Trump Signs Executive Order Expanding 401(k) Access to Alternative Investments

President Donald Trump signed an executive order directing federal agencies, including the Department of Labor and Securities and Exchange Commission, to revisit and potentially ease regulations that currently restrict 401(k) and workplace retirement plans from offering alternative investments such as private equity, real estate, and cryptocurrencies. This policy shift aims to provide ordinary American workers access to investment options that have historically been available mainly to wealthy investors and institutional funds, potentially allowing for higher long-term returns and greater diversification. While proponents highlight the opportunity for younger investors to benefit from these alternatives, critics caution that these investments carry higher risks, increased fees, less transparency, and liquidity challenges, which could adversely affect retirement savings. Major asset managers and private equity firms may gain new market access, with some already planning retirement products incorporating these assets. The executive order mandates the Labor Department to clarify fiduciary duties to encourage prudent consideration of such investments, but immediate changes are not expected as agencies conduct reviews. Labor unions and consumer advocates strongly oppose the move, warning it could jeopardize the retirement security of millions by exposing them to risky and expensive investment products historically designed for sophisticated investors.