Alternatives Gain Ground Among Plan Advisors After Federal Policy Shift
According to new research released today, one in four defined contribution plan advisors are likely to recommend alternative investments within plan lineups—and one in 10 are already doing so.
These are among the key findings from a Cogent Syndicated report from Escalent, titled 2025 Retirement Plan Advisor Trends. The study is designed to help retirement plan providers and DC investment managers better understand the perspectives and preferences of financial advisors who sell and support employer-sponsored retirement plans (ESRPs).
“The fact that so many advisors are advocating for the inclusion of alternatives within DC plans indicates just how quickly the market is changing.”
Linda York
“We know from previous research that interest in alternative investments has been rising on the retail side,” said Linda York, a senior vice president in Escalent’s Cogent Syndicated division. “These findings show that the same enthusiasm is starting to take hold within the DC plan space. Advisors have traditionally turned to alternatives as a diversification lever for high-net-worth and institutional clients. Now, these options are becoming more relevant for employees across all income levels. The fact that so many advisors are advocating for the inclusion of alternatives within DC plans indicates just how quickly the market is changing.”
The growing emphasis on alternative investments comes after the Department of Labor’s August 2025 decision to reverse its previous stance on the suitability of alternatives within 401(k) and other workplace DC plans.
“The DOL’s decision marked a turning point for the use of alternatives in workplace plans, and the market is still adjusting,” said Sonia Davis, senior product director in Escalent’s Cogent Syndicated division and lead author of the study. “What stands out in our research is how closely advisor interest tracks with the growing curiosity we are seeing among plan participants. As such, we can expect DC advisors to seek out suitable options as client inquiries continue to expand. The firms that align their alternative offerings with advisors’ priorities will be in the best position to capture that momentum.”
Among the various categories of alternative investments, advisors favored private equity, with 43% saying they already recommend it or are likely to do so. This was followed by private credit (42%), private real estate (39%), and venture capital (32%).
These preferences broadly reflect findings from Escalent’s 2025 DC Participant Planscape™, released in July. When participants were asked which alternative investments they were already using or most interested in for ESRPs, real estate, private equity, and venture capital emerged as frontrunners. Participants ranked real estate investment trusts (REITs) highest at 40%, followed by liquid alternatives (37%), private equity (36%), and venture capital (34%).
While demand for alternatives is already high, continued category growth will depend on how effectively providers support the features and structures advisors value most. When asked what would influence them to start recommending alternatives or increase their current recommendations to plan sponsors, DC advisors cited lower fees (38%), client requests for inclusion (34%), and increased liquidity (33%). These findings are especially significant in light of data from DC Participant Planscape, which suggests advisors are likely to field more requests for alternative investment options moving forward.
The survey included a representative cross section of 411 plan advisors and was conducted in September 2025. Survey participants were required to have an active book of business of at least $5 million and be actively managing DC plans.
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Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
