Private equity, crypto and the risks retirees can’t ignore

By Aaron Cirksena

An executive order issued by President Donald Trump in August encouraged U.S. regulators to make it easier for retirement savers to incorporate alternative assets into their portfolios. The order contended that employer-sponsored retirement savings plans such as 401(k)s could achieve greater asset diversification and more competitive returns if they included investment vehicles such as private equity, real estate and digital assets.

To help fiduciary advisors and the investors they serve by adding alternative assets to their investment strategies, the August 2025 executive order directed the Secretary of Labor to reexamine the guidance it has provided on such assets in the past. It gave the secretary a 180-day deadline to clarify its current position on alternative assets, encouraging it to “propose rules, regulations or guidance, as the Secretary deems appropriate, that clarify the duties that a fiduciary owes to plan participants” when integrating alternative assets into retirement plans.

As the deadline for the Secretary of Labor’s review approaches, here are some key issues fiduciary advisors should consider as they prepare for a possible shift in this area.

Who will benefit from broader access?

Increased access to alternative assets promised to reshape retirement investment by giving investors new options for diversification. This is becoming especially valuable as bonds continue to show a positive correlation with stocks. But the downsides of such next-gen diversification won’t appeal to all investors.

For example, private equity requires a higher degree of illiquidity than the average retirement investor is accustomed to. Investors typically need to lock up assets for between five and 10 years to access private equity. As a result, 401(k) plans featuring private equity will likely be less palatable to older employees approaching the distribution phase of retirement planning.

Older employees will also be less likely to embrace the volatility that cryptocurrency could introduce into their retirement portfolios. With younger employees in the early phases of accumulation, however, crypto’s volatility could be viewed as less of a risk.

How should advisors engage with clients about alternative assets?

The increase in illiquidity and volatility that alternative assets would bring to retirement investing would be the primary issue employers and plan administrators would need to address with employees contributing to plans. Employees need to know, for example, how including private equity in their strategies would affect their timelines, as well as any anticipated changes to the pace at which assets would grow.

Regarding crypto investing, advisors would need to keep employees educated on several issues that don’t come into play with traditional investing. Crypto losses can be triggered by a wide variety of factors, including project failures and hacking-related theft. In addition, the fact that crypto regulation is in its early stages introduces a “compliance risk” to crypto investing.

Will advisors have added protection from liability when suggesting alternative assets?

The August order followed the Department of Labor's May rescission of earlier guidance recommending that employers take “extreme caution” when adding crypto to retirement plan offerings. The Secretary of Labor called the guidance issued under the previous presidential administration an “overreach.”

However, the rollback of the crypto-related warning did not reduce the responsibility fiduciaries have to provide reliable guidance to those they advise. In fact, it may have placed greater emphasis on the responsibility by removing the influence of the earlier guidance.

The call for clarification of fiduciary duties issued by Trump suggests the Department of Labor consider rules, regulations, or guidance that include “appropriately calibrated safe harbors.” How the department will respond to that suggestion remains to be seen, which indicates fiduciaries should continue to act with extreme caution when recommending any investment strategies that are out of the ordinary.

The recent executive order on retirement investing, even if it does not result in new rules on alternative assets, could spark interest in alternative retirement strategies, especially among younger employees. As a result, employers and fiduciaries should consider how those assets could be leveraged to best serve employees and the steps needed to educate them about the new risks they will assume.