The recordkeeper\u2019s partnership with top private investment fund managers and custodians, including Apollo, Frankin Templeton, Goldman Sachs, Neuberger Berman, PIMCO, Partners Group, and Sagard, would safeguard its success with the new strategy.<\/p>\n
Private investments offered through these firms may be implemented through collective investment trusts (CITs), providing limited exposure to diversified pools of private equity, private credit and private real estate, a structure that is designed to provide liquidity protection and reduced fee exposure.<\/p>\n
Empower\u2019s initiative sent shockwaves in the industry, as many expressed feeling skeptical in offering illiquid and volatile investments in participant retirement accounts, while others continued to associate private funds with the dramatic fallout of cryptocurrency exchange platform FTX.<\/a><\/p>\n The move from the recordkeeper even garnered attention from lawmakers, who questioned the firm\u2019s intentions and whether it was prioritizing profits over consumer\u2019s financial safety. Following the announcement, Sen. Elizabeth Warren (D-MA) issued a letter probing Empower Retirement CEO Edward F. Murphy III on the company\u2019s plans to allow private funds in retirement investments and voicing her distrust with the private market.<\/p>\n \u201cPensions\u2019 investments in private equity have been dubbed a \u2018Wall Street time bomb.\u2019 Even institutional investors admit their uncertainty as to whether private equity\u2019s \u2018very thin outperformance is worth the risk of opaque and illiquid investments whose actual value is often impossible to determine\u2014investments that could crater when the money is most needed,\u2019\u201d Warren, who is also ranking member of the Senate Banking Committee, wrote in her letter\u00a0to Empower.<\/p>\n The potential threat doesn\u2019t seem to have deterred many, however. A number of asset managers have signaled their willingness to allow private markets in retirement investing, while others have partnered to sell private market products to retail investors<\/a>.<\/p>\n A survey from Empower<\/a> showed increasing interest in private markets among plan sponsors. In the survey, which fielded responses from 205 private sector 401(k) and 403(b) benefits administrators in the U.S., 96% of employers said they would likely add private market investments if fiduciary and regulatory guidance were clarified.<\/p>\n Separate research from BlackRock<\/a> and Schroders also noted interests in private markets among plan sponsors and retirement plan participants.<\/p>\n
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