Invest, OR WE'LL SUE!

Hey WSJ: this is not criticism from the left.

Here is a pro tip for right-leaning but otherwise truth-seeking readers of WSJ Op-ed pages:

When commentary leads by saying the left is against something, resist the temptation to viscerally be for said something.

You could be getting played.

Todays example: Charles Millard’s commentary “Trump May Turn Your 401(k) Into an Old-Fashioned Pension.”

Beware this language

The WSJ bio accompanying the commentary refers to Millard as a ‘consultant in asset management and retirement policy.’ An alternative way is to describe it is below, (as described by a different bio, presumably approved by Millard, just a few short weeks ago):

We did not hear him sing

In addition to his duties at Ares, which describes itself as “a leading alternative investment manager,” Millard serves on the board of Georgetown University’s Center for Retirement Initiatives, the comically-conflicted-and-reputation-of-its-namesake-destroying organization that regularly produces industry-sponsored, non-peer reviewed, non-academic research. All in support of Alts in 401(k)s.

The AltView wrote about it, and everyone should read it:

Georgetown & Willis Towers Watson

The acknowledgements below are from a 2023 Georgetown report that says Private Equity returns are great. Note: The American Investment Council is the patriotic rebrand of the Private Equity Growth Capital Council.

If the report’s conclusions did not support the AIC’s aims, would it see the light of day?

Back to the Op-Ed. Millard cites absurd Georgetown ‘research’ that says adding Alts to 401(k) plans could add 11%-17% to retirement balances. We note that the report was produced with the generous corporate support of Willis Towers Watson.

Perhaps since reasonable assumptions about future Alts returns don’t give you attractive looking results, the report’s authors simply assumed investors in Alts get above average results. For 40 years. Alts Always Win. And everyone is above average.

Invest-or we’ll SUE!

Last year Bloomberg reported on a big industry strategy meeting.

Millard featured prominently.

This is the same guy who the WSJ today calls “a consultant in asset management and retirement policy.”

The industry’s agreed goal: turn the tables on employers, to basically force them to consider Alts:

Obviously.

Would the industry try to craft regulations that would have employers fearing lawsuits from the other direction, i.e. for NOT investing in alts?

Yes. Franklin Templeton’s Alternative Allocations podcast from last year is revealing. The Head of the Defined Contribution Alternatives Association (DCALTA), Jonathan Epstein, said:

“The story is changing on diversification. The litigation may come to those plans that don’t diversify enough.”

Later in the podcast he added:

“I would want to come back and find out if there were any lawsuits to defined contribution plan sponsors for not properly diversifying their menu of options.”

So much for addressing the industry’s litigation problem, right?

But also: this is pretty funny. We understand that of the relatively small amount of Alt investments that exist in DC plans, most are in real estate. If the performance of these investments is representative, they have underperformed lower-cost, liquid, publicly traded REITs (could their low cost have something to do with their better performance)?

Right-Leaners: Stay Focused!

We will say it until we are blue in the face.

This is not criticism from the left.

If Alts could reliably- or even semi-reliably- be expected to improve results for investors, then employers wouldn’t need more legal protection to put them in plans. Good fiduciaries would already have done it.

If you stay logical, focus on evidence, and don’t let yourself get drawn down partisan rabbit holes, you’ll see that Alternative Investments generally aren’t worth the bother.

WSJ Commentary:

https://www.wsj.com/opinion/trump-may-turn-your-401-k-into-an-old-fashioned-pension-a36b0e42?mod=commentary_article_pos2

Georgetown ‘research’:

https://cri.georgetown.edu/wp-content/uploads/2023/06/GeorgetownCRI-CEm-Benchmarking_Lack-of-Asset-Diversification-CRI-paper.pdf

P&I online feat. Charles Millard, “Ares Advisor”

https://www.pionline.com/institutional-investors/defined-contribution/pi-private-markets-dol-defined-contribution-ares-deferred-compensation/

Alternative Allocations Podcast feat. Jonathan Epstein, DCALTA

https://www.franklintempleton.com/private-markets/alternative-allocations-podcast/episode-21

Bloomberg on 401(k)s":

https://www.bloomberg.com/news/articles/2025-03-25/retirement-saving-private-equity-comes-for-america-s-401-k