A potential regulatory shift is on the horizon. President Trump is expected to sign an Executive Order that would allow 401(k) plans to include private market investments such as private equity, venture capital, real estate, or other alternative assets. Private markets are investments that are not traded on a public exchange or stock market. This would mark a significant change, opening the door for everyday investors to access opportunities that have traditionally been reserved for institutions and the ultra-wealthy.
As you plan for retirement, understanding the power of diversification is more important than ever. A well-diversified portfolio can help reduce risk and increase potential returns over time, especially as the investment landscape evolves.
At the same time, rolling over an old 401(k) into an IRA can provide greater flexibility, giving you access to a broader range of investment options that may better align with your long-term goals. In this article, we’ll explore how these developments could reshape retirement investing and how Trajan Wealth is uniquely positioned to help you navigate these changes.
The Context: Private Market Investment Opportunity
President Trump is expected to sign an Executive Order that would allow target-date funds and other 401(k) investment vehicles to include private market alternatives. While specific eligibility rules are not finalized, the initiative reflects the growing belief that private assets may enhance long-term retirement outcomes.
However, this evolution brings both opportunities and considerations:
- Potential Return Advantage: Historically, private equity and other private market assets have outperformed many traditional public markets, though returns can vary widely by strategy.
- Diversification Benefits: Private market investments often have lower correlations to public markets, potentially reducing reliance on public market cycles.
- Considerations: Private market investment frequently involves higher fees, reduced liquidity, and valuation opacity as private assets are typically priced quarterly rather than daily.
Trajan Wealth’s Private Market Advantage
Trajan Wealth has provided private investment opportunities to qualified investors for years. Unlike many firms that offer structured “fund-of-funds” products, often with layered fees and limited transparency, Trajan Wealth takes a different approach:
- Curated Opportunities: We source and vet private investment opportunities through our extensive network.
- Transparent Fees: We work to reduce management and performance fees, passing more value to clients.
- Lower Minimums: Our offerings allow our qualified clients to participate in multiple deals, thereby increasing diversification.
- Ongoing Monitoring: We actively track performance and developments, avoiding the passive oversight often seen in fund-of-funds structures.
This direct and selective approach provides greater alignment with our client’s long-term goals, compared to the one-size-fits-all solutions likely to appear in 401(k) plans.
Target Date Funds and Private Alternatives
Many people own target-date funds by default in their 401(k) plans, often without fully understanding the underlying holdings. As these funds begin to incorporate private alternatives, plan participants could be unknowingly exposed to illiquid private assets with complex structures.
If you have a 401(k) from a previous employer, now is an excellent time to review fees, investment options, and overall strategy. Rolling over an old 401(k) into an IRA can offer more control and potentially provide access to Trajan Wealth’s private market opportunities (for those who qualify). Our priority is to ensure your hard-earned savings work as effectively as possible toward your retirement goals.
Private Investment Considerations
There are roughly 33 million businesses in the U.S., compared to only 4,700 publicly traded companies. This means that the majority of investment opportunities remain inaccessible to traditional investors. Trajan Wealth helps bridge this gap by connecting accredited investors to private markets as part of a well-rounded wealth strategy.
Key considerations for private investments include:
- Liquidity: Lock-up periods may last several years.
- Valuation: Prices are updated less frequently, unlike public markets with real-time pricing.
- Complexity: Detailed due diligence on the structure, fees, and risk profile is required.
Understanding these factors is critical when deciding whether private assets fit your portfolio.
What This Means for Your Retirement Game Plan
Key Takeaways:
- If you have an old 401(k), consider whether rolling into an IRA could provide greater control, lower fees, and more diversified investment options, including private markets, tailored to your retirement objectives.
- Private market investments may enhance portfolio diversification and long-term returns but require careful selection and ongoing monitoring.
- Trajan Wealth’s curated private market offerings provide access to unique opportunities, transparent fee structures, and active monitoring.
Next Steps:
At Trajan Wealth, we believe that true diversification and wealth-building requires more than simply following the crowd. As the investment landscape evolves, having an experienced partner who can curate private market opportunities, manage risk, and tailor strategies to your goals is critical.
Don’t wait for new regulations or market changes to define your retirement future. Schedule a complimentary consultation with Trajan Wealth today to discover how our private market solutions and long-term strategies can help you unlock new opportunities and build a retirement plan designed for you.
Sources:
- https://www.morningstar.com/funds/target-date-funds-have-delivered-investors
- https://blinks.bloomberg.com/news/stories/SZGNGXPV4WE9
