On August 7, 2025, President Trump issued an executive order,
titled "Democratizing Access to
Alternative Assets for 401(k) Investors," that is intended
to increase access for 401(k) plan investors to "alternative
assets," including private equity, private credit, real
estate, and digital assets. The executive order directs the U.S.
Department of Labor (DOL) and the U.S. Securities and Exchange
Commission (SEC) to propose reductions in any regulatory burdens
and provide guidance to fiduciaries evaluating whether to make
alternative assets available to 401(k) plan investors.
Elements of the financial services industry representing private
equity, private credit, real estate, and digital assets have been
advocating for government action to facilitate increased access to
the 401(k) plan marketplace. Although the Employee Retirement
Income Security Act (ERISA) does not ban any asset class and
applies the same fiduciary standard to all investments, the DOL has
generally discouraged alternative assets in 401(k) plans, causing
many plan fiduciaries to harbor concerns that inclusion of
alternative assets in their fund line-up would make them potential
litigation targets to the plaintiffs' bar. Accordingly, this
has had a chilling effect on fiduciaries who considered adding
alternative assets to 401(k) plans. The private funds industry
could see significant growth opportunities by accessing the 401(k)
plan marketplace, depending on how quickly and aggressively the DOL
and the SEC move on this issue, particularly by addressing the
application of ERISA's fiduciary standards to alternative
investments in a manner that would reduce the risk of fiduciary
litigation. We will continue to monitor the status of this
executive order and any subsequent agency action.
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