By Yann Magnan, CEO and Co-Founder, 73 Strings

As policymakers and retirement plan sponsors explore expanding access to private markets within defined contribution and 401(k) plans, most of the conversation has centered on access, diversification, and the potential for stronger long-term returns.

A more fundamental question is emerging: does the private markets industry have the valuation, data, and governance infrastructure necessary to support millions of retirement savers?

The U.S. Department of Labor’s proposed safe harbor framework brings that question into sharper focus. By making valuation, benchmarking, and ongoing monitoring explicit factors in a prudent selection process, the proposal recognizes that expanding access to private markets is about more than investment selection. It is also about whether the operational infrastructure behind those investments is sufficiently transparent, consistent, and auditable for participant-directed retirement plans.

That distinction matters.

Institutional investors have long accepted that private assets operate differently from public markets. Pension funds, endowments, and sovereign wealth funds employ sophisticated investment teams that can interrogate valuation methodologies, negotiate reporting requirements, and scrutinize governance processes. Defined contribution plans have none of that machinery at the participant level. A 401(k) saver cannot audit a discount rate. Participants rely entirely on fiduciaries to ensure the information reflected in their retirement accounts is accurate, consistent, and defensible.

That shifts transparency from an operational consideration to a matter of participant protection. The industry’s next challenge is deploying the infrastructure that earns that trust.

The infrastructure gap

Much of today’s private markets ecosystem was built for a relatively small number of sophisticated institutional investors: manual valuation processes running on spreadsheets, fragmented data sources, and workflows designed for quarterly reporting. None of it was intended to operate at the scale or frequency participant-directed retirement plans require.

Three gaps demand attention.

First, scalability. Valuation processes designed to support dozens of institutional limited partners must now support daily net asset values flowing into potentially millions of participant accounts. Retailization is already pushing valuation frequency from quarterly to

monthly and on-demand; 401(k) inclusion accelerates that pressure. Meeting it requires a level of automation, governance, and operational resilience that spreadsheet-based processes cannot provide.

Second, auditability. The proposed safe harbor is fundamentally process-based. Fiduciaries will need confidence that every valuation can be reconstructed, with inputs, assumptions, and approvals documented in a complete audit trail. Manual quarterly processes typically lack the version control and data lineage that make reconstruction possible.

Third, governance, including independence. Valuation methodologies must be consistently applied, documented, and subject to oversight that is meaningfully separate from portfolio management. Changes to assumptions, comparable companies, or discount rates should be deliberate and traceable. Fiduciaries should also expect independent checks on manager-provided marks; in participant-directed plans, valuation should not rest solely with the manager whose compensation depends on it.

These are core elements of fiduciary risk management, not back-office improvements.

A sound framework that can go further

The proposed safe harbor establishes a strong foundation by focusing on the decision-making process rather than prescribing which asset classes fiduciaries may select. That asset-neutral approach gives plan sponsors appropriate flexibility while setting expectations across performance, fees, liquidity, valuation, benchmarking, and complexity.

As the Department reviews comments and moves toward a final rule, it could go further on valuation and governance. Clarifying what constitutes “adequate measures” through principles such as documentation, consistency, explainability, and auditability would give fiduciaries greater certainty and encourage common standards across the industry.

Explicitly recognizing established fair value frameworks — FASB ASC 820, IFRS 13, SEC Rule 2a-5, the IPEV Valuation Guidelines, and the International Valuation Standards (IVS) — would anchor the rule in practices the market already knows how to apply and audit, rather than leaving fiduciaries to interpret broad regulatory language on their own.

What fiduciaries should demand

The industry’s primary objective to date has been expanding access. The focus now needs to shift to operational readiness, and fiduciaries are well placed to drive it. Before allocating to private markets, plan sponsors and their advisers should ask hard questions of every manager and vehicle. Can each valuation be reconstructed from documented inputs and assumptions? Is the valuation process governed separately from portfolio management? Are marks subject to independent review? Can the process operate at daily NAV frequency without degrading rigor?

Managers who can answer yes will find fiduciaries receptive. Those who cannot will discover that in defined contribution plans, opacity is disqualifying.

Expanding private market access is as much a governance challenge as an investment one. Success in 401(k)s will depend on delivering returns, and equally on earning the confidence of fiduciaries, regulators, and retirement savers through valuation practices they can verify. Operational transparency is the foundation on which that trust will be built.