Understanding the 401(k) Market – Eric Mogelof, KKR

**Eric Mogelof** (0:00)
It's not an if, it's really a when. There's no doubt in my mind, in a decade from now, we will see very meaningful allocations within that DC market to private markets. Whether it's 10%, 15%, it's going to be really, really big. I would say over the next three to five years, the off-the-shelf is going to take the longest time to get adoption to move. But in the meantime, you're going to see a lot of allocations through managed accounts and custom target date. It will be a hockey stick, but it's not going to be a hockey stick in the next couple of months or couple of quarters. It really is going to take years for this to play out.

**Ted Seides** (0:44)
I'm Ted Seides, and this is Capital Allocators. The movement of private wealth allocations to alternatives is one of the biggest questions impacting the future of private markets. Our Private Wealth miniseries shared perspectives from allocators and managers on the space. Since then, an executive order opened the door for 401k plans to adopt alternatives. I wrote, in a recent musings for our premium members, that private market allocations in retirement plans may be a big deal down the road, but there's no need to worry about a flood of capital hitting the private markets anytime soon. To understand why, I asked Eric Mogelof to come back on the podcast and explain how capital flows in the retirement markets. Eric is the head of Global Client Solutions at KKR, and join me on the Private Wealth miniseries. In this hot take, Eric breaks down the retirement market across defined benefit, defined contribution and IRA plans, the importance of target date funds to 401ks, and the decision making process required for these various structures to adopt alternatives. I hope you enjoy the show, and if you do, this week, if you happen to be in a married or committed relationship, and one night you turn to your partner and say, Hey, babe, what do you think? And they turn back and say, Sorry, hon, not tonight. I have a headache. Why not turn a lemon into lemonade by responding, I have a better idea. Let's listen to the Capital Allocators podcast together. You can snuggle up and share a night of stimulating intellectual bonding. Thanks so much for spreading the word to your partner. Capital Allocators is brought to you by my friends at WCM Investment Management. To outperform the markets, you have to do something differently from others. In my 30-something years investing in managers, there may be no one I've come across who does that as clearly and as well as WCM. I've seen it up close as an investor in their international growth strategy for the last five years. WCM is a global equity investment manager majority owned by its employees. They believe that being based on the West Coast, away from the influence of Wall Street Groupthink, provides them with the freedom to live out their investment team's core values, think different and get better. As advocates of integrating culture research into the investment process and advancing wide moat investing with the concept of moat trajectory, WCM has delivered differentiated returns while building concentrated portfolios designed to stand out from the crowd. WCM is committed to defying the status quo by dismantling outdated practices, believing in the extraordinary capabilities of its people, and fostering optimism to inspire each individual to become the best version of themselves. To learn more about WCM, visit their website at wcminvest.com.
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**SPEAKER_4** (3:55)
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**Ted Seides** (4:22)
Capital Allocators is also brought to you by Morningstar. What if data wasn't just a bunch of raw numbers but a clear and decisive language to help connect investment strategies with long-term investor needs in a constantly evolving market landscape? Morningstar created that language, bringing order and utility to insight-rich data so you can prepare for your next opportunity no matter the asset class or market. Visit wheredataspeaks.com to see what Morningstar data can do for you. Please enjoy my conversation with Eric Mogelof.
Eric, thanks so much for doing this.