What Private Equity Has Become – And What That Means for Your Retirement
A follow-up to “What’s Behind Private Equity’s Push Into Retirement Funds?” — Sarasota Herald-Tribune, November 3, 2025
When I wrote last November about private equity’s march into your retirement accounts, I ended with a simple observation: the real question was never whether you could access these assets. It was whether you should. And when you considered the liquidity constraints, the fee drag, and who actually benefits, the math wasn’t complicated — the risks may not always be fully apparent in marketing materials.
Since then, the landscape has moved quickly. And not always in the direction the brochures promised. The private credit market has grown to roughly the same size as the traditional broadly syndicated loan market at roughly $1.5 to $2 trillion and forecasts calling for the broader private credit market to reach $3 trillion by 2028 (1). A Trump administration executive order in August 2025 opened the door to alternative assets inside 401(k) plans, and private credit managers are now actively pursuing your retirement savings as a new pool of permanent capital.
The pitch sounds compelling: higher yields, portfolio diversification, returns uncorrelated to the stock market. But let’s examine what has actually unfolded — because the real-world mechanics of these assets look different in practice than they do on a presentation slide.
THE LONG CYCLE PROBLEM
Private equity is not a market you can exit when you need to. The standard fund structure locks your capital for seven to ten years. There is no stock ticker, no bid-ask spread, and no sell button. When life changes — a health event, a spouse’s death, a change in income — the investment may not provide liquidity when personal circumstances change.
Consider what happened in 2025. Distributions from private equity stumbled and those from real estate funds hit new lows. Median holding periods at exit stretched from 4.3 years in 2017 to 5.4 years in 2024. General partners responded not by selling assets and returning cash to investors, but by creating “continuation vehicles” — essentially moving assets from one fund pocket to another to extend their management tenure and delay an actual sale or realization event.
From 2016 to 2020, contributions to continuation funds averaged just 6% of distributions from mature private-equity funds. From 2021 through the third quarter of 2025, that figure had jumped to an average of 20% (2). That means for every five dollars a mature fund might have returned to investors the old-fashioned way — by selling a company — one dollar is instead being shuffled into a new vehicle that resets the clock. For a retiree who needs income on a schedule, this is not a technicality. It is a potential challenge to your cash flow.
The most vivid recent example: in the first quarter of 2026, Blackstone’s flagship private credit fund faced $3.7 billion in redemption requests — roughly 7.9% of its net asset value — after posting its first monthly loss in over three years. Blackstone met those requests, but only by having board members and senior executives inject personal capital to cover the gap above their standard 5% quarterly limit. The mechanics held. Some observers interpreted the event as an indication that retail investors may respond differently to valuation changes than large institutional investors: when markdowns arrive, some retail investors may head for the exit in a way institutional pension funds do not.
You are not a pension fund. You have bills and a life that requires cash on a schedule that private equity was never designed to accommodate.
THE VALUATION PROBLEM
Here is something few sales presentations volunteer: Valuations of private assets may be more difficult to independently verify than publicly traded securities because they are not continuously priced in public markets.
Public stocks are priced continuously by millions of buyers and sellers. Private equity holdings are valued by the general partner — the same firm managing the investment and collecting the fees — using internal models, comparable company analysis, and judgment calls that occur quarterly at best. These are called “marks,” and they are, by nature, subjective.
This matters enormously for retail investors now entering semi-liquid structures like interval funds and non-traded BDCs. When you redeem shares, you do so at the GP-issued mark — a price the manager sets, not the market. And when those marks are adjusted downward, even slightly, the reaction can be outsized. The Blackstone situation in early 2026 was triggered by a 0.4% monthly loss — a figure that would barely register in any public market context, yet was enough to spark billions in redemption requests.
Institutional investors — endowments, pension funds, sovereign wealth funds — understand this dynamic and have the internal staff, legal counsel, and investment committees to monitor and challenge GP valuations. The typical retail investor does not.
THE AUDIT PROBLEM
Public companies are subject to quarterly reporting requirements, SEC oversight, and annual audits by independent firms under strict accounting standards. The financial statements of Apple, JPMorgan, and Home Depot are scrutinized by thousands of analysts, journalists, and regulators.
The portfolio companies inside a private equity fund are not public. They file no 10-Ks. They hold no earnings calls. Their financial statements, if audited at all, are prepared by the firm or its affiliates and shared selectively with limited partners — not the public, and often not even individual retail investors in pooled vehicles.
In 2025, covenant breaches among private credit borrowers increased through the year — even as managers reported default rates of just 1.5%, well below public market benchmarks. The discrepancy is not necessarily fraud. It reflects the fact that private lenders have more flexibility to modify terms, extend maturities, and defer recognition of stress than public market structures allow. Whether that flexibility benefits the borrower, the lender, or the investor depends heavily on which party has the most information — and that is rarely the retail investor at the end of the chain.
Industry executives acknowledged in 2025 that hidden pockets of distress could emerge in private credit portfolios — stress that had not yet surfaced in reported default rates but was visible in rising covenant violations and the growing resources managers were devoting to workout and restructuring teams.
THE THREE TIERS: WHAT YOU’RE ACTUALLY BEING SOLD
Not all private equity carries the same risk profile or the same structural integrity. Understanding the tiers matters before you commit a dollar.
