Skip to content

CONTRIBUTORS

Tony Davidow, CIMA®

Senior Alternatives Investment Strategist
Franklin Templeton Institute

In this latest episode of the Alternative Allocations podcast series, I sat down with Patrick Arey from Empower to discuss the addition of private markets in defined contribution (DC) plans. This exciting new development has been gaining momentum over the last several years.

I began by asking Pat about the differences between defined benefit (DB) plans, which have historically made big allocations to private markets and DC plans, which have been slow to embrace private markets. Pat commented about the maturity of the DB marketplace and the relative newness of DC plans. He noted that the DC marketplace often lags DB plans and tries to emulate their best practices.

How Institutions Allocate to Alternatives

Alternatives Diversification Among Institutional Investors
As of December 31, 2023

Sources: Preqin. Analysis by Franklin Templeton Capital Market Insights Group.

Notes: Investors are selected from Preqin’s database that have between 98% and 102% in the sum of total allocation and have a 3% absolute difference between alternative allocation and the sum of the underlying alternative asset classes (both criteria imposed to allow for rounding errors and completeness).

Because of the historical results of many private market investments, DB plans felt comfortable allocating increasing amounts of capital to the private markets, and many retirees reaped the benefits over time.

We discussed some of the challenges associated with adding private markets, from product structure to liquidity to fiduciary responsibilities and investor education. Pat noted that, “. . . we work with fiduciaries and provide guidance to them about using these investments in the plan. So, for us, it's important to ensure that the trust companies that they're working with have experience working with these investments.” 

We discussed the important role that advisors play. “They're a critical piece to the puzzle, both in terms of the process in evaluating and offering some of these products, as well as partnering with us as a recordkeeper and ensuring that education is done in an appropriate way to both.”

Pat shared recent Empower research.1 “We recently did a survey of advisors, and we found that 68% of the advisors that we work with today are using private market strategies predominantly in the wealth space, and nearly 60% of those advisors would feel comfortable with recommending private markets to retirement plans.”

We discussed the asset allocation ranges for private markets in DC plans, and while all plans are different, Pat noted that he is seeing products with 10%-15% allocations—although some of the larger plans have substantially higher allocations.

To listen to this episode, or any previous episodes, please visit Alternative Allocations Podcast | Alternatives by FT. If you are enjoying this podcast, please take a moment to rate and review us. Your feedback helps us deliver more insightful episodes on alternative investments.

Endnotes

  1. The Empower private market investment advisor survey was conducted from July 15-July 22, 2025, through an online survey that received 237 responses.

 

WHAT ARE THE RISKS?

All investments involve risks, including possible loss of principal.

Investments in many alternative investment strategies are complex and speculative, entail significant risk and should not be considered a complete investment program. Depending on the product invested in, an investment in alternative strategies may provide for only limited liquidity and is suitable only for persons who can afford to lose the entire amount of their investment. Diversification does not guarantee a profit or protect against a loss.

Past performance does not guarantee future results.

WF: 6987718

IMPORTANT LEGAL INFORMATION

This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy. It does not constitute legal or tax advice. This material may not be reproduced, distributed or published without prior written permission from Franklin Templeton.

The views expressed are those of the investment manager and the comments, opinions and analyses are rendered as at publication date and may change without notice. The underlying assumptions and these views are subject to change based on market and other conditions and may differ from other portfolio managers or of the firm as a whole. The information provided in this material is not intended as a complete analysis of every material fact regarding any country, region or market. There is no assurance that any prediction, projection or forecast on the economy, stock market, bond market or the economic trends of the markets will be realized. The value of investments and the income from them can go down as well as up and you may not get back the full amount that you invested. Past performance is not necessarily indicative nor a guarantee of future performance. All investments involve risks, including possible loss of principal.

Any research and analysis contained in this material has been procured by Franklin Templeton for its own purposes and may be acted upon in that connection and, as such, is provided to you incidentally. Data from third party sources may have been used in the preparation of this material and Franklin Templeton ("FT") has not independently verified, validated or audited such data.  Although information has been obtained from sources that Franklin Templeton believes to be reliable, no guarantee can be given as to its accuracy and such information may be incomplete or condensed and may be subject to change at any time without notice. The mention of any individual securities should neither constitute nor be construed as a recommendation to purchase, hold or sell any securities, and the information provided regarding such individual securities (if any) is not a sufficient basis upon which to make an investment decision. FT accepts no liability whatsoever for any loss arising from use of this information and reliance upon the comments, opinions and analyses in the material is at the sole discretion of the user.

Franklin Templeton has environmental, social and governance (ESG) capabilities; however, not all strategies or products for a strategy consider “ESG” as part of their investment process.

Products, services and information may not be available in all jurisdictions and are offered outside the U.S. by other FT affiliates and/or their distributors as local laws and regulation permits. Please consult your own financial professional or Franklin Templeton institutional contact for further information on availability of products and services in your jurisdiction.

Issued in the U.S. by Franklin Templeton, One Franklin Parkway, San Mateo, California 94403-1906, (800) DIAL BEN/342-5236, franklintempleton.com. Investments are not FDIC insured; may lose value; and are not bank guaranteed.

You need Adobe Acrobat Reader to view and print PDF documents. Download a free version from Adobe's website.

CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.