A new University of Kansas paper provides some of the strongest empirical evidence yet that affiliated financial advisers can hurt 401(k) participants by steering their money into proprietary products.

But Wall Street may already be moving the game to a much less transparent playing field.

William Bazley, Gjergji Cici and Junchao Liao studied thousands of 401(k) plans and found that when an adviser is affiliated with the plan’s recordkeeper, participant performance declines. The reason is particularly important: affiliated advisers steer participant money toward the recordkeeper’s proprietary funds. Unaffiliated advisers did not produce the same result.

The damage was concentrated in the proprietary investments. The researchers estimated roughly a 34-basis-point annual reduction in allocation alpha in proprietary funds, while finding no statistically significant comparable reduction in non-proprietary funds.

Even more damning, participants apparently weren’t getting much in return. The researchers found no meaningful improvement in participation, administrative fees or diversification.

University of Kansas 401(k) conflicts paper on SSRN

Wall Street’s Better Mousetrap

The Kansas researchers studied a relatively easy conflict to see:

Recordkeeper → affiliated adviser → proprietary mutual fund.

Mutual funds have tickers, SEC filings, published expense ratios and daily prices. Researchers can compare them.

The new 401(k) architecture can look more like this:

Recordkeeper → affiliated adviser → target-date CIT → affiliated stable-value/annuity product → lifetime-income guarantee → private equity/private credit.

Now try following the money.

Collective investment trusts don’t provide investors the same SEC-registered mutual-fund disclosure framework. Insurance-company general accounts add another layer. Private equity and private credit add valuation, liquidity and fee issues.

The conflict hasn’t disappeared.

It may simply have become harder to see.

Voya Shows Where This Could Be Going

Voya may be the clearest example.

Its MyCompass target-date products are three CIT series trusteed by Great Gray. Voya says those portfolios include either a guaranteed investment annuity contract or stable-value product issued by Voya itself.

So participant money can travel:

Voya retirement platform
→ MyCompass CIT
→ Great Gray trustee
→ Voya insurance product.

And Voya has separately partnered with Blue Owl to develop private-market investments for defined-contribution plans.

The old Kansas conflict involved a proprietary mutual fund.

The new version potentially involves recordkeeping + CIT + insurance + private markets.

That deserves considerably more scrutiny, not less.

AIG Corebridge/VALIC Doesn’t Even Make Us Draw the Corporate Chart

Corebridge essentially provides the chart itself.

Its disclosures say securities and investment advisory services are provided through VALIC Financial Advisors, while VALIC Retirement Services Company provides retirement-plan recordkeeping and acts as transfer agent for certain affiliated variable investment options.

And they’re all Corebridge subsidiaries.

That is:

Recordkeeper → affiliated adviser → affiliated investments → affiliated insurer.

The Kansas researchers found that affiliation matters.

Plan fiduciaries should probably start asking exactly how much money every entity in that chain makes.

John Hancock Calls It “Co-Manufacturing”

John Hancock has provided an unusually revealing description of where target-date funds may be headed.

It describes “co-manufactured” target-date CITs in which an asset manager’s conventional target-date strategy can be recreated as a CIT and some fixed-income exposure replaced by a recordkeeper’s proprietary stable-value product.

Think about what has changed.

Yesterday:

Participant chooses proprietary mutual fund.

Tomorrow:

Employer chooses target-date CIT as QDIA → participant is automatically enrolled → CIT buys proprietary product.

You don’t even need an adviser sitting across the table convincing the participant to buy something.

The default can do it automatically.

Then Come Private Equity and Private Credit

Private markets make the economics even more interesting.

Goldman Sachs developed a private-credit CIT for DC plans carrying roughly a 1% fee including expenses, and Great Gray target-date funds were among the first intended users. Those Great Gray funds also incorporate private investments managed by BlackRock.

Compare that with an institutional index fund costing a handful of basis points.

There is an enormous economic incentive to move retirement assets from cheap transparent public-market investments into products carrying insurance spreads, private-market management fees and other economics.

That doesn’t prove anyone is violating ERISA.

It does tell fiduciaries where they should look.

The Kansas researchers found a conflict when the money trail was relatively simple.

Now imagine repeating their study in 2026.

Instead of following:

401(k) → proprietary mutual fund

researchers may need to follow:

401(k) → recordkeeper → affiliated adviser → QDIA → CIT → trustee → investment manager → insurer → general account → private equity/private credit manager.

And at every step the fiduciary should ask:

Who gets paid?

How much?

Would this product have been selected if none of the parties selecting, recommending, administering or manufacturing it made money from it?

That may be the real sequel to the Kansas study.

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Appendix A — Tier Four Affiliation Matrix

● = documented/current; ◐ = partial, partnership, manufacturing or legacy relationship; — = not established in our initial review.

Company	RK	Affiliated Advice/Distribution	CIT/TDF	Affiliated Insurance/Stable Value	Lifetime Income	Private Markets DC	Conflict Priority
Principal	●	●	●	●	●	◐	Very High
Lincoln	◐	●	◐	●	●	—	High
John Hancock/Manulife	●	●	●	●	◐	◐	Very High
MassMutual	Legacy	◐	—	●	●	—	Medium/High
Prudential/PGIM	Legacy	◐	●	●	◐	◐	High
New York Life	Legacy	●	◐	●	●	—	Medium/High
Nationwide	●	●	●	●	●	—	Very High
Transamerica	●	●	●	●	●	—	Very High
Voya	●	●	●	●	●	●	EXTREME
AIG/VALIC	colspan	colspan	colspan	Now Corebridge — don’t double-count
MetLife	Legacy	◐	—	●	●	—	Medium
OneAmerica/AUL	●	●	◐	●	◐	—	High
Corebridge/VALIC	●	●	◐	●	●	—	EXTREME
Equitable	●/partner	●	●	●	●	—	EXTREME
Ameritas	●	●	●	◐	◐	—	High
Security Benefit	●	●	◐	●	●	—	High

Note: AIG/VALIC and Corebridge are now the same economic family and should not be treated as two independent companies.

Lifetime Income Annuities Need Downgrade Clauses to Work in 401(k)s

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