Tier One: Institutional-grade buyout funds — KKR, Blackstone, Apollo, Carlyle operating at scale. These firms have long track records, deep operational teams, and genuine value-creation strategies. In 2025, global private equity buyout dealmaking reached nearly $1.8 trillion, a 20% increase from the prior year. The year also produced landmark megadeals, including the $55 billion acquisition of Electronic Arts — the largest private equity buyout in history (3). These funds require minimum investments of $5 million or more, lock capital for ten years, and are built for endowments and sovereign wealth funds. They may not be appropriate for all retires.
Tier Two: Middle-market buyout and growth equity managers investing in companies generating $10 million to $150 million in annual earnings. Many industry participants view the middle market as an area that may offer attractive investment opportunities — competition is lower, pricing more rational, and skilled operators can materially improve a business. Hybrid capital structures at this level have generated returns comparable to upper-quartile private equity with meaningfully better downside protection. These funds remain largely inaccessible to retail investors, though some accredited investors reach them through RIAs with alternative platform access.
Tier Three: What is being sold to you right now. Semi-liquid, evergreen and other open-ended private-credit structures designed to make an illiquid asset class more accessible to individual investors -- non-traded structures packaged inside BDCs, interval funds, and 401(k) sleeves. Annual flows into these vehicles jumped from $10 billion in 2020 to a projected $74 billion in 2025 (4). They promise periodic liquidity windows and private-market exposure without decade-long lockups. What they deliver is a quieter version of the same liquidity problem — quarterly redemption limits, withdrawal gates, and valuations set by the fund manager at marks that are subjective and opaque. These new funds largely pull in investors who are inexperienced in private markets.
WHAT A FIDUCIARY PLANNER ACTUALLY DOES WITH THIS
Before any conversation about private equity or private credit begins in our practice, we complete three steps.
First, we map your cash flow. We need to know what you spend, what you receive in Social Security and required minimum distributions, what your healthcare reserve looks like, and how much of your portfolio you can genuinely afford to leave untouched for five to seven years. If the answer is “not much,” the conversation is a short one.
Second, we establish your liquidity floor. Most retirees we work with need at least two to three years of living expenses in liquid, accessible form — money market funds, short-term bonds, cash. That bucket is sacred. Anything going into an illiquid structure comes from what remains above that floor, not from it.
Third, if a private asset makes sense at all, we select for manager quality, structural transparency, fee clarity, and independent valuation. We ask who audits the portfolio companies. We ask what the redemption gate mechanics are — in writing. We ask how marks are determined and by whom. The answers tell us more than any performance slide.
The market has delivered a lot of evidence since last November. Long cycle assets require patience you may not have. Unknown valuations require trust you should not extend blindly. And private business audits require scrutiny that most retail structures do not provide.
The real question is not whether you can access private equity. It is whether the structure being offered actually serves your financial life — your cash flow, your timeline, your peace of mind.
The sales pitch hasn’t changed. What has changed is that now we have enough evidence to know exactly what questions to ask before you sign.
Source:
(4) https://www.msci.com/research-and-insights/paper/investment-trends-in-focus-key-themes-for-2026
Evan R. Guido, Senior Wealth Advisor, is the Founder of Aksala Wealth Advisors LLC, a 2026 Forbes Best in State Wealth Advisor, a 2018 Forbes Top Next-Gen Advisors award recipient. Evan heads a team of financial strategists for clients who consider themselves the “Millionaire Next Door.” He can be reached at 941-500-5122 Aksala.com eguido@aksalawealth.com 6260 Lake Osprey Dr. Lakewood Ranch, FL 34240. Securities offered through Cetera Wealth Services, LLC member FINRA/SIPC. Advisory Services offered through Cetera Investment Advisers LLC, a registered investment adviser. Cetera is under separate ownership from any other named entity. The views and opinions presented in this article are those of Evan R. Guido and not of Cetera or its subsidiaries. These opinions are based on Evan’s observations and research and are not intended to predict or depict performance of any investment. These views are subject to change based on subsequent developments. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. These views should not be construed as a recommendation to buy or sell any securities and purely for education and entertainment. Past performance does not guarantee future results. The Top Next Gen list includes 250 rising advisors who help manage over $490 billion in client assets. Each advisor was nominated by their firm, then vetted and ranked by SHOOK Research. The rankings, developed by SHOOK Research, are based on an algorithm of qualitative criterion, mostly gained through telephone and in-person due diligence interviews, and quantitative data. Those advisors who are considered have a minimum of four years' experience and the algorithm weighs factors like revenue trends, assets under management, compliance records, industry experience and those that encompass the highest standards of best practices. The Forbes ranking of Best-In-State Wealth Advisors, developed by SHOOK Research, is based on an algorithm of qualitative data, rating thousands of wealth advisors with a minimum of seven years' experience and weighing factors like revenue trends, assets under management, compliance records, industry experience, and best practices learned through telephone and in-person interviews. Portfolio performance is not a criteria due to varying client objectives and lack of audited data. Neither Forbes nor SHOOK receive a fee in exchange for rankings. Listings in these publications and/or awards are not guarantees of future investment success. These recognitions should not be construed as endorsements of the advisor by any clients. No compensation was provided directly or indirectly by the recipient for participation or in connection with obtaining or using these third-party ratings or award. Alternative investments, including private equity and private credit investments, involve unique risks that may not be suitable for all investors. Such investments may be illiquid, subject to limited transparency, utilize leverage, involve complex valuation methodologies, and may experience periods of significant volatility. Investors should carefully consider investment objectives, risks, charges, and expenses before investing.