President Trump has signed an executive order directing federal agencies, including the Department of Labor (DoL), the Securities and Exchange Commission (SEC), and the Treasury Department, to reexamine and potentially loosen regulations that have long restricted alternative assets in defined contribution plans.
These “alternative assets” include things like private equity, private credit, real estate, cryptocurrencies, commodities, and infrastructure investments.
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The executive order, titled “Democratizing Access to Alternative Assets for 401(k) Investors,” doesn't immediately change investment rules. Instead, it instructs agencies to, within 180 days:
- Clarify fiduciary duty rules under ERISA (the law that governs retirement plans).
- Establish clear criteria for when these assets can be prudently included.
- Create “safe harbors” to reduce litigation risk for plan sponsors.
Why this matters to you: For decades, your 401(k) has largely been limited to stocks, bonds, and mutual funds. This executive order could change the menu of options you have to choose from, introducing new opportunities but also new risks.
The two sides of the debate: Pros and cons of alternative assets
Financial planners are sharply divided on the executive order, offering a window into the core arguments for and against this policy change.
The case for greater access: ‘stronger, more robust, and resilient portfolios'
Some financial professionals see potential benefits in expanding investment options.
- Diversification and returns: Thomas Rindahl, a certified financial planner with TruWest Wealth Management Services, believes alternatives can create “stronger, more robust, and resilient portfolios.”
- Flexibility for business owners: Collin Lyon, a CFP with Anderson Financial Strategies, noted that it could give business owners “flexibility” to include more advanced strategies in their retirement plans, especially since they're more likely to have professional advice.
- Shielding against inflation: Patrick Huey, a CFP with Victory Independent Planning, acknowledged that most 401(k)s today are “bland” and that alternatives could “give portfolios more diversification” and help shield them from inflation.
Related: Millions of Medicare beneficiaries could see major price shock
The case against: ‘A bad idea' for the average investor
The majority of planners, however, warn that the risks significantly outweigh the benefits for the average retirement saver.
- Illiquidity and high fees: Alternatives are often less transparent, with “hard-to-dig-under fees, tricky valuation, liquidity constraints, and jargon,” according to Huey. This means you might not be able to sell your investment when you need the cash.
- Lack of understanding: “Access without understanding is not progress,” said Melissa Caro, a CFP with My Retirement Network. She argues that these assets can go to zero and lock up funds for years. Andrew Herzog, a CFP with The Watchman Group, agreed, saying most Americans are “poorly educated in financial matters.”
- Distraction from core issues: Catherine Valega, a CFP with Green Bee Advisory, called the initiative “stupid,” arguing that policymakers should focus on more pressing issues like helping employees start saving and increasing low savings rates, rather than offering complex investments to people who don't understand them.
Related: Social Security COLA for 2026: What Retirees Can Expect
- High risk and fraud potential: Monica Dwyer, a CFP with Harvest Financial Advisors, called the move “incredibly risky,” fearing it could remind people of “Enron all over again.” She noted that alternative investments are “less regulated” and could bring a flood of money into a risky space. Michael Hansen, a CFP with Frontier Wealth Strategies, warned that cryptocurrencies, which he described as a “pyramid scheme,” should be completely off-limits.
- One shot at retirement: Hansen reminded us that retirement savings are a person's “one shot at it,” with “no do-overs.” This makes highly speculative and illiquid investments particularly dangerous.
Policy experts weigh in: A deeper, more critical view
While many financial planners focused on the practical implications for investors, the Institute for the Fiduciary Standard took in a media briefing last week a more structural, policy-focused view — and its assessment was far more critical.
The Institute described the executive order as “an historic effort to open retirement accounts to costly, complicated, risky, opaque and frequently illiquid investments that rarely, if ever, belong in basic retirement accounts that tens of millions of Americans rely on.”
- ‘An historic effort to attack the heart of what fiduciary means': Knut Rostad, president of the Institute for the Fiduciary Standard, said the order represents a “frontal assault” on the fiduciary standard, which requires financial professionals to act in their clients' best interest.
- Misleading the public: Phyllis Borsi, the former Assistant Secretary of Labor of the Employee Benefits Security Administration (EBSA), criticized the order for misleading the public into thinking that current protections are “interfering in the marketplace.”
- Overcomplicating for profit: Tim McGlinn, founder of The Alt View, warned that the financial industry often “overcomplicate[s] things” to create more expensive offerings that are better for providers, not investors.
- The danger of illiquidity: Kathleen McBride, founder of FiduciaryPath, focused on the practical risks, stating that assets that “can't be valued, that cannot be sold immediately like a stock or a mutual fund, those are not things that belong in plans.”
Why this matters to you: The experts' concerns go beyond investment performance and touch on the very structure of your retirement plan's legal protections. They argue this move could weaken the fiduciary standard and create opportunities for conflicts of interest and complex, high-fee products to be pushed to an unprepared public.
