CNN  — 

A typical 401(k) plan only offers stock and bond funds that invest in publicly traded companies. But private companies — traditionally the domain of institutional and high-net-worth investors — have become a significant part of the overall investing market. Do they belong as an option in workplace retirement plans, given that they are often more expensive and less transparent than publicly traded securities?

It’s a question that’s been getting a lot of attention as the private investment industry and others seek to “democratize” access to such investments. And it’s an issue receiving pushback from some lawmakers and consumer advocates, including Sen. Elizabeth Warren, the top-ranking Democrat on the Senate Banking Committee.

Most recently, Warren sent a letter and a series of questions to Empower, one of the largest workplace retirement plan recordkeepers, probing its recently announced decision to offer plan sponsors the choice of including private equity as an investment option for their employees.

In its response to Warren earlier this week, Empower — which serves roughly 90,000 corporate, government and nonprofit employers — likened the desire to give people access to private markets to the creation of 401(k)s decades ago. “The 401(k) democratized access to the public markets in unprecedented fashion and without it, many people would have no access to investing,” Empower CEO Ed Murphy wrote.“Today, we are facing a similar moment.”

Murphy, noting that there are far fewer publicly traded companies today than 30 years ago, cited the growth in capital going towards private companies and the estimated $13 trillion in assets in the global private equity market. “This structural shift means fewer opportunities for everyday investors saving in defined contribution plans — especially those seeking exposure to innovative or fast-growing companies.”

He also stressed that the new investment option it would offer would have guardrails. “Private markets investing is not for everyone and Empower is not suggesting that it is. Empower is not advocating for unregulated or unmanaged access to complex asset classes. … It’s a carefully monitored gateway.”

Among the guardrails Murphy said would be in place: “(T)he investment manager advising to these investments in accordance with the participant’s financial goals and risk tolerance, are selected by the plan sponsor and must be subject to ERISA’s high standards and adhere to those standards.”

More specifically, Empower told CNN in an email that only participants with managed accounts will have access. (A managed account is run by an investment professional who will, among other things, manage your investments within your workplace plan in keeping with your goals, risk tolerance and time horizon.)

And, the company added, the private investments would only be a portion of a larger collective investment trust that a person could select. The other portions of the CIT would be in public securities.

“We believe that professionally managed solutions are the best way to offer private assets, as they offer an additional layer of analysis and fiduciary protection,” the company said.

In her reply to Murphy’s letter, released Saturday, Warren said she shares his stated goal of helping everyone, regardless of income or net worth, to “‘build lasting financial security through well-designed, responsibly managed investment opportunities.’”

But, she wrote, “Your response did not meaningfully address how you would shield plan participants, and our financial system, from the structural risks inherent in private markets. Ultimately, you did not explain why providing retirees with the option to invest their hard-earned life-savings in risky, expensive private markets benefits anyone other than private funds.”

Nor, Warren said, did the company offer “details about your partnerships with private firms, your fees, and your incentive structures.”

Warren ended her letter by asking Empower to address her specific questions by Friday, July 25, 2025.

So … to be continued.

In the meantime, the Office of the Investor Advocate at the Securities and Exchange Commission said that in fiscal year 2026 it plans to explore issues “surrounding the inclusion of alternative investments, such as private equity and private credit, in retirement savings plans and their implications for retail investors.”