Retirement plan advisers, asset managers and legal experts said plan sponsors should at least consider adding alternative investments to their defined contribution plan menus as the Department of Labor nears final guidance providing favorable regulations.
“This is not something that gets a free pass into a portfolio,” said Patrick Arey, custom solutions sales director at Empower, during a panel last week at the 2026 PLANSPONSOR National Conference, run by PLANADVISER’s sister publication, in Nashville, Tennessee. “It has to provide a net-of-fee benefit.”
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Panelists said adding private markets exposure may help broaden the investment opportunity set at a time when the number of publicly traded companies has fallen and more corporate growth is occurring before companies go public. The most likely vehicle for adding alternatives, they said, is not a stand-alone menu option, but professionally managed products such as target-date funds, managed accounts and custom funds.
The rule recently proposed by the DOL, which received more than 40,000 industry comments, made clear that its proposed safe harbor would apply to investments held in professionally managed products.
Brandon Shea, a defined contribution strategist at T. Rowe Price, said the case for private assets rests largely on diversification and potential return enhancement. Even modest gains, he said, can compound meaningfully over a worker’s career. T. Rowe Price has modeled private market allocations that add 25 to 50 basis points in annual net returns under certain assumptions, potentially increasing retirement balances by about 10%, Shea shared during the panel.
Still, fees remain a central concern. Private-market vehicles can carry meaningfully higher expenses than traditional public-market funds. Panelists said sponsors should expect to make affirmative decisions if they want access to the versions of target-date funds that include private assets.
Liquidity is another hurdle. Arey said private investments would typically be held through layered structures, such as evergreen funds wrapped in collective investment trusts, with liquidity supported by public holdings, cash flows and plan contributions. The goal, he said, is to preserve participant access to money, while allowing limited exposure to less liquid assets.
Brian Tiemann, a partner in law firm McDermott Will & Schulte, said proposed DOL regulations could give plan fiduciaries a broader safe harbor for selecting investments. But he cautioned that regulatory protection may not eliminate litigation risk.
“A safe harbor doesn’t necessarily guarantee a good fact pattern,” said Michael Kozemchak, the panel’s moderator and a managing director at Institutional Investment Consulting, noting that sponsors still need to conduct a documented investment selection process.
The panelists urged sponsors to evaluate private assets through the same fiduciary lens applied to any investment: performance, diversification, fees, liquidity, valuation and complexity. They also said sponsors should document discussions even if they decide not to act.
“For plan sponsors, doing nothing is still a decision,” Kozemchak said.
