While private market investments are not yet broadly implemented within defined contribution plans, they are being widely implemented into client portfolios by advisers.
According to a new research paper, “From Public to Private: How Advisors Are Using Alternative Investments,” by Cion Investments Corp., YCharts Inc. and Compound Insights, an affiliate of Ritholtz Wealth Management, 95% of surveyed advisers reported using alternative investments in client portfolios.
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Of advisers who recommended alts in client portfolios, 61% said the investments appeared across many client portfolios, 26% said alts appeared for select client portfolios, and 8% said the investments appeared on rare occasions.
The mass adoption of alternatives for client portfolios suggests a similar market could develop for defined contribution plans, pending a finalized rule from the Department of Labor on private market investment guidelines for DC plans.
“Liquidity was the barrier advisers flagged most in implementing alternatives. This is really a design question, with semiliquid structures specifically as the answer. Adoption of semiliquid structures in DC plans is the trend advisers should be watching,” said Michael Reisner, co-founder and co-CEO of Cion Investments, in an email to PLANADVISER.
Approaching Alternatives
When advisers were asked which specific investments they were interested in, but had not yet implemented at scale, 52% said infrastructure or real assets, 46% said private equity, and 36% said private credit.
Asked what kept them from fully implementing the vehicles at scale, advisers cited liquidity concerns (61%), followed by complexity of structures (46%) and client comprehension (46%).
The most common alternative investment structures used by advisers were evergreen vehicles or interval funds (61%) and liquid alternatives exchange-traded funds (50%).
“What’s holding many [advisers] back is structural: matching liquidity terms to the right client. That’s a solvable problem, and it’s exactly why the market has moved toward semiliquid, evergreen structures rather than away from them, even amid this year’s redemption headlines,” said Reisner.
While private market vehicles are constantly being released, newer vehicles will not make implementation easier, according to the report. To address this hurdle of complexity, the report suggested that advisers “adopt a common language” by first understanding their firm’s stance on alternatives, so that colleagues give similar points when they are advising clients.
“I’d start with identifying what role the investment is supposed to play in a client’s portfolio: income, diversification, illiquidity premium, risk-adjusted returns, or simply private-market exposure. Only after that should advisers think about sizing,” said Reisner.
Next, advisers should create a clear strategy for their investments in alts. If an adviser’s firm does not have common guidelines, the adviser should decide individual stances on preferred investments, such as private equity and credit, and vehicles, which may include exchange-traded funds.
Advisers can also lean on internal resources such as their firm’s investment teams or external resources such as separate research and studies.
“Alternatives are illiquid or semiliquid by design, so an investor can’t simply exit a bad decision the way you might in public markets. That makes due diligence on how a manager sources deals, underwrites risk and has performed across a full cycle, not just a recent vintage, the foundation on which everything else is built,” Reisner said.
Cion, YCharts and Compound Insights surveyed 301 registered investment advisers in a survey fielded from April 7 through May 6.
Sponsors’ Outlook on Alts
DC plan sponsors’ concerns about and interest in private market investments are essential factors for plan advisers to consider.
According to the “2026 Retirement Planscape,” a Cogent Syndicated report from Escalent Inc., nearly half (44%) of DC plan sponsors said they are interested in learning more about incorporating alternatives into their 401(k) plan lineups. The interest was more prevalent among larger sponsors: 62% of sponsors of plans with $100 million to $500 million in plan assets expressed interest in learning more about alts, and 50% of sponsors of plans with at least $500 million in plan assets did so.
“New regulations from the U.S. Department of Labor have given alternatives a major boost,” said Sonia Davis, lead report author and a senior product director in Escalent’s Cogent Syndicated division, in a statement. “Plan sponsors now have greater flexibility in deciding which asset classes are advantageous to their plans, and that’s led to an influx of interest in alternatives.”
However, interest has not yet translated into adoption by plan sponsors.
According to the report, 3% of plan sponsors are currently incorporating alternatives into their current investment lineups.
When sponsors were asked which vehicles interested them most, 75% said hedge funds, up from 62% in 2025. Sponsors also showed interest in private credit (75%), private equity (75%), private infrastructure (73%) and venture capital (72%).
Sponsors’ most-cited barriers to incorporating alternatives into DC lineups were high fees or expenses (33%), risk (28%) and weak participant demand (27%).
“The industry is still in the early exploratory phases, with most sponsors mulling which types of alternative investment options could fit best within their lineups,” Davis said in a statement. “As such, recordkeepers and DC investment managers will need to lean heavily into education to translate sponsor curiosity into smart adoption.”
Escalent’s annual study surveyed 1,008 401(k) plan sponsors from February 18 through March 17.
