Private Equity in Farmers Insurance Group 401(k) Plans: What Employees Should Know

Healthcare Provider Update: Farmers Insurance Group does not have a specific healthcare provider associated with their insurance services. Instead, they offer various health insurance products including plans that can be supplemented through external providers. Typically, individuals and families insured under Farmers Insurance can select providers from a network compatible with their specific health plan. As for potential healthcare cost increases in 2026, projections indicate significant challenges for consumers, particularly in the context of the Affordable Care Act (ACA). With healthcare premiums expected to rise sharply-potentially exceeding 60% in some states-over 22 million Americans may see their out-of-pocket expenses for premiums increase by over 75%. This surge is attributed to the expiration of federal subsidies that have been crucial in offsetting costs for policyholders. As major insurers prepare for these hikes, many consumers may encounter a daunting financial landscape, prompting a critical need to reassess their healthcare options for 2026. Click here to learn more

'Farmers Insurance Group employees should carefully weigh transparency, costs, and flexibility when evaluating new 401(k) options, as thoughtful planning today can make a meaningful difference in retirement outcomes.' — Michael Corgiat, a representative of The Retirement Group, a division of Wealth Enhancement.

'Farmers Insurance Group employees navigating evolving 401(k) choices should focus on understanding fees, liquidity, and long-term impact to help align their retirement strategies with their personal goals.' — Brent Wolf, a representative of The Retirement Group, a division of Wealth Enhancement.

In this article, we will discuss:

1. The opportunities and risks of private equity’s entry into 401(k) retirement plans.

2. The impact of fees, transparency, and liquidity on long-term retirement outcomes.

3. Key considerations Farmers Insurance Group employees should weigh before adding private equity to their portfolios.

For several years, private equity firms have been seeking access to corporate retirement plans, which could affect the investment choices available in 401(k) accounts. Traditionally, these alternative investments have been limited to wealthy and institutional investors, who provide private equity firms with funds they can use to buy equity stakes in unlisted private companies. Under the Employee Retirement Income Security Act (ERISA), however, private equity funds have been excluded from most workplace retirement plans due to their high fees, limited liquidity, and opaque reporting requirements. ¹

New federal guidelines may be shifting this landscape. In an Executive Order issued in August 2025, the Trump administration supported access to alternative assets for 401(k) investors. ²  While these changes may broaden diversification opportunities, they also raise questions about appropriateness, costs, and transparency for Farmers Insurance Group employees planning their retirement. 'It's a historic change in access, but it's also a time that calls for caution,' said Neva Bradley of Wealth Enhancement. Although private equity may offer diversification benefits, a higher risk profile and less transparent pricing require careful consideration.

Juggling Promise and Risk

Private equity funds have historically delivered strong long-term returns, ³  but more recent conditions have narrowed the edge over traditional stock indexes. ⁴  Rising interest rates and volatile markets have made performance less consistent, which is an important factor for Farmers Insurance Group workers evaluating retirement strategies. While opportunities for gains remain, the trade-off in volatility cannot be ignored.

Fee structures complicate matters further. Compared to low-cost index funds, private equity investments involve multiple layers of expenses. According to Bradley, 'the fee structures and volatility can significantly reduce those gains over time.' Farmers Insurance Group employees should note that these fees can be ten times higher than standard 401(k) options, ⁵  which can diminish long-term compounding.

Challenges of Transparency

One of the largest differences between mutual funds and private equity is reporting. Mutual funds tend to publish daily prices and transparent performance updates, while private equity reports are typically quarterly and valuations are often based on estimates. ¹  This lack of standard benchmarks can make it difficult for even seasoned investors to evaluate performance consistently. For Farmers Insurance Group participants, this means private equity may feel less straightforward than traditional investment choices.

The Cost Aspect

Private equity is also known for its high fees. Typical structures include a 1% to 2% annual management charge plus performance-based incentives, compared to about 0.25% for many mutual funds. ¹  Over decades, these higher costs compound, especially for retirement accounts where long-term growth is important. As Bradley points out, 'those costs compound over decades,' underscoring the need to weigh fees against potential returns.

Important Things to Consider for Retirement Planning

For Farmers Insurance Group employees who may encounter private equity options in their 401(k), here are some key considerations:

• Liquidity:  Investments are often locked in for years with limited access.

• Costs:  Carefully review and compare fee structures.

• Timeline:  Private equity may lack the flexibility needed closer to retirement.

• Diversification:  If included, it should represent only a small portion of the portfolio.

Bradley summarized, 'Private equity is not a panacea, but it can contribute to complex portfolios.' Farmers Insurance Group participants should evaluate transparency, fees, and personal risk tolerance before making decisions.

One notable development is that target-date funds that include private equity and private credit holdings have been shown to potentially boost retirement income by 5% to 15% over 40 years, ⁶  provided top-tier managers are selected. For Farmers Insurance Group employees, this underscores both the opportunity and the complexity of integrating private equity into a long-term plan.

Featured Video

Articles you may find interesting:

Sources:

1. Investopedia. ' Private Equity is Coming for Your 401(k): How to Protect Yourself ,' by Daniel Liberto. 17 Jan. 2025.

2. The White House, Presidential Actions. ' Democratizing Access to Alternative Assets for 401(k) Investors ,' Executive Orders. 7 Aug. 2025.

3. Institutional Investor. ' Why Private Equity Wins ,' by Dawson Partners. 24 Mar. 2025.

4. Morningstar. ' How Attractive Is Private Equity? ' by Jack Shannon. 11 June 2025.

5. Investopedia. ' Private Equity Explained With Examples and Ways To Invest ,' by James Chen. 2 Sep. 2025.

6. BlackRock Advisor Center. ' How private markets could improve retirement outcomes ,' by BlackRock Retirement Perspectives. 26 Jun. 2025.