Is Private Equity Coming to Your 401(k)? What It Means for Your Retirement

Summary

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HerMoney with Jean Chatzky

Episode: Private Equity & Crypto in Your 401(k)? What Investors Need to Know Now
Date: February 20, 2026
Host: Jean Chatzky
Guest: Liz Miller, CFP®, CFA, President of Summit Place Financial

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Episode Overview

This episode tackles a pressing and emerging topic in retirement investing: the potential inclusion of private equity, private credit, and cryptocurrency in 401(k) accounts, spurred by recent executive orders. Host Jean Chatzky and guest Liz Miller, an accomplished financial planner, demystify what these alternative assets are, how they work, who (if anyone) should consider them, and what risks and costs are involved. The conversation is frank, insightful, occasionally funny, and specifically attuned to the needs and questions of women investors.

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Key Discussion Points & Insights

Wall Street’s Push for Alternative Assets in 401(k)s

• Product Evolution & Accessibility
  • Wall Street consistently looks to repackage and sell new products to larger segments of investors.
    • "If there's a product they can sell, they're going to be excited to figure out how to keep repackaging it for more and more and more investors." – Liz Miller [00:32], [05:46]
  • Alternative investments, once exclusive to the ultra-wealthy, are now being positioned for everyday savers through 401(k)s.
  • The move to include these assets is partly a marketing transformation – making what seemed “elite” accessible to more investors.

Defining Alternatives: Private Credit & Private Equity

• What Are They?
  • Private Equity: Buying private company stock instead of public. Generally illiquid and valued less frequently.
  • Private Credit: Lending money (as a group of investors) to companies outside traditional banks; essentially private bonds.

    “Private equity is when you're buying into the stock, the private stock of a company… Private credit… instead of going to a bank to ask for a loan, companies go to investors… and now we've created a private bond and we're calling it private credit.” – Liz Miller [08:46]

• Implementation in 401(k)s
  • Most likely offered as funds (private equity fund, private credit fund), bundled by major asset managers like Vanguard and BlackRock.
    • "I think particularly in 401ks, that's what we'll see. ...There'll be Vanguard Private Equity and Vanguard Private Credit." – Liz Miller [10:34]

Risks of Non-Public Investments

• Valuation Gaps & Perceived Stability
  • Since alternatives aren’t marked to market daily, apparent stability can be misleading. Downturns catch up eventually.

    "You make yourself believe it’s a more stable investment because you’re not seeing the valuations up and down… Probably not. They just haven’t yet been marked to market.” – Liz Miller [05:46]

The Fee Structure Challenge

• Comparing Costs
  • Private funds are notoriously expensive (often 2% fee + 20% of profits), much higher than index funds.
    • "Private equity is known for charging 2% fees plus 20% of the profits." – Jean Chatzky [14:19]
  • Many new 401(k) funds may temporarily offer lower fees, but lasting cost reductions are uncertain.

    "These have always been very expensive. I really don't know if they will change the pricing in a 401k." – Liz Miller [14:40]

Cryptocurrency as a Retirement Asset

• Is Crypto Appropriate in a 401(k)?
  • Crypto is volatile, loosely regulated, and not suitable for every investor.
    • "All three of these choices are not for everyone. Everyone shouldn't have an allocation." – Liz Miller [16:36]
  • For those interested, allocations should be very small (typically 1-3%, possibly as high as 10% in rare circumstances).

    "Crypto assets are in a really different category. It's a very tiny exposure that I think makes sense even for the people where owning it makes some sense." – Liz Miller [19:37]

  • Crypto likely to enter 401(k)s as ETFs, increasing accessibility and volatility.

    "Now that we have exchange traded funds for it, it inevitably will be available in your retirement accounts." – Liz Miller [18:25]

How to Find (and Switch) a Financial Advisor

• Key Criteria for Advisors
  • Look for a Certified Financial Planner (CFP) who acts as a fiduciary.
    • "Whoever you're working with has committed to working only in your best interests." – Liz Miller [20:57]
  • Trust is crucial; discomfort or lack of communication are reasons to look elsewhere.

    "The level of trust with your advisor has to be there day in and day out." – Liz Miller [21:40]

• Breaking Up Gracefully
  • Legally and practically, clients can move to a new advisor with minimal confrontation.
    • "You can ghost your past advisor." – Liz Miller [22:48]
  • If preferred, honesty and gratitude are best: “It’s time for something different.”

