The Trump administration has proposed a rule to broaden investment options within retirement plans, potentially including alternative assets like private equity and cryptocurrencies. Announced by the US Department of Labor, the measure seeks to reduce barriers to incorporating these less liquid and transparent assets into American 401(k) retirement plans. This action follows President Trump’s executive order from the previous summer, which could unlock new capital sources for alternative asset management firms.
Industry groups argue that private market investments can improve long-term returns and diversification for retirement savers. However, critics warn of higher fees, complexity, and limited liquidity, potentially reducing gains and creating risks for retail investors. Treasury Secretary Scott Bessent stated the proposed rule is an ‘initial step’ designed to protect retirement assets. The guidance outlines how plan trustees, who have a legal duty to act in the best interest of members, can incorporate these assets by thoroughly assessing factors such as performance, fees, liquidity, and valuation.
Blackstone, KKR, and Apollo Global Management, alternative asset managers, could benefit from this rule, potentially tapping into a new capital pool. BlackRock, the world’s largest asset manager with over $14 trillion in assets under management, much of which is linked to retirement, has applauded the move. Apollo CEO Marc Rowan stated that the proposed rule could ‘meaningfully improve retirement outcomes,’ addressing Americans’ growing need for secure retirement savings and income.
The Department of Labor will allow a 60-day comment period before deciding whether to finalise the rule. While SEC Chair Paul Atkins believes the rule will allow Americans to ‘participate more fully in innovation,’ Senator Elizabeth Warren criticised the rule, warning of exposure to risky assets. John Toomey, CEO of HarbourVest, a $147 billion private equity firm, said the new rule emphasizes following the right process with the right information, prioritizing individuals’ interests.
