Private assets will reach 401(k)s through the default sleeve

T. Rowe Price's sixth annual Defined Contribution Consultant Study, released Wednesday, rests on three dozen consultant and advisory firms, more than 160,000 plan sponsor clients, and $10.3 trillion in DC plan assets under advisement—a sample covering about 72% of the DC plan market, which speaks for the industry more than for itself.

The AI headline was already out: consultants have moved from evaluation to execution. Beneath it, the same firms expecting artificial intelligence to keep absorbing the operational layer now expect private assets to arrive inside professionally managed, multi-asset solutions, and expect personalization to become the way advice scales to participants whose needs have grown more complex.

On AI, the shift is close to complete: the share of firms describing their use as "too early to know, currently evaluating" fell from 44% in 2025 to 14% a year later, a thirty-point move in twelve months. Adoption concentrates in unglamorous places—operational efficiency at 78%, client preparation at 67%, client outreach at 47%—while it thins to 12% for plan design and benchmarking analysis and 9% for participant engagement and other advice-oriented work, where fiduciary judgment carries the weight, and the further a task sits from a signature, the more often the machine does it.

The number with the longest tail sits in the governance question: firms with formal AI governance use the technology about 50% more frequently across business functions, and the study reads that clear policies, approved tools, and compliance guardrails accelerate adoption rather than slow it. That cuts against the standing assumption that compliance review is where new tools stall. Whether governance causes the heavier use or heavy users write the policy after the fact, the association belongs to the study, and either direction rewards firms that put rules in place before the pilot—the evidence behind the argument that the governance gap, rather than the choice of model, will separate the firms that pull ahead.

Jessica Sclafani, who heads T. Rowe Price's retirement strategist team, framed the study as a way to anticipate emerging trends and fold client preferences into the firm's solutions. It is worth remembering, when a study is this useful, that it is also a distribution instrument; the sixth edition comes from a Baltimore asset manager that sells into the market it is measuring.

Private assets remain expectation rather than adoption in this survey, and the published summary gives no count of plans already holding them; asked which alternative strategies are most likely to be incorporated over the next 12 to 24 months, consultants pointed to broader adoption across nearly every private asset category, with hedge funds the sole exception.

The phrasing carries the argument. An asset held inside a professionally managed solution never has to be chosen by a participant; it has to be agreed between the consultant and the manager building the sleeve. The contest for private assets in 401(k) plans is for the multi-asset vehicle that already holds the default money, not for menu real estate—the ground that has shifted since collective investment trusts passed the halfway mark in the $5.3 trillion target-date market.

T. Rowe Price has been assembling pieces that fit it: its $19 billion fixed-income deal with F/m, struck in August, buys the engine CITs demand, and PGIM's private-markets hire pointed at the next front inside the fund. Read against this week's survey, both look less like standalone product bets than capacity being built for a default sleeve that consultants now expect to carry private assets.

Hedge funds standing alone is the detail to keep: the one category consultants exclude from the next 12 to 24 months is the one whose fee and liquidity terms are hardest to explain to a plan committee, which likely explains why it is the exception.

Personalization is the third trend and the lightly documented one, and it collides with an awkward fact. If 9% of these firms use AI for participant engagement and advice-oriented activity, personalization at scale will be staffed by people for the next several years, lifting the value of the advisory seat relative to the fund seat—the logic behind aggregators buying retirement-plan advisories. The roll-up has moved from client books to fiduciary seats; this survey suggests the next thing worth buying is the consulting relationship that controls the plan search, because that is where the personalization work lands.

The window the study gives is concrete, so hold the industry to it. Watch whether a consultant-signed plan puts a private-asset sleeve inside the vehicle holding its default money before the seventh edition of this survey, and whether hedge funds remain the exception if one does.