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Mailbag Questions & Practical Advice

1. Tax Benefits of Crypto in a 401(k) vs. Brokerage ([27:09])

Listener: Kendra

• Q: If crypto comes to my 401(k), is it smarter to invest there for tax advantages?
• A: Yes, upside is tax-advantaged, but losses can't offset other gains as they can in taxable accounts.

  "If there's any reason you would appreciate the tax advantage on the downside, you will lose that in a 401k situation." – Liz Miller [27:51]

• Stick to small allocations even if offered in your plan.

2. Is It Too Late to Add Alternatives Approaching Retirement? ([29:54])

Listener: Daria

• Q: At 59, should I consider private equity or private credit in my 401(k)?
• A: Keep allocation very small, given limited non-retirement assets. Longevity risk matters, but lack of liquidity and need for stable income suggest caution.

3. Will 401(k) Alternatives Show Fees Clearly? ([31:18])

Listener: Jess

• Q: Will fees be transparent or buried?
• A: Fund fact sheets should disclose fees directly. Read them carefully, and don’t rely solely on summaries.

  "It shouldn’t be buried in the tiny print of the disclosure. It should be in the actual fees of the funds." – Liz Miller [31:47]

• High fees + illiquidity often offset the touted returns; be clear on what you expect from such investments.

4. Is “Playing It Safe” Still Smart Near Retirement? ([34:05])

• Insight: Experts increasingly recommend not moving portfolios too conservatively just because you retire; longevity requires continued growth exposure.

  "My 60-year-olds and 70-year-olds, we need the growth… we need to make sure the money will be there, and that does take a higher allocation to growth oriented assets like public stocks." – Liz Miller [36:21]

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Notable Quotes & Memorable Moments

• "Fiduciary… in its simplest terms, it means whoever you're working with has committed to working only in your best interests." – Liz Miller [20:57]
• "It's not for everybody. It's incredibly volatile. I talk to some people who think about it as it's, you know, the money I don't mind losing." (on crypto in 401k) – Liz Miller [17:46]
• "You can ghost your past advisor. You're telling us you can ghost, wow, okay. All right, good to know." – Jean Chatzky [22:48]
• "Was that worth it to you for all those years of what we call illiquidity, not being able to get at the money and potentially paying those high fees?" – Liz Miller [33:13]

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Timestamps for Important Segments

• [00:32] – Why Wall Street pushes alternatives to everyday investors
• [05:46] – The “illusion” of stability in private assets
• [08:46] – Explaining private equity vs. private credit
• [14:19] – Discussion of fees and cost structures
• [16:36] – Should crypto belong in a retirement account?
• [20:57] – How to find and assess a trustworthy financial advisor
• [27:09–34:05] – Listener mailbag: taxes on crypto, age/timing for alternatives, illiquidity/fees transparency
• [34:42] – Rethinking “safe” vs. “growth” in retirement planning

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Conclusion

Jean and Liz emphasize the importance of understanding the risks, costs, and liquidity constraints of private equity, private credit, and crypto—especially as these options enter the mainstream via retirement plans. For most investors, particularly those nearing retirement or with limited assets, exposure should be minimal. Even with new choices, the old rules—know what you’re buying, read the fine print, and get unbiased advice—matter more than ever.

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For more practical investing advice and women-focused financial discussions, subscribe to HerMoney or join the Investing Fix club.

Transcript

[A]

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[B]

What we both know about Wall street, which is if there's a product they can sell, they're going to be excited to figure out how to keep repackaging it for more and more and more investors. And I, you know, cynically think that's what's happening with all of these. To get this allowable in a 401k for an everyday person is recapturing something that for years, you know, sounded like the sexy elite investment.

[C]

Hey everyone, welcome to Hermoney. I'm Jean Chaty. If you have been following the headlines or even just trying to keep up with what's going on inside your 401k, you might have noticed that things are changing and they're changing quickly. We're, we're not just talking about stocks and bonds anymore. Thanks to a recent executive order from the Trump administration, private equity crypto and other so called alternative assets could show up in your 401k right along your typical retirement plan options. And on the one hand, this opens the door to new investments, new choices, which is not always a bad thing. I remember a time not so long ago when ETFs were considered the new kid on the block. On the other hand, some of these assets bring a whole lot of risk complexity, higher fees, not to mention serious questions as to whether or not they're right appropriate for the average investor. So today we're going to dig into it and we're going to get down to the basics. What are private credit, private equity, what do they mean for your retirement? Should you consider them? Should you consider crypto? And if so, how do you know if these choices are right for you? To help us answer those questions, we've got the perfect guest. She's an old friend of mine. Liz Miller is a cfp, a CFA and just came off her term as chair of the CFP board where she helped set the standard for the financial planning profession. She is also the president and founder of Summit Place Financial and someone who loves to explain the nuances of these often misunderstood investments. Liz, welcome to her money. So good to see you.

