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Demystifying Private Markets in Retirement Portfolios

Insights from SIFMA’s Valuation Roundtable

  • While valuation in private markets is inherently judgment-driven, long-established and structured processes and independent oversight ensure reasonableness.
  • Transparency, fiduciary safeguards, and investor education will be critical as retail access expands.
  • With appropriately tailored regulatory frameworks and investor protections private assets could serve to broaden diversification, democratize access, and improve long-term outcomes for retirement savers.

On September 4, SIFMA brought together industry leaders, academics, researchers, service providers and regulators to examine valuation principles in private credit and private equity markets, with a particular focus on applicability to individual retirement plans.

Helping Americans save for retirement is a core function of our capital markets. As I noted in my opening remarks, SIFMA supports policies that strengthen retirement security for all. Defined contribution plans—like 401(k)s—have long relied on mutual funds, ETFs, and other publicly traded securities as their foundation, offering workers diversified, cost-effective, and liquid market access.

But with more companies staying private for longer, private markets have become a key driver of growth and innovation. Access to these opportunities, however, has largely been limited to institutional investors such as pension funds and endowments, and high net worth individuals. Policymakers are now considering whether and how individual retirement savers and retail investors might appropriately participate, consistent with existing investor protections. A central challenge is valuation: daily market prices aren’t always available, and private investments require more complex and judgment-driven processes. That is precisely why SIFMA convened this roundtable—to examine current frameworks and safeguards utilized by investors to better understand their application and accuracy.

Commissioner Uyeda: The Role of Private Capital

The program opened with remarks from SEC Commissioner Mark Uyeda, who emphasized the complementary relationship between public and private markets: “Economic growth and the capital markets is not a zero-sum game. Public markets benefit from vibrant private capital markets and vice versa. Private markets operate in an environment with more regulatory flexibility and freedom to contract, while public markets provide market participants with enhanced liquidity and access to retail capital that is unavailable elsewhere.”

He highlighted the SEC’s Fair Value Rule, which requires fund boards or their designees to determine fair value—often with third-party support—alongside the anti-fraud provisions of federal securities laws that protect integrity. He also underscored the importance of SEC-DOL coordination, potential benefits of uniform fiduciary standards, and the value of principles-based judgments in accounting.

On the question of retirement account access, he referenced the recent Executive Order on alternative investments and concluded: “While there may be disagreement over the specific amount of exposure to alternative investments, it is clear that retail investors should be permitted to have some level of exposure to such investments. The appropriate amount should not be zero, and there is data suggesting some exposure is beneficial.”

Valuation in Practice

Roundtable participants emphasized that while private market valuation requires judgment, it is far from arbitrary. Common methodologies include discounted cash flow analysis, market comparables, precedent transactions, and calibration to actual outcomes. Blended approaches are often used to ensure reliability. As Brian Garfield of Lincoln International explained: “For a private equity position, there will be different judgments that may be put into place, but there is a common principle that [the industry] thinks through and addresses in context of the subjective and objective inputs that we assess.”

Dr. Craig Lewis of Vanderbilt University reinforced that point: “I think some people have said private valuation is like throwing darts at a dart board. I don’t think that could be further from the truth. The same principles that one would use to value a private investment are the same you would use to value a publicly traded company. There is no difference in the techniques.”

Sara Shean, Managing Director at PGIM, reiterated this point, explaining that the industry has a strong track record of valuation on the real estate market, which can be leveraged for private asset valuation practices: “We’ve been doing this for a long time in the defined contribution (DC) space, on the real estate side of the business… There’s a lot of track record established around daily valuation, getting to that point, and how you do that most efficiently with the right partners.”

Governance and independence were recurring themes. Firms rely on internal valuation committees, independent third-party reviewers, and auditors under PCAOB oversight, with institutional investors increasingly demanding transparency. As Robert Rosen of Carlyle explained: “The majority of the fair market value of our assets is tested on a rolling 12-month basis by independent, third-party firms… Checks and balances are not just about the process; they’re about protecting the confidence that our investors have with our valuations.” Curt Ruoff of BlackRock added: “These are practices that have been developed over decades in both private and public funds, and that independence is crucial and expected by investors.”

Market forces also reinforce accuracy. Misaligned NAVs can harm credibility and fundraising, while secondary transactions, NAV-based lending, and daily liquidity requirements in retail-focused products all incentivize discipline. As PGIM’s Sara Shean observed: “The market demands consistency and precision so that we can build that trust for daily trading.”

Retirement Accounts and Private Assets

A central theme of the second panel was how private assets might responsibly be integrated into individual retirement portfolios. Panelists pointed to benefits such as diversification, stronger long-term returns, and improved retirement security. Bradford Campbell of Faegre Drinker framed the policy discussion: “What I think the administration’s looking at is how do we apply some of the existing regulation, how do we look at modifying how they interact with one another as we consider private markets expanding in retirement plans.”

Dan Doonan of the National Institute on Retirement Security pointed to the precedent of public pensions: “You go back to 2001, public plans were about 90% stocks and bonds… today, that’s shifted to about 70%. This shift has been positive in terms of returns and reduced volatility.” Dr. Burcu Esmer of Wharton added: “Retirement savers are great candidates to invest in private markets because… they are, by definition, long-term investors… especially early in your career you have a long horizon to invest, so you can enjoy the illiquidity premium.”

International models also demonstrate how private assets can be integrated safely with robust disclosure and periodic valuation. As PGIM’s Sara Shean noted: “When you go outside of the U.S. and you talk to these investors, they don’t think about private equity and public equity. They think about equity… To the extent we are evolving and learning lessons from these other DC markets around the world, we’re going to see more of that here.”

Panelists agreed that transparency, fiduciary safeguards, and investor education will be critical as retail access expands.

Conclusion

The roundtable highlighted both the potential and the challenges of expanding access to private market investments in retirement accounts. With appropriately tailored regulatory frameworks and investor protections under ERISA and SEC oversight, private assets could serve tobroaden diversification, democratize access, and improve long-term outcomes for retirement savers.

A replay of the event is available here. Please also join us for our next roundtable on liquidity on November 12.

Author

Kenneth E. Bentsen, Jr. is President and CEO of SIFMA. From 1995 to 2003, he served as a Member of the United States House of Representatives from Texas. Prior to his service in Congress, Mr. Bentsen was an investment banker specializing in municipal and housing finance.

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