Empower recently made headlines by announcing a bold new initiative: giving defined contribution (DC) retirement plan participants access to private market investments. On the surface, it sounds like a win—more choice, broader diversification, and the chance to tap into investment strategies once reserved for institutional players.
But if you’ve been in this business as long as I have, you learn to read between the lines. And what I see here isn’t just a shiny new investment opportunity. It’s a potential red flag.
What Empower Is Pitching
Empower has teamed up with some of the biggest names in finance—Apollo, Goldman Sachs, Franklin Templeton, Neuberger Berman, PIMCO, Partners Group, Sagard. Together, they plan to offer private equity, private credit, and private real estate investments via collective investment trusts (CITs). The promise? Limited exposure, reduced fees, and more diversification for your retirement plan lineup.
Sounds exciting. But let’s pause for a moment.
The Reality Check
Private investments aren’t like mutual funds or index funds. They’re complex, opaque, and illiquid. They often require long holding periods. They involve higher fees. And they rely on valuation models that aren’t always easy to verify.
Using CITs to offer these investments doesn’t magically make them “retirement ready.” It just gives them a new wrapper.
And let’s be honest—these private market firms aren’t offering access out of charity. They see a new revenue stream in the massive DC plan market. If they can get their slice of that $10+ trillion pie, they will.
What It Means for Plan Sponsors
Here’s the part where fiduciaries need to pay attention.
Just because Empower is offering it doesn’t mean it’s prudent. Under ERISA, plan sponsors have a duty to act in the best interest of plan participants. That means doing serious due diligence:
· Can these investments be properly valued?
· What are the true costs after layering in all the fees?
· Are participants equipped to understand what they’re investing in?
· How will the plan handle liquidity if things go south?
If the answer to any of these questions is “I’m not sure,” that’s a problem.
A Word of Caution
I’m not against innovation. And I’m not saying private investments should be off-limits forever. But throwing them into DC plans without a clear roadmap for transparency, education, and fiduciary oversight is reckless.
This isn’t just about adding another fund to your plan menu. It’s about fundamentally changing what kind of risk you’re exposing participants to—and what kind of liability you’re taking on as a fiduciary.
Final Thoughts
Empower is calling this a “landmark initiative.” I call it a potential minefield.
If you’re a plan sponsor or advisor, proceed with extreme caution. Ask the hard questions. Demand clear answers. Don’t get swept up in the hype. Because in the retirement plan world, there’s a fine line between opportunity and overreach—and crossing it could cost your participants dearly.