[B]

Thank you. It's great to see you and be with you on this.

[C]

I teased it, but I'm going to tell everybody. Liz and I know each other from college where we were both members of the theater community. Liz was in an all female comedy troupe, Bloomers. I did a little bit more on the musical theater side, but it is always great to connect.

[B]

It's so funny where we are today to think about those roots, right?

[C]

Yeah, definitely. Nobody would have guessed.

[B]

No. But I suppose it makes getting up in front of people and talking a lot easier. With all those speeches I gave last

[C]

year, you know, I think that that's absolutely true. People have asked, does the fact that you were a theater kid help with being able to get up in front of a camera? And I think it 100% does. It's one of the reasons I nudged my kids to become theater kids. They're at home in front of a mic.

[B]

Yeah. I tell my children, you know, you just need to follow where the path may lead. I kind of say to them, I've been on TV and appearances more than I ever could have dreamed. If I had tried to pursue theater, you know, if I had pursued my writing, I would have gotten nowhere. You're an amazing writer. I have one book under my belt and I never would have guessed I would have done that. But had I tried to pursue writing, I probably never would have been published at all. So we need to take our talents and just let them stay with us wherever the path takes us.

[C]

I think that's such good advice. Let's dig into these new and convoluted investments. There's this new executive order from the Trump administration that opens the door for alternative assets in retirement plans, private equity, private credit, crypto in a 401k. Now, I gotta tell you, when I was at Smart Money magazine, we were allowed to cover stocks and bonds. We were not allowed to cover derivatives, we weren't allowed to cover shorts. I mean, anything that bordered on the line of what the editors at that point thought might be too risky for Main street investing. We were just not going to touch in our pages. And to me, this feels a little like that. So can you talk a little bit about why this is even happening and whether it is as risky as it sounds?

[B]

So let's first talk about what we both know about Wall street, which is if there's a product they can sell, they're going to be excited to figure out how to keep repackaging it for more and more and more investors. And I cynically think that's what's happening with all of these. To get this allowable in a 401k for an everyday person is recapturing something that for years sounded like the sexy elite investment. I look back, and very early in my career, I was on one of the very first hedge fund desks as a young security advisor. That was in the 90s. So that's how far we've come from the start of these investments, which have always been alternatives, private investments. We change the wording over time to try to make it more accessible and understandable. At first, the hedge fund again sounded sexy. It was elite. Only certain investors could get in. And those certain investors wanted to be in because it sounded like something just for them. They wanted to prove, I'm ultra wealthy. I can talk at the cocktail party about my hedge fund. And we know that that's evolved over the years. And private credit, private equity, are still all within that universe. What makes it alternative is it doesn't trade on a public market. That's how that phrase came to be. Now, some people love that because they talk about it's more stable, it's uncorrelated, it doesn't move with the markets. And sometimes that's true, but the entire category sometimes looks that way because since it doesn't trade every minute on a public market, you don't regularly see the ups and downs. So it's a little bit sometimes of a trick to yourself. You make yourself believe it's a more stable investment because you're not seeing the valuations up and down. I think about that a lot. Most recently, when we had a real market pullback in 2020, and the first response was, oh, well, my private real estate investments are fine. And we would talk to clients about probably not. They just haven't yet been marked to market. And the real estate market takes a little longer to catch up. And sure enough, you know, by the end of the year, all of those were revalued on paper. So the first thing to understand with anything that's alternative, not trading in a public market is you are at a little bit at the whim. There are some rules, but you're at the whim of the revaluations of those who are setting up the investments.

[C]

You just threw out a whole bunch of terms that we haven't ever talked about on this Show. So I want to, I want to do some definitions. Private credit and private equity, what are they?

