Big Take Private Equity Is Coming for Your 401(k)
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Aug 7, 2025 Allison McNeely, a private equity reporter for Bloomberg, dives into the recent executive order allowing private equity to enter the $12 trillion 401(k) market. She explains what this means for Americans' retirement savings and the potential risks involved. The conversation covers the complexities of integrating private equity into retirement plans, including higher fees and liquidity challenges. Legal and ethical dilemmas are also addressed, revealing mixed perceptions among employees about these new investment options.
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PE Exec Zoom Sparks Movement
- More than 30 money managers from major firms strategized before Trump's inauguration about getting private equity into 401ks.
- This was seen as a "next gold rush" to access trillions in retirement funds.
Private Equity as Valid 401k Option
- 401k plans generally invest in stocks and bonds with fiduciaries selecting default options.
- Private equity could be a valid investment option even though traditionally excluded from 401ks.
Private Equity Illiquidity Explained
- Private equity involves long-term investments in companies not publicly traded, often 10 years or more.
- Investors usually cannot access their money until the firm sells the company, highlighting illiquidity.