is originally from Queens, New York, but now resides in Denver, Colorado.