[B]

So they're all under this umbrella that we call alternatives. And again, they're alternative because we can't go and buy them in our brokerage account easily. They don't trade every day on a public market. Now, you mentioned at Smart Money, you could talk about stocks and bonds. So private equity and private credit are the same two categories, but in that private alternative market, private equity is when you're buying into the stock, the private stock of a company, and it may or may not be valued over time, but you're sort of buying it for the same reason you think the company is going to be worth more in the future. Now, private credit, again, they just make up terms that all make us think it's going to be fun is the same as like private fixed income. Instead of going to a bank to ask for a loan, companies go to investors like you and me and anyone else and say, hey, will you all give me this loan? Would you write me the iou? And now we've created a private bond and we're calling it private credit. And most of these today are in funds. So that you are buying a bunch of companies privately and, and you're lending to a number of companies privately. You can do it specifically to an individual company. But particularly when we think about what we might be seeing in 401ks, it's going to be that fund structure, a basket of investments.

[C]

If we think about how they might work inside of a 401k, it'd be that fund. Right? People would have access to private equity fund or private credit funds. Is that sort of where we're headed?

[B]

I think particularly in 401ks, that's what we'll see. You get your laundry list. My Vanguard Broad market, my Vanguard Growth, my Vanguard Income and Growth. And then there'll be. I don't know if it's Vanguard, but there'll be Vanguard Private Equity and Vanguard Private Credit.

[C]

So you expect that the providers that are currently rolling out funds and investments for 401ks, the Vanguards, the Fidelities, the Blackrocks, they're going to be the ones that are packaging,

[B]

I think at first. Now, some of us still have those 401ks where we have a mix of choices from a lot of different. We kind of sometimes call it best in breed. My husband's 401k is that way. It's not all, you know, Fidelity Investments. So they may be, I think, the first ones we see will be from these third parties. I think BlackRock will be very fast. If you have a 401 that has BlackRock choices, I think they'll be one of the first to come out if this is allowed. And then some of the names that a lot of us haven't heard a lot about but have probably been in the business, they'll repackage them quickly into funds for a 401k as well.

[C]

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[B]

You're absolutely right. These have always been very expensive. I really don't know if they will change the pricing in a 401k. I have always felt that as the years go by, these structures all tend to provide lower and lower returns. The reason two and 20, as we say, 2% of an annual fee and then 20% give back of the profits above your investment. So the people managing the fund, once your initial investment is back, you keep 80% of the additional upside. They keep 20%. Now, that was okay. And investors who were in these funds were comfortable with that because over time they were getting much higher than public market returns. Like any product, as we get more and more and we build it out and it's a bigger and bigger slice, I'm not sure we're going to see those kinds of returns. And so I really don't know what they're going to do for pricing within a 401k structure.

[C]

All right, crypto. Let me just clarify. Liz and I are taping this podcast second week of February, and if you look at just bitcoin prices, Bitcoin prices have fallen out of the sky. This is a loosely regulated industry. There are a lot of cowboys. It makes me wonder if this should be in a retirement account or if it's too risky for many, many people. And if you like it as a retirement asset, or if you believe, as Larry Fink, the CEO of BlackRock, said at some point last year, that in fact, cryptocurrency is a core asset at this point. What percentage are we talking about? Wow.

[B]

You know, I think we start as with all these things. We didn't say it about the private equity and private credit, but we have to say all three of these choices are not for everyone. Everyone shouldn't have an allocation. A model that says you should have an allocation to these things is not going to fit most people. And we're all going to need to be really careful about that. If they become a choice. When we all know that, even my own daughters who are working, they go on their 401k and before they talk to me, they look at the little guideline and they take the little questions and it says I should have, blah, blah, blah. And you know, as a professional advisor, we're more nuanced than those models. But those models aren't bad. I would never tell anyone that they're bad and ignore them. But I'm going to be very worried if those models automatically tell someone. And here's how much you should have in a private equity, a private credit or a crypto. First of all, let's clarify in terms of easy investment. We've seen both Ethereum and Bitcoin take off since the SEC approved exchange traded funds. And the same thing happened 30 years ago when we got an exchange traded fund for gold and silver. And as you mentioned as we're taping this, we've seen a huge run in precious metals and a pullback. And I do believe that kind of volatility is enabled when we start creating these exchange traded funds that make all of these things so much easier to own. So we are going to see more volatility in the crypto assets for which there are exchange traded funds. And that is probably how they would arrive in 401ks. Do we all think the future of blockchain promises something? Yes, I do. I still don't know what that is. We're here spending the last year getting very excited about AI and the incredibly rapid pace of its development. And I mention that because that was the promise of blockchain. And now it's been a decade and while there's some really interesting technological structures to blockchain, we certainly haven't yet seen that kind of development and that kind of explosion. So I think even today when you're talking crypto assets, in many ways you're really talking about I'm investing in the underlying blockchain technology to each of these. It's very interesting to think about global digital assets and I do think they will continue to expand and evolve. I don't know if Bitcoin or Ethereum are the surviving ones and what it looks like, having said all that and introduced that, does it belong, you know, should it be available in a 401k? Well, I think the fact that we have exchange traded funds for it now means it inevitably will be available in your retirement accounts. It's not for everybody. It's incredibly volatile. I talk to some people who think about it as it's, you know, the money I don't mind losing. Almost like going gambling. If you are young with a very long time frame and you're interested in this because you do Think someday there's something to it. We kind of are talking to people about 1% to like 33% at most in an allocation. When a private investment is appropriate for some of our clients, we're very comfortable talking about up to 10% in a mix of private investments. So you can just even see in that comparison, crypto assets are in a really different category. It's a very tiny exposure that I think makes sense even for the people where owning it makes some sense.

