The Clark Howard Podcast – “Ask An Advisor With Wes Moss”

Episode Date: October 21, 2025
Host: Clark Howard (with Krista Dibiaz and Wes Moss)
Main Theme: The potential arrival of private equity investments in 401(k) plans, plus listener Q&A on investing, retirement, and financial strategy.

Episode Overview

This episode dives deep into a significant shift coming to retirement planning: the introduction of private equity as a possible investment category within 401(k) plans. Wes Moss brings his perspective as a financial advisor, breaking down what private equity is, how it might function for average investors, and the broader impact on retirement choices. The show also features a range of listener questions answered by Wes, covering topics like financial education for heirs, FIRE movement misconceptions, asset allocation trends, covered call ETFs, and more.

Key Discussion Points & Insights

1. Credit Cards and Travel Points (01:00 – 01:53)

• Krista and Wes joke about Clark Howard’s extensive knowledge of maximizing credit card points, hinting at strategies for getting the most value on spending.
• Tone: Light-hearted and humorous.

2. Private Equity in 401(k)s: What’s Happening? (02:04 – 09:08)

Key Insights:

• Private equity could soon be an option in 401(k) plans, due to recent executive orders and shifting Department of Labor/SEC policies.
• Historically, 401(k) choices have been limited to stocks and bonds. This change marks the biggest shift in plan options in decades.
• Market context:
  • Today, only ~4,000 public companies exist, down from 8,000+ in the 1990s; meanwhile, the U.S. economy contains hundreds of thousands of large private companies.
  • 87% of large businesses ($100M+ revenue) in the U.S. are private.
• Private equity access has previously been restricted to accredited investors (over $1M net worth), but 401(k) plans could act as “qualified purchasers” for everyone.

Memorable Quote:

“Private equity is coming to a 401(k) plan near you… I don’t know of a bigger shift in the 401(k) world since I’ve been talking about 401(k)s. It’s a really big deal.” – Wes Moss (02:08)

• The Wall Street Journal reports that only 10% of Americans want more investment choices in their 401(k)s, and less than half are familiar with private equity.
• Wes is optimistic about additional return potential but warns about complexity and risk:

“I am a fan of private equity investing... but I would be very cautious about it too, because there is a lot of other things to think about.” – Wes Moss (07:22)

3. Listener Q&A: Financial Literacy and Communication with Heirs (09:28 – 12:19)

Question: Parents with significant wealth want advice on educating their children about finance; they’ve kept their net worth secret to avoid entitlement.

Wes’ Insights:

• Recommends podcasts for engaging education but emphasizes ongoing parental teaching.
• Cautions against secrecy:

“There should be no clandestine you’re secretly wealthy… It is a lifetime of what they’re exposed to on how to respect money and understand how difficult it is to attain.” – Wes Moss (11:18)

• Personal financial values and lessons matter more than any single course or book.

4. Listener Q&A: FIRE and Early Retirement (12:19 – 15:36)

Question: Is reaching $1 million in liquid assets enough to switch to part-time work in your 20s or 30s?

Wes’ Insights:

• Labels this a “Financial Independence, Retire Early” (FIRE) question. He’s skeptical FIRE works if you stop earning early.
• $1 million brings optionality, but probably not enough for multi-decade retirement, especially with family and rising costs.
• Instead, reaching that level can offer flexibility or enable more meaningful work.

“I don’t really think FIRE is get $2 million bucks and you’re retired. It’s not really how it works… Getting that million dollars does help. I think of it as the financial green zone for Americans.” – Wes Moss (14:10)

5. Listener Q&A: Bond Allocations & Vanguard’s Advice (15:36 – 18:05)

Question: Should we follow Vanguard’s suggested 70% bond allocation?

Wes’ Insights:

• Vanguard uses a timing model with conservative assumptions for a specific return objective (similar to some pension funds).
• It’s not tailored to individual investors, especially younger ones.
• Following a high bond allocation strictly could lead to missing crucial equity returns needed to combat inflation over time.

“It does speak that stocks have already done really well over the last three years, but I don’t know if I would be following it to the letter.” – Wes Moss (17:56)

6. Deep Dive: Mechanics of Private Equity in 401(k)s (20:48 – 26:53)

Detailed Structure:

• Private equity will likely appear in 401(k)s via collective investment trusts (CITs).
• These function like a mutual fund, bundling dozens of private businesses to provide diversification.
• Discussion of different types of private investment: private equity, private credit, infrastructure funds, etc.

