Noted investor Jim Chanos sniffed out another one.
Welcome to "the first and only 401(k) platform that allows participants to finance assets and access alternative investments."
It's called Basic Capital and it's brought to you by TechGods.
In the small print at the bottom of Basic Capital's website it says "Basic Capital is not a bank" and that funds will be advised by Basic Capital Advisors, LLC.
A New York state regulatory filing shows the firm had one employee as of January 2025. A brochure filing for the same period indicated:
Mr. Al-Asaad is the President, CEO and Chief Compliance Officer for Basic Capital Advisors LLC
One filing also covered three entities: Basic Capital Advisors, StormSafe, Inc. and StormSafe Asset Management.
Financing long term assets with short term money becomes extremely problematic when the big money boys no longer trust each other to make good on their debts. Think Fall 2008.
Also, look at the pittance of a gain they are implying is yours, a couple hundred basis points. Basic Capital takes the lion's share of any gains in a market simply holding its own. Your 401(k) needs to earn over 7% in perpetuity and the SOFR needs to be stable at 6.5% for the borrowed money to work on your behalf.
Basic Capital talks about "underlying bond investments" as a floor and "you are earning more than you owe."
There too much imprecision and sales language for me to understand what is really being offered. Fintechs have a way of doing that.
If the market is gangbusters and interest rates go down levered 401(k) investing could be a boon. That's the promise from Trump II's economic team, but their boss lies and forces people below him to lie.
Leverage is a knife that cuts both ways. When markets are going up it cuts thin slices of roast beef for you to enjoy. When markets take a beating, leverage can lop off a limb or worse, especially in the alternative asset area.
Avoid leveraged lending in your 401(k) plan unless you are OK with the possibility that the very moment you need your retirement money, it might not be there. Do not fall for the Basic Capital sales pitch. You can go underwater in a 401(k) loan just as you can in a mortgage or an auto loan.
Invest as much as you can comfortably based on your income in your 401(k) and avoid alternatives (private equity, private credit) as well as crypto.
When fintech Synapse failed, TechGods who'd marketed it as a FDIC bank, walked away from its stinking corpse. That's the level of commitment TechGods have to their affiliate's customers.
They have a hurdle rate to hit and if Basic Capital does not make, TechGods can turn off the lights on your retirement party. Do not give them that power.
Update: Blackstone Group added a division focused on defined contribution benefit plans. PlanSponsor reported:
... the unit will focus on strategic partnerships, a lineup of perpetual products, investor education and scale strategies across private equity, real estate, private credit and private infrastructure.
Heather Von Zuben was previously Blackstone Credit & Insurance’s global head of perpetual capital solutions. She joined Blackstone in 2022 after 15 years at Goldman Sachs, where her leadership roles included global head of wealth management alternatives.
Tom Nides joined Blackstone in 2024 after serving as U.S. ambassador to Israel from 2021 through 2023. He also held various roles at Morgan Stanley, including chief operating officer and vice chairman.
Paul Quinlan was most recently global chief financial officer of Blackstone Real Estate. Prior to joining Blackstone in 2010, he worked at Bank of America Merrill Lynch.'
Blackstone is a private equity underwriter (PEU) headed by Stephen Schwarzman, who recently attended the Black-Tie White House dinner for Crown Prince Mohammed bin Salman.
Basic Capital will determine if Blackstone's new 401(k) offerings qualify for leverage finance.