[C]

It's such a helpful way to lay things out, the fact that crypto is much more volatile and risky than even these private equity, private credit investments. So thank you for that. You just wrapped up your term, as I mentioned, as the chair of the CFP Board. Congratulations on that. With that insider perspective, I got to say the question I get asked more than any other question is how do I find a financial advisor who is right for me? What do you say when someone asks you that question? And what are the red flags that might signal it's time to reconsider your relationship with your current advisor?

[B]

Great question. Well, let's start with, you know, the first thing I'm going to say you're going to look for is an advisor who has earned their Certified Financial Planner designation. That means they have shown a commitment to education, a rigorous exam, and almost most importantly at all, when they've gotten through both of those barriers, they commit to ongoing ethical standards to always work as a fiduciary for you. Finally, I have people coming to me where they're actually looking for the word fiduciary. I spent most of my career. I'm sure you have too, Jean, that no one understands that phrase. Today we can use it, and in its simplest terms, it means whoever you're working with has committed to working only in your best interests. So that's the baseline you really want to make sure not just that they have credentials that reflect a commitment to expertise and competence, but that anyone you talk to, even with a different credential, tells you they're acting as a fiduciary and that they're under a fiduciary compliance guideline. Always in your best interest. I always say it's time to make a move whenever you're uncomfortable. I have so many people who say, well, I can't decide. Maybe it's okay. I think my performance is okay, but they really haven't talked to me in months and there's so much going on. And I say it's not fit. Then whatever your wealth level, the level of trust with your advisor has to be there day in and day out. And the minute you say, I'm not sure I see the answer is it's time to talk to other people.

[C]

And when you want to say to that advisor that you've been working with that you're done, what are the right words to use?

[B]

Well, I'm going to give you the easy out first because generally if you're moving to another advisor, you don't have to say anything. They can help take over your assets and that will inform the previous advisor.

[C]

You can ghost your past advisor. You're telling us you can go, wow, okay. All right, Good to know.

[B]

Practically you can you sign a contract with a new advisor. You will sign some paperwork that gives them a limited power of attorney over your accounts, which is legally how the thing sets up. And it takes it away from the previous advisor and they will be informed by back office.

[C]

Amazing.

[B]

So you don't have to. But I think when it is a good relationship, the most important thing to share is it's time for a change. You've been great. I so appreciate everything you've done for me. But I now realize it's time for something different. I think that's the perfect phrase.

[C]

