GGA Retirement

Private Equity and “Daily Pricing”?

It may sound like progress for transparency, until you look closer.

Private equity is illiquid and long-term. It has no live market price. Any “daily” figure may just be a modeled estimate, not a true market value.

Some suggest moving 401(k)s to monthly transaction cycles to accommodate private assets. That may help stabilize withdrawals, but it can also come with trade-offs:

▪️Reduced liquidity for participants
▪️Added administrative complexity
▪️Disclosure documents participants may not fully understand

Potential risks of daily/monthly valuations:

Short-termism vs. long-term strategy: Frequent reporting can lead to adjustments in timing or assumptions for valuations, potentially making reported results less reflective of the underlying fundamentals (similar to the debate around quarterly vs. semi-annual corporate reporting).

Mark-to-model risks: Frequent appraisals can create more variability in reported values, potentially affecting fund-level decisions and corporate behavior.

Behavioral & double-illiquidity risk: Stable value funds, annuities, and other “locked” products restrict access to protect fund stability, terms participants generally accept for predictability.

In plans that already include these products, adding private equity with similar restrictions further increases the total portion of the portfolio that is illiquid. Plan sponsors should carefully consider how much of the portfolio can reasonably be “locked up.”

Private equity can offer diversification and upside, but in retirement plans it must be introduced strategically, with careful attention to valuation, liquidity, and incentives.

💬 What do you think? Are daily or monthly valuations a step forward, or a risk to long-term outcomes? Share your thoughts below. 👇

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