Understanding Trump’s push to open retirement plans to private equity, cryptocurrency, and other alternative assets
This is a sponsored post for my US readers.
We’ve seen it before: private equity firms snatch up a business, slash costs, and dwindle quality before selling it to turn a profit. Sometimes it works, other times it leaves a company with such overwhelming debt that it’s forced to collapse.
Private equity firms are sitting on trillions—yes, trillions—of dollars worth of unsold assets, and now an executive order signed by President Trump aims to open the door for 401(k) plans to offer greater exposure to volatile assets once largely reserved for institutional investors and the ultra-wealthy.
To some, this change unlocks new opportunities. To others, it feels like another cash grab designed to funnel working-class retirement dollars into industries desperate for new capital.
So, what exactly changed? What risks could this create for your retirement savings? And what should everyday investors do next?
Here’s what you need to know.
What Is Private Equity?
Private equity firms are investment management companies that acquire companies using money pooled from investors—mostly wealthy individuals and institutions. The firm then maximizes profits by restructuring, cutting down on costs, and expanding into new markets. After about 5-10 years, the firm tries to sell the company for a profit and divest money back to investors.
For a very long time, private equity was quite profitable. But, since 2022, interest rates have been on the rise, causing higher borrowing costs and purchase prices while making it hard to sell and turn a sizable profit. It’s estimated that private equity firms have $3.8 trillion in unsold assets, which is keeping firms’ capital frozen. Unsold portfolio companies are at a two-decade high.
Ivy leagues—some of the biggest investors in private equity—have started to reconsider their private equity investments as endowment returns decline and federal funding is halted by the Trump administration. That’s not to say they’re cutting out private equity investments entirely—it makes up over 40% of their holding assets—but it is causing them to reevaluate and cut down to try to recoup declining endowment returns.
Understanding the Executive Order
In August 2025, President Trump signed an executive order titled “Democratizing Access to Alternative Assets for 401(k) Investors,” expanding the types of investments employers can offer in workplace retirement plans while reducing certain regulatory liabilities for employers.
Until recently, access to alternative investments like private equity was largely limited to institutional investors, public pension funds, and wealthy individuals. Most employees with 401(k) plans were typically offered more traditional investment options, such as mutual funds, index funds, and stocks.
While federal law never outright prohibited employers from offering alternative assets in 401(k)s, the Employee Retirement Income Security Act (ERISA) placed strict fiduciary responsibilities on employers. Under ERISA, employers were expected to act in employees’ best interests when selecting retirement plan investments. Employees could sue if they believed their plans included excessive fees, poorly managed funds, or unnecessarily risky investments when safer or lower-cost alternatives were available.
The executive order changes how those protections are enforced by making it more difficult for employees to hold employers legally responsible for high-risk investment offerings. In practice, this could pave the way for more employer-sponsored retirement plans to include alternative assets such as private equity, cryptocurrency, venture capital, and certain real estate investments.
The order also directs the Department of Labor to create “safe harbor” guidelines for employers offering these investments. Essentially, if employers follow the government-approved vetting process for alternative asset funds, they receive greater legal protection against future employee lawsuits tied to investment performance or risk exposure.
Supporters of the executive order argue that expanding access to alternative assets could help everyday investors diversify their portfolios and potentially achieve higher long-term returns previously reserved for institutional investors. Critics, however, warn that these investments are often more volatile, less transparent, and significantly more expensive than traditional retirement assets. Private equity funds, for example, frequently carry high management fees and can be difficult to sell during market downturns. Combined with reduced employer accountability, some experts worry employees may ultimately shoulder more risk with fewer protections in place if investments underperform.
While the policy currently exists as an executive order, lawmakers are also pushing the proposed Retirement Investment Choice Act, which would permanently codify many of these changes into federal law.
How to Protect Your Retirement Savings
Depending on how you look at it, this is either an exciting change that opens doors for new market opportunities, or you might feel a little uncertain about the risks and lack of legal protections. Either way, it’s a good time to review your retirement accounts to ensure your funds are locked into the best assets for your goals.
- Review your 401(k): Log into your 401(k) and take a look at where your money automatically goes now. Look out for any new asset classes, like private equity or crypto. Make any changes necessary to suit your needs.
- Consider allocation caps: If you decide to invest in alternative assets, consider adding a cap on alternative assets to protect your money from market crashes
- Understand fees: Check the management fees on all of your assets and opt out of any funds with high fees. Standard index funds typically cost less than 0.1% annually, while alternative assets could charge 2% or more.
- Monitor your plan regularly: Make a plan to review your 401(k) at least once per quarter to ensure you’re putting your money where you want.
As retirement investing becomes more complex, it may also be worth thinking beyond your 401(k) alone. Market downturns, speculative investments, and shifting policies all introduce uncertainty into long-term planning. While no investment strategy is entirely risk-free, term life insurance can provide an added layer of protection for your loved ones that isn’t tied directly to stock market performance.
Whether you view this executive order as long-overdue financial freedom or a dangerous loosening of protection, one thing is clear: retirement investing is now a little more complicated for everyday Americans.
Investing in these alternative assets is not inherently a bad thing, but it does mean that employees can no longer assume their 401(k) options were selected with the same level of caution and legal accountability that existed in the past.
As these changes unfold, now is the time to become more involved in your retirement planning. Review your investment allocations regularly, understand exactly where your money is going, pay attention to fees, and avoid blindly accepting default fund selections.
