- Trump’s executive order directs regulators to allow 401(k) plans to invest in private assets like crypto, real estate, and private equity.
- Financial advisors warn that such assets are illiquid and complex, recommending caution and a limited allocation of 5–10%.
- Providers like BlackRock and Empower are launching new products to meet this shift, but experts stress the need for transparency and investor education.
President Trump signed a landmark executive order on Thursday, directing the Department of Labor and the SEC to draft new guidance that would allow 401(k) plans to include private-market assets like crypto, real estate, hedge funds, and venture capital. Supporters argue that this move could boost retirement returns and diversify portfolios beyond traditional stocks and bonds. But financial experts are urging savers to approach with caution, warning that these assets are complex, less liquid, and often not suitable for average investors.
Private investments can be locked up for years, and savers nearing retirement or planning a rollover should be especially careful. Advisor Lisa A.K. Kirchenbauer recommends avoiding them unless you fully understand the risks and only allocating 5–10% to such assets if you proceed. Many 401(k) participants currently rely on target-date funds, which automatically adjust allocations based on your retirement year. Introducing private assets into these plans could complicate what is already a confusing investment landscape for many.
The Role of Target-Date Funds and the 50/30/20 Portfolio
Larry Fink, CEO of BlackRock, envisions a future where retirement portfolios move away from the traditional 60/40 stock-bond split to a 50/30/20 structure that includes private investments. In his 2025 annual letter, he noted that pension funds, which already hold these types of assets, typically outperform 401(k)s by 0.5% annually. BlackRock’s new target-date fund, launching in 2026, will include private equity and credit to help close that gap.
Despite legal precedent allowing such investments, many plan sponsors have hesitated due to the perceived complexity. The executive order is designed to push regulators to provide clearer frameworks, paving the way for providers like Empower and Voya to introduce private asset options in workplace plans later this year.
Concerns Around Liquidity, Transparency, and Costs
While the potential upside of private assets is appealing, experts like Cary Carbonaro caution that these investments come with downsides. They often lack transparency, operate with limited liquidity, and charge higher fees than index funds. Carbonaro emphasized that most retirement savers are not familiar with how these funds work or how returns are generated, making them more appropriate for institutions than the average 401(k) investor.
Moreover, many 401(k) plan participants don’t even understand the stock or bond allocations in their current plans. Introducing opaque, fee-heavy alternatives could do more harm than good without proper education and guardrails. Advisors fear a shift away from simplicity, which has helped reduce fees and increase participation over the years.
How Providers Are Reacting to the Executive Order
BlackRock, Empower, Apollo, Goldman Sachs, and other industry leaders are already preparing to roll out new retirement products based on private market access. Great Gray Trust will manage the new target-date funds incorporating private assets, while Blue Owl and Voya are developing specialized solutions for defined contribution plans.
This move is seen as democratizing access to investments previously reserved for high-net-worth individuals and institutions. But even as the landscape evolves, many are calling for caution. Experts stress the importance of understanding liquidity rules, fee structures, and long-term risks before jumping into these new options.
