What Plan Sponsors and Participants Need to Know About the New Executive Order and Expanding Investment Options

Retirement planning is evolving. On Aug. 7, 2025, the “Democratizing Access to Alternative Assets for 401(k) Investors” Executive Order was signed, signaling a major shift in how retirement plans can be structured and invested. This initiative opens the door for everyday investors to access asset classes once reserved for institutions.

What Are Alternative Investments?

Often referred to as “Alts,” alternative investments include financial assets outside traditional public markets like stocks, bonds and cash. While typically less liquid and more complex they offer potential for diversification, enhanced returns and exposure to unique market opportunities.

Major Categories of Alternative Investments

  • Private Equity – Long-term investments in private companies or buyouts of public firms. These can yield substantial growth, especially in emerging sectors or turnaround scenarios.
  • Private Credit – Debt financing from non-bank entities. These instruments often carry higher yields and can diversify portfolios in low-rate environments.
  • Hedge Funds – Pooled vehicles using strategies like long/short equity, arbitrage and derivatives. Though complex and fee-heavy, they may offer downside protection and non-correlated returns.
  • Real Estate – Direct property ownership or indirect exposure via REITS. Real estate provides income and appreciation potential, behaving differently than traditional assets.
  • Cryptocurrency – Digital assets like Bitcoin and Ethereum offer exposure to blockchain innovation. While highly volatile and speculative, they represent a growing segment of modern portfolios.

Why the Executive Order Matters

This policy shift reflects a broader philosophy: expanding access and leveling the playing field.

Key Objectives of the Order:

  • Unlocking Capital: Enable 401(k) plans to invest in private markets to fuel innovation, infrastructure and entrepreneurship.
  • Democratizing Access: Providing everyday workers with investment opportunities previously limited to institutions.
  • Reducing Barriers: Encourage regulators to ease minimum investment thresholds and accreditation requirements.

Market Implications

With nearly $8 trillion in 401(k) assets, even modest allocations to alternatives could reshape private equity, real estate and other sectors. Plan sponsors now have an opportunity to innovate investment menus and enhance participant education.

Benefits for Participants & Sponsors

  • Diversification – Alts often move independently of traditional markets, helping reduce. volatility and improve risk-adjusted returns.
  • Potential for Higher Returns – Many alternatives have historically outperformed public markets over the long term.
  • Customization – Sponsors can tailor investment options to align with participant goals, risk tolerance and retirement timelines.

Risks and Considerations

Despite their appeal, alternative investments require careful oversight.

Common Challenges

  • Complexity – Many participants lack familiarity with alts. Sponsors must prioritize education and transparency.
  • Illiquidity – Lock-up periods may limit access to funds, especially for early withdrawals.
  • Fees – Higher management and performance fees can erode returns if not properly benchmarked.
  • Due Diligence – Fiduciaries must vet managers and strategies thoroughly, requiring expertise and ongoing monitoring.
  • Regulatory Hurdles – Navigating ERISA, SEC and DOL rules is essential to avoid legal pitfalls.

Key Questions for Plan Sponsors

Before integrating alts into a 401(k) plan, sponsors should ask:

  • Are these investments appropriate for our participant demographics?
  • What allocation strategy makes sense?
  • Should alts be standalone options or part of custom portfolios?
  • Will we set allocation caps and how will they be enforced?
  • How will we manage governance, due diligence and participant education?

The inclusion of alternative investments in retirement plans marks a bold evolution in financial planning. While the potential for enhanced returns and diversification are compelling, success hinges on thoughtful implementation, robust education and diligent oversight.

At Adams Brown Wealth Consultants, our integrated team of CPAs and retirement advisors is uniquely positioned to guide sponsors through this new landscape. Through our Private Asset Solutions model, we deliver holistic, tax-advantaged financial planning tailored to your business and your people.

Ready to explore how alternative investments can strengthen your retirement plan? Contact an advisor to schedule a consultation and discover how we can help you build a smarter, more resilient retirement strategy.