Trump’s Executive Order Expands 401(k) Investment Options to Include Crypto and Private Assets, Raising Fee and Risk Concerns
By Suzanne McGee and Isla Binnie
August 11, 2025
The Trump administration has issued an executive order aimed at broadening the investment options available to 401(k) retirement savers, allowing access to alternative assets such as cryptocurrencies and privately held companies. While proponents herald the initiative as an opportunity for greater returns, experts caution that these new options may come with significantly higher fees, increased risks, and liquidity challenges for everyday investors.
Expanded Access to Alternative Investments
The recent White House directive instructs regulators to facilitate the inclusion of alternative investments—including crypto assets and stakes in private firms like OpenAI and SpaceX—within employer-sponsored 401(k) plans. This represents a sharp departure from the traditional investment models primarily composed of public equity mutual funds and bonds.
Advocates argue that such alternatives could tap into high-growth sectors, potentially boosting long-term portfolio gains for retirement savers. However, investment professionals warn that the complexity and novelty of these assets mean they lack a track record under market stress conditions.
Concerns Over Fees, Liquidity, and Transparency
Christopher Bailey, director of retirement research at Cerulli Associates, emphasized that these options have “not been stress-tested yet” in scenarios like market downturns. He and others highlight concerns over liquidity since private assets and cryptocurrencies often do not trade on open exchanges and may have limited secondary markets. This could hinder investors’ ability to access their money when needed.
Fees are another pressing issue. Equity and fund administration expert Philitsa Hanson of Allvue Systems notes that private equity and alternative assets typically charge much higher fees compared to traditional 401(k) funds. Private equity famously charges a “2 and 20” fee structure—2% management fees plus 20% of any profits—while mutual funds in 401(k) plans generally incur fees around 0.26%.
Jason Kephart, a Morningstar analyst, added that fee disclosures for many alternative investment products are often opaque, buried in fine print or footnotes, making it difficult for plan sponsors and investors to fully understand the true costs.
Shifting Retirement Investing Paradigms
Dmitriy Katsnelson, deputy chief investment officer at Wealthspire Advisors, noted that this move runs counter to decades of efforts focused on reducing costs and risks for 401(k) investors. "It’s going to take a while to develop a framework that balances these new assets’ risks and returns," he said.
To successfully integrate these alternatives, asset managers may need to develop new products featuring lower fees, enhanced liquidity, and greater transparency tailored to typical retirement plan participants.
Legal and Regulatory Risks
The expansion of alternative assets into retirement plans also raises potential legal challenges. A high-profile case involving Intel employees’ lawsuit over retirement plans invested in private equity and hedge funds exemplifies the risks asset managers and plan sponsors face when offering complex investments. Although the case was dismissed after a seven-year legal battle, similar lawsuits could prove financially draining for smaller providers.
Legal experts suggest that robust regulatory protections will be necessary to shield the industry from costly litigation and ensure the long-term viability of Trump’s policy goals.
Importance of Investor Education
Given the added complexities, experts underline the necessity for increased outreach and education efforts directed at retirement plan investors. Bailey cautioned that typical savers usually do not actively manage portfolios nor fully appreciate the risks associated with illiquid private assets.
Jon Gray, President and COO of Blackstone, recently expressed that private assets are better suited for younger investors with longer investment horizons rather than those close to retirement, highlighting the need for prudent participant suitability assessments.
Market Implications
This policy initiative comes as retirement assets under management reach trillions of dollars across about 90 million American investors. How quickly and effectively the industry can implement these changes may have broad implications for the future of retirement investing and wealth accumulation in the United States.
Reporting by Suzanne McGee and Isla Binnie in New York. Editing by Dawn Kopecki and Aurora Ellis.
For more on retirement investing and policy updates, stay tuned to Reuters.