Unlocking Two-Thirds of the Investable Economy

A new U.S. executive order frames 401(k)s as the next frontier for “democratizing” private markets. The idea: retirement savers should be able to access the same growth engines as wealthy families — private companies, not just public stocks.On paper, it sounds like progress. 

After all, two-thirds of the investable economy has been off-limits to most 401(k) plans. But the data paints a more complex picture.

What the Numbers Show

• Private vs. Public scale: ≈$46.9T in private company revenue vs. $24.5T in public, a 2:1 ratio.

• Long-tail structure: ≈445,000 private companies vs. ~10,900 public. Average revenue: $105M (private) vs. $2.2B (public). This isn’t about “bigger” firms — it’s about many more smaller ones.

• 401(k) coverage gap: Today’s target-date funds cover just ~one-third of the investable economy’s revenue. The rest is out of reach.

• Sector weight reality check: The “real economy” leans into Industrials & Energy ($34.4T) — far more than Technology ($8.4T) or Life Sciences & HealthTech ($7.9T).

In other words: broadening the 401(k) menu means tilting portfolios toward a vast, diverse, and more opaque set of companies.

Why It Matters

• Diversification vs. complexity: Access to private markets could reduce dependence on public mega-caps. But it introduces illiquidity, valuation opacity, and governance questions.

• Fee drag & benchmarking risk: Multi-layer fee structures and performance-smoothing (“volatility laundering”) could erode long-term returns if not tightly regulated.

• Default design problem: If private assets are added to default target-date funds, millions of savers could hold opaque, illiquid exposures without actively choosing them.

The opportunity is clear: unlocking private companies could capture a huge untapped share of economic growth. 

The risk is equally clear: ordinary savers may be exposed to structures they don’t fully understand — with costs they can’t easily see.

The Bigger Lesson

Wealthy families already access private markets — but they do it through structure:

• Due diligence across managers

• Liquidity planning for long lock-ups

• Governance to oversee fees and alignment

If private markets enter the 401(k) mainstream, the same principles will matter. Scale won’t eliminate fragility. Structure will.