WTW, SEI to Offer Private Markets in 401(k) Plans

WTW Investments has partnered with SEI to develop private-market offerings for U.S. defined contribution plans, including 401(k) plans, using collective investment trust (CIT) structures. The firms say the format will provide pooled, professionally managed access to alternative assets while preserving daily liquidity and conservative allocations.

Under the agreement, SEI will facilitate CIT vehicles for some WTW retirement products. WTW has incorporated private markets into defined contribution solutions since 2018. SEI, based in Oaks, Pennsylvania, charges a custody fee that starts at 0.10% and serves 654 advisory firms with about $138 billion in assets under custody or administration.

The partnership is framed as a way for plan sponsors and participants to access more diversified investments with institutional oversight, governance and operational support. WTW and SEI intend the CITs to be available inside managed retirement products rather than as stand-alone participant-directed line items.

Regulatory guidance is unsettled. The U.S. Department of Labor has proposed a rule meant to clarify when alternative investments may be offered in 401(k) plans; that proposal has not been finalized. Some certified financial planners filed public comments warning that private credit and other alternatives could expose retirement savers to inappropriate risks if not structured and overseen properly.

Rich Joseph, U.S. growth leader for investments at WTW, cautioned that plan sponsors must avoid leaving allocation decisions to uninformed participants. “You can’t just offer private markets in a 401(k) portfolio and expect the average participant to know how much to allocate to it — that would be dangerous,” he warned, adding that large allocations would be inappropriate for most investors. He described the appeal of placing private-market exposure inside target-date funds and multi-asset strategies where allocations can be conservative and daily liquidity preserved.

Sean Lawlor, head of public markets for SEI’s Investment Managers business, said the convergence of public and private markets is creating opportunities for more diversified solutions delivered through flexible, efficient CIT vehicles. Collective investment trusts are pooled accounts maintained by a bank or trust company that can lower costs and simplify administration for multiple plan participants.

A Deloitte analysis cited by the firms projects private assets could represent about 6% of defined contribution plan assets — roughly $1.1 trillion — by 2030, and about $500 billion by 2028. WTW and SEI plan to offer CIT-based private-market access for inclusion in managed retirement products such as target-date, multi-asset and income-oriented strategies, with an emphasis on liquidity management and oversight.