It's time for something different. All right, we're going to take a quick break. When we come back, we're going to take some mailbag questions from the hermoney community. You had a lot of questions about private equity. We want to make sure that you have all of these questions answered. Back in a sec. You know that feeling when you're wearing something that just works? Lately, for me, it starts before I even get dressed because skims has totally transformed my basics drawer. The cotton jersey full brief, that's my go to. They stay in place, they don't bunch, and after dozens of washes, they are still in perfect shape. And the fits everybody, triangle bralette. I didn't think a bralette could support and flatter, but skims nailed it. Feels like a second skin, but one that makes you feel really confident. Skims just makes me feel pulled together even on the busiest mornings. And that's something I'll always recommend to a friend. Shop my favorite bras and [e-mail] after you place your order, be sure to let them know that we sent you select podcast in the survey and be sure to select our show in the dropdown menu that follows. When I first started hermoney, it felt like I had to figure it all out alone. Scripts, tech, design, promotion. The list was never Ending every day brought new tasks that I just hadn't planned for. I would have loved having Shopify in my corner. Shopify is like having a built in business partner. It helps you run your online store from top to bottom. Inventory, payments, marketing, analytics, all in one place. They even offer you hundreds of beautiful templates so that your store looks just like you. And if you're stuck, They've got award winning 24. 7 support and tools that simplify your work. From AI written product descriptions to social and email campaigns. Campaigns that actually convert so that you can spend more time growing your dream and less time chasing tabs. Start your business today with the industry's best business partner, Shopify and start hearing. Sign up for your $1 per month trial today at shopify.comhermoney go to shopify.comhermoney that's shopify.comhermoney we are back with Liz Miller, founder and president of Summit Place Financial. So Liz, before we dive into these questions, one more from me. This is an executive order from the president that has sent us down this path. How likely is it to actually happen and when might we see this stuff start popping up?

[B]

I think it's highly likely it's going to happen, and not just because of the executive order, but again because Wall street sees a product it can sell and so this just makes the market opportunity for the companies offering private equity and private credit funds explode. And so of course they want this. So I do think it's inevitable. I'm not sure the timing, but I think what we've already seen is under our current president, sometimes these things are going through faster than they might have in the past. So there's a lot that the providers are going to have to put in place, but might be within a year. It's certainly within three years, I think at most.

[C]

Okay. Our first question comes from Kendra. She writes, I'm 38. I've dipped a toe into crypto. I've got about a thousand dollars in a separate brokerage account. I loved your recent episode with Amanda Holden. We did an episode with Amanda Holden, who wrote a book about how to be a rich old lady, which we love, especially when she said to think of crypto like a going out bag, something you're okay with losing if you accidentally leave it in a cab. That really stuck with me because that's how I've been approaching it. But now I'm hearing that crypto might be coming to my 401k. If that happens, would it make more sense to invest there for the tax advantages.

[B]

That is a great question. And I love the going out bag. I said, like gambling money you're willing to lose. It's the same idea. You know, we work with a range of investors at my firm and many of them are ultra high net worth, who for years could think about crypto and private investments. And they love to try to get these into their IRAs. So they're excited to maybe do it in a 401k. It is more tax efficient on the upside. But these are also incredibly volatile investments, as we said. So if there's any reason that you would appreciate the tax advantage on the downside, you will lose that in a 401k situation. But yes, there are tax advantages there. I love that you've done at most $1000 and I certainly wouldn't go any more than that just because it's in your 401k.

[C]

So essentially, when you're saying you'll lose it on the downside, if we've got assets in a taxable brokerage account, when we look at our gains, we also look at our losses, particularly at the end of the year when we want to write off gains against losses. And by keeping this asset in a tax deferred or tax free retirement account, you lose the ability to take advantage of that.

[B]

Exactly. And a lot of investors who are interested in Bitcoin and Ethereum through these exchange traded funds, this is why they become active investors or active traders for exactly that reason. They may take the profits on the upside if they think of it and get out. But then with it down so much, as you noted, some of them are selling it now because they haven't owned it very long. And that loss that they have, you know, for tax purposes we say can be valuable. You can use investment tax losses and pair them with gains that you've had. So if you own Nvidia last year and you own some crypto today, you might be trimming both sides of that and you might be able to balance the gain in one to the loss in the other.

[C]

Terrific. Okay, Our next question comes from Daria. She says I'm 59 and planning to retire somewhere between 65 and 67. So in the next five to seven years. Right now I've got about $640,000 in my 401k. I also have a brokerage account with $85,000. I've been reading about private credit and private equity possibly being added to retirement plans. But is it too late for me to explore these or could they still be A smart piece of my portfolio at this stage. Retirement's a long time, Liz.

[B]

Retirement is a long time and we want to make sure that we're investing for what we say is longevity. And in that sense, private equity in particular can be long term. But you don't have very many assets outside your retirement account, so that means you're going to be living on them. So if this interests you, I would keep the allocation very small. You know, what do you live on? What are going to be your sources of income? We're not talking about it today, but it almost sounds to me like I'd love to see a piece of that maybe go into a fixed annuity. So I really know you have the cash flow you're going to need for the next 30 years of planning. Before we talk too much about what could get exciting about some long term returns in equity funds, ready for one more?

