Retirement savers are eager to invest in private assets, new survey finds
Retirement savers are eagerly anticipating the arrival of private asset investment options.
Nearly half of investors participating in 401(k) and similar workplace retirement savings plans say they would invest in private equity and private debt if their plan offered them, according to investment manager Schroders 2025 US Retirement Survey, which provided an exclusive first look at the report to Yahoo Finance.
“Demand for access to private markets is on the rise among Americans who participate in employer-sponsored defined-contribution plans,” Deb Boyden, Schroders’s head of US defined contribution, told Yahoo Finance.
Private assets, including private equity, venture capital, hedge funds, and real estate, are already legal in retirement accounts. However, plans have been slow to adopt them, and many workplace 401(k) administrators aren’t up to speed on them.
That’s where President Trump’s recent executive order comes into play. The directive instructs the Department of Labor and the Securities and Exchange Commission to draft guidance for defined-contribution plans to incorporate these types of investments.
The challenge will be finding the proper path to create investment options that can meet the fiduciary requirement plan providers must adhere to, such as acting solely in the interest of the participants and their beneficiaries.
Driving the demand
Why are these retirement savers chomping at the bit? Nearly three-quarters say these investments will offer diversification and better returns.
In fact, they’re so hopeful for these new options that more than 3 in 4 say they would increase their paycheck contributions to their plan to fully take advantage of the opportunity.
While backers say the shift offers diversification from plain vanilla stocks and bonds and potential juiced-up returns over time, experts advise caution in adding private assets like crypto to 401(k)s.
Read more: Want to buy a house with crypto? What to expect.
Risky business?
Even though retirement savers champion the concept in theory, more than half (53%) think private assets sound risky, according to the report.
Their skepticism is healthy.
“While they may offer higher long-term returns compared to public markets, and some real estate and infrastructure assets may offer better protection against inflation, I am still not sure they are appropriate for regular lay people,” said Cary Carbonaro, a certified financial planner and the author of the new book “Women and Wealth.”
Private assets typically come with limited or no ability to sell early. And private funds often carry performance fees and other layers of costs far above what most mutual fund options charge.
Meanwhile, it comes down to education. Most retirement savers aren’t even able to identify a target-date fund, where the bulk of employer-provided plan assets are invested nowadays.
“They all have different returns and risks, and you need to understand those differences,” Lisa A.K. Kirchenbauer, senior adviser and founder of Omega Wealth Management in Arlington, Va., told Yahoo Finance.
Individual investors won’t be expected to conduct in-depth research and analysis on private companies and offerings. That said, “significant inroads in participant education must be made to ensure all investors are familiar with the role of privates in a diversified portfolio,” Boyden said.
Keep it small
Most advisers I spoke to suggested that people who are curious about investing in private assets should consider keeping allocations to a maximum of 5% to 10% to start.
Schroders’s data backs that approach.
Among those who say they would invest retirement savings in private assets, about half would allocate less than 10%; 36% would allocate between 10% and 15%, and 6% would allocate more than 15%.
“Without question, the private investment landscape will continue to evolve at a rapid pace,” Boyden said. “Plan fiduciaries should continue to monitor this space to determine if private asset inclusion makes sense for their participant base.”
Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist and the author of 14 books, including the forthcoming “Retirement Bites: A Gen X Guide to Securing Your Financial Future,” “In Control at 50+: How to Succeed in the New World of Work,” and “Never Too Old to Get Rich.” Follow her on Bluesky.
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