President Donald Trump on Thursday signed an executive order directing regulators to clear the path for 401(k) plans to include private market investments and cryptocurrencies — a shift that could reshape how advisors construct retirement portfolios.
The order instructs the Department of Labor to review and clarify ERISA fiduciary guidelines for offering alternative assets in defined-contribution plans. If implemented, the changes could expand advisors’ toolkit to include asset classes such as private equity, private credit, infrastructure, real estate and digital assets.
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The executive order calls for the Labor Secretary to examine past and current guidance on fiduciaries’ duties when including alternatives in asset allocation funds, such as target date products. Within the next 180 days, the department must clarify the criteria fiduciaries should use to weigh the higher costs of these investments against potential long-term gains and broader diversification benefits.
American Retirement Association CEO Brian Graff argued that fiduciaries, not the government, should be the ones deciding if an investment class is appropriate for plan participants.
“Professional retirement plan fiduciaries that are subject to strict fiduciary standards — not the federal government — are in the best position to assess developments in the financial markets and determine what is in the financial best interest of retirement plan participants and beneficiaries,” Graff said in a statement.
The move also aims to curb ERISA litigation that has historically deterred plan sponsors from offering private market and digital assets.
Industry interest in alternatives has been building in recent years. In 2024, 3.9% of plan sponsors offered alternative investments to participants, up from 2.2% in 2023, according to PLANSPONSOR’s latest Recordkeeping Survey.
In the Financial Planning Association’s 2025 Trends in Investing survey, researchers saw a sharp increase in the use of alternative investments among advisors. Nearly 1 in 5 advisors surveyed said they currently use or recommend investing in private debt to their clients, up 55% from the previous year.
Proponents say alternative assets offer an opportunity for improved returns and diversification, but critics warn that higher fees, lower liquidity and a lack of transparency could ultimately harm retirement savings for the average investor.
A niche investment for the masses
Although alternative assets can play a role in some clients’ broader portfolios, advisors say that defined contribution plans aren’t the right place for such a specialized investment class.
“I don’t think it’s appropriate to have private investments and private credit and private equity inside of a 401(k),” said Kashif Ahmed, founder of Bedford, Massachusetts-based advisory firm American Private Wealth.
“It really is for people who max out all of the common 401(k) vehicles and everything else, and they have tremendous liquidity. Those are the people who should be rolling the dice on private equity and private credit, because they’re really illiquid,” Ahmed added. “It’s for people who have no issues with tying up a substantial amount of [money] that they may or may not be able to get for many years. The 401(k) is just not that. It’s just not that vehicle. The average client is better off avoiding private investments.”
Despite their unique drawbacks, some investors are still drawn to alternative assets due to their novelty among the average person, according to Ahmed.
“That’s why this is so devilish, right? It’s human nature to be able to want something that either you can’t get or you’ve been told for a long time that you can’t have, and all of a sudden it’s available,” Ahmed said. “And I think people are just going to let their emotions get the better of them.”
Will private assets invade target date funds?
The mechanics of adding private assets to 401(k) plans are still up for debate, but many experts point to target date funds as the most likely entry point.
In a T. Rowe Price survey of defined contribution plan consultants and advisors, most respondents said private assets are most likely to show up inside off-the-shelf or custom target date funds. While stand-alone options for plan participants are possible, respondents viewed them as far less likely.
For advisors like Cristina Guglielmetti, the founder of Future Perfect Planning in Brooklyn, New York, the addition of private assets to target date funds would be reason enough to revisit how she allocates clients’ 401(k) holdings.
By 2027, target date funds will account for about two-thirds of all 401(k) contributions and hold roughly 46% of total plan assets, according to estimates from Cerulli Associates.
“As an advisor, that would cause more of an issue because it’s much harder to avoid, right? So that’s kind of my concern is, will a client be able to avoid these if they decide that they don’t want it, or their advisor wants to advise them against it,” Guglielmetti said. “How hard is it going to be to not have any of this stuff?”