Returns & Cautions:

• Historically, private equity delivers 15–20% annualized, but with high illiquidity and risk.
• Performance depends heavily on the fund manager (back to “who’s a good manager,” like old mutual funds).
• It’s unlikely you’ll pick “Apollo Global Fund 17” directly; instead, exposure might be built into broader target-date or allocation funds.

“It’s still going to be manager based… Makes me feel like we’re going back 20 or 30 years with mutual funds.” – Wes Moss (22:53)

• Concerns:
  • Losses are possible; some portfolio companies may go to zero.
  • Fund structures are designed to offset this via diversification, but returns and safety aren’t guaranteed.

7. Listener Q&A: Roth vs. Traditional 401(k) for Employees (26:53 – 29:01)

Question: Should employees be encouraged to switch to Roth 401(k) early in adoption?

Wes’ Insights:

• The employer’s job is to educate, not to guide employees to any one choice.
• Individuals should choose based on their unique tax situations and financial goals.
• Higher earners may benefit more from traditional (pre-tax); others might be better off with Roth.

8. Listener Q&A: Inherited IRAs/401(k)s and Community Property Rules (29:01 – 32:29)

Question: Can a husband in Washington refuse to accept IRA/401(k) inheritance from his sister? How do RMDs and state laws affect this?

Wes’ Insights:

• Estate planning is complex and state-specific—consult a local attorney.
• The husband can “disclaim” the inheritance, but then it passes to the contingent beneficiary.
• Being within 10 years of the original owner’s age allows a “stretch IRA” scenario, requiring only minimum distributions.
• Disclaiming is rarely beneficial financially. Even if RMDs increase Medicare premiums (“IRMAA”), more wealth is rarely a bad thing.

9. Listener Q&A: Covered Call ETFs for Retirement Income (32:29 – 35:32)

Question: Are covered call ETFs a good income strategy in retirement?

Wes’ Insights:

• A covered call is selling the right for someone else to buy your stock at a set price, exchanging some upside for current income.
• ETFs can simplify the strategy, but it’s best as a “sprinkled-in” income source, not a portfolio’s cornerstone.
• Uses a helpful analogy: “It’s like renting out your house, but the tenant has the option to buy at a fixed future price.”

“You’re trading some upside in the stock price for immediate income. … You don’t want to have it be a huge, huge part of your portfolio, but I think you can sprinkle this in for more income.” – Wes Moss (35:16)

Notable Quotes & Memorable Moments

• On the sea change of private equity in 401(k)s:
  “It’s a brand new category that people have not been able to invest in for a very long time.” – Wes Moss (08:38)
• On teaching children about wealth:
  “You’re the teacher, John. You’re the one that will educate them… and if you want them to have the right values, well, guess what? They’ve got a good teacher. His name is John.” – Wes Moss (11:01)
• On private equity as a future option for all:
  “Your 401k plan becomes the qualified purchaser. So that means that anybody inside that 401k plan can have access to private equity exposure.” – Wes Moss (08:18)
• On potential risks:
  “If they buy a $20 million company and then it’s worth 10 or zero? … That happens a lot too.” – Krista Dibiaz / Wes Moss (23:35–23:41)

Timestamps for Key Segments

• 01:00 – Clark, Krista, and Wes discuss credit card rewards and points
• 02:04 – Wes introduces the arrival of private equity in retirement plans
• 05:27 – Shrinking public markets and growth of private companies
• 07:20 – Wes’s personal experience and caution on private equity
• 09:28 – Listener Q&A: Educating children about wealth
• 12:19 – Listener Q&A: FIRE and retiring early with $1M
• 15:36 – Listener Q&A: Vanguard’s 70% bond allocation advice
• 20:48 – Post-break: Mechanics of private equity funds in 401(k)s
• 23:41 – Risks and diversification in private equity funds
• 24:31 – Role of CITs (collective investment trusts) in 401(k)s
• 26:53 – Listener Q&A: Roth vs. Traditional 401(k) choices for employees
• 29:01 – Listener Q&A: Inherited IRAs and RMDs
• 32:29 – Listener Q&A: Covered call ETFs for retirement income

Final Thoughts

• The episode delivers a timely, accessible exploration of financial innovations that will affect millions of savers, blending practical advice with foundational financial wisdom.
• Wes’s optimistic yet cautious tone helps demystify private equity, while listener questions ensure relevance across life stages and personal situations.
• The show encourages audiences to keep learning, seek education, and avoid one-size-fits-all financial advice, especially as complex new investment options arrive.