By Yann Bloch, Vice President of Product Management of NeoXam, Americas
American savers are after a retirement shake-up, increasingly eyeing private markets once reserved for the super wealthy. 10% say they’re dissatisfied with their current 401(k) investment offerings and want more non-traditional options, according to a Harris Poll survey of US adults. A staggering 90% of survey participants say they’d be comfortable allocating a portion of their retirement savings to private investments, while almost a third would happily devote as much as 10–14% of their portfolio to them.
This dramatic sea change begs the question – how exactly do investment managers prepare existing investment portfolios for a future where private markets are no longer just for the select few?
The shift from curiosity to participation presents a plethora of operational problems. As President Trump’s August executive order accelerates access to alternatives in retirement plans, investment managers will soon be tasked with integrating private credit, private equity, and other illiquid assets into the same systems that currently handle public equities, bonds, and mutual funds. This is the essence of what has become more commonly known as total portfolio management, which aims to unify all asset classes in one portfolio to better balance risk and return.
Yet achieving this aim is far from straightforward. Private assets operate on entirely different valuation methods than public ones. For instance, private-credit funds might report quarterly, while public markets update by the millisecond. Illiquid holdings often rely on modeled valuations, while liquid assets depend on real-time market pricing. Reconciling these differences, not to mention ensuring they roll up consistently into portfolio-level insights, is where most existing systems will falter.
These risks are not merely academic. A total portfolio framework that cannot reconcile private valuations with public market movements can distort exposure calculations, overstate diversification, or misjudge liquidity. For 401(k) investors gaining access to private markets for the first time, that could mean seeing misleading performance numbers or, worse still, bearing the brunt of unforeseen risks.
Siloed systems are the major culprit here. Public equities, bonds, and private assets are often tracked on separate platforms, each with distinct data structures, investment methodologies, and reporting cycles. When these worlds collide, as they increasingly are, discrepancies become inevitable. Even the most sophisticated asset owners struggle to harmonize data feeds from multiple custodians, administrators, and private fund managers in near real time.
As investors demand access to alternative assets, the definition of a total portfolio is evolving. It’s no longer just about managing across geographies or currencies. Instead, it’s about bridging the gap between the transparent world of public markets and the opaque realm of private ones.
The democratization of alternatives represents both an opportunity and a stress test. Investment managers who build robust total portfolio systems, capable of integrating private assets with the same rigor and timeliness as public ones, will undoubtably be best positioned to serve the next generation of retirement savers. As 401(k) investors step into private markets, seeing the whole portfolio picture will be key to maintaining an institutional investor client base rooted in Wall Street, while simultaneously earning Main Street investor trust.