[C]

Yeah. All right. This one's from Jess. She says, I'm 44, I've got about $220,000 in my 401k. I've always stuck with low cost index funds because I really try to avoid high fees. I'm curious about private equity, but I've heard the fees can be outrageous. If these funds show up in my plan, will I be able to see the fees clearly before I invest? Or will they be buried in disclosures that no one actually reads?

[B]

Oh, I love that you've said that. You know, I can't tell you how many times we tell someone. Well, you have to click on the investment to get the fact sheet and it should give you the fees there. And so that should be the same case. And we're going to tell everybody to read those. And yes, read them carefully. It shouldn't be buried in the tiny print of the disclosure. It should be in the actual fees of the funds. And, you know, sometimes what we've seen, just to digress a second, is when new products like this come into 401ks, sometimes there's an agreement to sort of minimize or reduce those fees for a little while until they really become part of a product everyone's comfortable with. So as Jean and I talked earlier, I really don't know what those fees are going to look like. I think that you have a really nice long term timeframe. And then if this interests you, then you might think about a small allocation. What I'd like to say about private equity funds is even the most established of them, if you look at their fund structures, you know, a Blackstone, a Blackrock, a Carlisle A kkr, you know, over the last decade, five years is even lower. You know, the returns consistently end up to be 20 plus percent. It's not a game changer from what you might make in some of your aggressive holdings in the equity markets and in the public markets. So I really try to make sure that investors understand what is it you're expecting from this. And a private fund doesn't pay it for a long time. So what you're really going to do is, is sit on something doing Nothing in your 401k for a good number of years, probably at least 5, often 10 years before it starts paying anything out. And then if everything goes well, yes, you might be looking at returns that average out to be about 20 plus percent a year. Was that worth it to you for all those years of what we call illiquidity, not being able to get at the money and potentially paying those high fees? So you can understand why these started with very high standards for who could invest in them. So when we make it easier and easier to invest, we're going to work really hard to ask these kinds of questions of you to make sure it's something that truly interests you in your retirement funds.

[C]

Love it. Before we wrap, Liz, one more question and this one is on a lot of our listeners minds, especially those who are getting closer to retirement. We've all heard this rule of thumb that as you get older you should shift more into safer investments. More bonds, more cash, fewer stocks. Lately some financial experts are saying that playing it too safe might actually be the bigger risk. So what's your take? Is there, is there such a thing as the perfect portfolio for every age? And how should we start thinking about risk when retirement is just a few years away?

[B]

I do think there's nuances of the right portfolio allocation for everybody. But that's because I work one on one with people and I do think the online models and suggestions aren't bad. But I do think they're too conservative. And first of all when we think about has that allocation change, to me it certainly changed over 10 years ago when we went down to zero percent interest rates. I would tell people so many times this is not your grandparents bond market. So when you could get 4 and 5% from the fixed income in your portfolio, it made a whole lot more sense for that to be a growing portion because we generally tell people to live on about 4 or 5%. So indeed that could support them. When interest rates for so long were so low, Even up to like 2%, we were suggesting our Clients have much smaller allocations to fixed income. They needed the growth from equity. And we really talked about fixed income just being the anchor in the portfolio. So for us we would make that fixed income particularly safe. No private credit, the risk was in the equity side and we would have smaller allocations to fixed income. The last couple of years we've gone back to those higher rates. So now when you can build a portfolio that yields 3 to 4%, we're sort of in the middle. But I do think overall we believe the thinking has changed that we do not do a 4060 portfolio for our retirees. We don't start thinking about a 4060 portfolio until we have a client really somewhat pushing their 80s. And you could argue at that point, as some professionals do, you should flip it because now we're really only planning for 10 to 15 years. So you could argue the risk is actually lower at that point. Point. But my 60 year olds and 70 year olds, we need the growth. We're all actually living longer. I know the latest life expectancy came out a little bit higher than it's been, but clients that usually have saved for retirement and can live in retirement are really living into their mid-80s and well into their 90s. For many of them healthy lifestyles, we need to make sure the money will be there and that does take a higher allocation to growth oriented assets like public stocks.

[C]

Liz Miller, thank you so much. This was a great conversation. Really important, really educational. I'm sure we are going to get more questions for you. So if we can invite you back to answer them, that would be amazing.

[B]

I'd love to. Thank you so much Jean. This has been great.

[C]

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