Labor & Employment Law Daily Wrap Up, BENEFITS NEWS—Reaction to White House 401(k) executive order swift, but predictable, (Aug 11, 2025)

By Mark S. Nelson, J.D.

The Trump Administration’s plan to allow employees to invest in alternative assets through their 401(k) plans could help with diversification but also brings inherent risks.

The Trump Administration recently issued an executive order calling on the DOL and other federal financial regulators to revise their regulations and guidance to allow retirement savers with 401(k) accounts to invest in private equity, real estate, and digital assets. While a broader palate of investment options could help increase diversification of workers’ savings accounts, the plan to make alternative assets accessible to retail investors through 401(k) accounts also brings potential risks. The risks and rewards inherent in the executive order were on full display as regulators, lawmakers, and industry groups representing a range of interests weighed in in the hours after the Administration published the text of the executive order.

Labor Secretary Lori Chavez-DeRemer, whose agency will likely do most of the heavy lifting to implement the executive order via rulemaking and/or guidance, welcomed the opportunity to provide retirement savers with more options within their 401(k) plans.

Said Chavez-DeRemer: “The Department of Labor already took action to rescind the Biden Administration’s guidance that disadvantaged crypto investments. This Executive Order further supports our efforts to improve flexibility and eliminate unfair one-size-fits-all approaches, and I applaud President Trump for taking decisive action.”

According to Deputy Labor Secretary Keith Sonderling, who commented in the same press release as Chavez-DeRemer, the executive order may provide a means for workers who do not qualify as accredited investors to gain exposure to alternative assets. “[The] Executive Order directs the Department of Labor to level the playing field for all Americans saving for retirement by breaking down barriers to investment opportunities previously accessible only to certain pension plans and the very wealthy,” said Sonderling.

Some of the earliest reaction from outside the Trump Administration to the executive order came from prominent capital markets interest groups. Investment Company Institute (ICI) President and CEO Eric J. Pan issued a statement welcoming the Trump Administration’s executive order on alternative assets. “Retirement savers are the ultimate long-term investors and would benefit from the diversification offered by the inclusion of private assets,” said Pan.

Benjamin Schiffrin, Director of Securities Policy for Better Markets, by contrast, issued a statement warning of significant consequences for retirement savers if the executive order is fully implemented.

“This executive order exemplifies the administration’s determination to prioritize the interests of Wall Street over the interests of Main Street and retail investors,” said Schiffrin. “Let’s be clear: neither 401(k) plan sponsors or 401(k) plan participants—regular, hardworking Americans—are asking to replace stocks and bonds in their 401(k)s with risky private assets. Instead, the private funds industry needs a way to get its hands on the $12 trillion in Americans’ retirement accounts to boost its profits and make up for the fact that institutional investors are fleeing the private markets due to mediocre returns, higher fees, and more risk.”

Both the ICI and Better Markets reactions set the stage for comments that largely tracked both streams of thought. Comments in this category came from a variety of interest groups, some of which focus on private equity, and still other comments came from members of Congress who are not directly members of the Trump Administration.

For example, Reps. French Hill (R-Ark), Chair of the House Financial Services Committee, and Ann Wagner (R-MO), Chair of the House FSC’s Subcommittee on Capital Markets, indicated they would use their Congressional oversight posts to work with the DOL and the SEC to implement the executive order.

“This is a significant step toward modernizing the U.S. retirement system and empowering American workers with greater choice for how they grow their savings,” said Hill and Wagner in a joint statement. “Facilitating the inclusion of private assets in 401(k) plans will help unlock new avenues for long-term financial security for everyday Americans.”

In the Senate, Banking Committee Ranking Member Elizabeth Warren (D-Mass) issued a statement in which she echoed much of what Better Markets had said by focusing on Wall Street’s role in opening up risky investment opportunities for retirement savers.

“President Trump just granted private equity billionaires their biggest wish: access to Americans’ retirement savings,” said Warren. “But it’s a rotten deal: the data shows private equity has failed to deliver the returns it has promised while saddling investors with exorbitant fees. Trump’s executive order will expose Americans’ retirement savings to risky investments with little transparency and weak protections—as well as to highly volatile crypto assets.”

In the private equity sphere, American Investment Council President and CEO Will Dunham suggested the executive order is a positive step. “For decades, public pension funds have invested in private assets because they deliver strong returns over the long term and are a smart, safe way to diversify retirement savings. President Trump’s EO is a great step that will help all Americans enjoy the same benefits of stronger returns and a secure retirement.”

Bryan Corbett, President and CEO of the Managed Funds Association, which represents a mix of hedge funds, private credit funds, and hybrid funds, said in a statement that “[w]e look forward to working with the Trump Administration on a thoughtful framework that expands access to alternatives for retirement savers, offering Americans more diversification and investment options with appropriate investor guardrails.”

A pair of press releases from Americans for Financial Reform offered more tempered views of the executive order. In one AFR press release, Oscar Valdés Viera, a private equity and capital markets policy analyst at AFR, suggested that the authors of the executive order see workers’ savings “as a piggy bank to raid.” The press release added that: “Private equity investments lack the most basic investor protections like transparent disclosure, accurate and comparable reporting of returns, meaningful valuations, fee disclosure, and more. The private equity industry has recently struggled to raise additional funds, offered dwindling distributions to investors, and has had difficulty selling underperforming assets—all critical reasons for their push to access investments from retirement savers and other small, retail investors.”

In the second AFR press release, Lisa Donner, co-executive director of AFR, said that “[e]xposure to these risky investments with little transparency and manipulated values will put trillions of dollars of retirement earnings at risk.” Donner added that “[w]orkers who spent their lives building a nest egg deserve a regulatory regime that will help them retire with dignity, not make Wall Street richer.”

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