When Finance Eats Function: Private Equity, Fiduciary Advice, and the Risk to 401(k) Outcomes

Private equity’s influence on service sectors—from emergency response to healthcare—has revealed a troubling pattern: quality can suffer when profit extraction takes precedence.

This same model is now permeating the defined contribution (DC) consulting space, where private equity (PE)-backed roll-ups and shifting policy stances are changing how retirement plans are advised and constructed.

Fiduciaries must scrutinize ownership structures, compensation models, and product incentives or risk exposing participants to degraded outcomes. As private equity reshapes the retirement advisory landscape and policy shifts open the door to more complex investment options, fiduciaries face a growing responsibility to look beyond surface-level service. Ownership structures, incentive models, and fee flows can subtly, but significantly, impact participant outcomes.

Frequently Asked Questions About Private Equity

• Why is private equity’s influence on retirement plan consulting a concern?

Private equity’s influence on service sectors—from emergency response to healthcare—has revealed a troubling pattern: quality can suffer when profit extraction takes precedence. This same model is now permeating the DC consulting space, where PE-backed roll-ups and shifting policy stances are changing how retirement plans are advised and constructed.

• What are some real-world examples of private equity’s impact on service quality?

A University of Iowa study found that after private equity acquired major ambulance providers, layoffs of paramedics in favor of lower-cost EMTs, longer response times, and increased traffic-fatality rates followed. Healthcare research echoes this theme, with PE ownership most consistently associated with higher costs and mixed to harmful quality effects.

• How is the defined contribution (DC) landscape changing?

Industry consolidation and PE ownership are accelerating in the advisory and consulting channel that influences plan menus, fees, and rollover flows. Recent transactions include SageView Advisory Group, CAPTRUST, and OneDigital, all involving private equity investment and acquisition strategies.

• What policy changes are affecting retirement plans and private equity?

Public policy positions have shifted dramatically. In 2020, the Department of Labor (DOL) allowed professionally managed funds with a private-equity component in retirement plans. The DOL’s 2025 rule rescission signals a friendlier stance toward alternatives in 401(k)s, but fiduciaries remain responsible for prudence.

• What are the main fiduciary risks to watch?

  • Conflicted Advice & Product Shelf Bias: Pressure to cross-sell affiliates or steer toward higher-margin vehicles.
  • Fee Opacity in Roll-Ups: Complicated fee flows across affiliates and third parties.
  • Service Erosion Post-Acquisition: Leaner client teams and turnover may impact service quality.
  • Menu Creep Into Alternatives: Increased marketing of PE components in target-date or balanced funds, with higher fees and limited liquidity.

• What can sponsors and committees do to protect participant outcomes?

  • Map the money: Request a Schedule C-style fee map covering all compensation streams.
  • Interrogate ownership and incentives: Ask who owns your advisor/consultant and about sponsor return timelines and growth targets.
  • Monitor staffing and turnover: Track staffing ratios, experience levels, and turnover in provider RFPs and ongoing reviews.

• Where can I learn more or get actionable questions for my provider?

The guide includes six RFP (or monitoring) questions to surface PE pressure, such as ownership disclosure, compensation streams, product shelf governance, staffing details, revenue-sharing arrangements, and conflict-of-interest policies.

Download the full guide to learn more about how private equity is reshaping the retirement advisory landscape, the risks to participant outcomes, and the steps prudent sponsors and committees can take to stay vigilant and demand transparency.

Multnomah Group is a registered investment adviser registered with the Securities and Exchange Commission. Any information contained herein or on Multnomah Group’s website is provided for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Multnomah Group does not provide legal or tax advice.