The 401(k) floodgates have opened. Please don’t drown.

In August 2025, President Trump issued an executive order encouraging employer retirement funds to invest in alternative assets such as hedge funds, real estate, crypto, startups, and private equity. The US Department of Labor has essentially been instructed to reduce regulatory barriers and provide guidance for fiduciaries in evaluating whether to make alternative assets available to 401(k) plan investors.

This is great news for investment management companies. In 2017, Blackstone CEO Stephen Schwarzman told investors it was his “dream” for private equity to have access to retirement funds.

But the real question is, is this good news for the average American with a retirement fund?

Opening the door to alternative investments encourages greater diversification of investment opportunities, which can be crucial, especially as the number of public companies continues to shrink (although, with even more capital in the hands of private funds, the speed at which public companies go private may accelerate).

But we at Financial Poise encourage you to treat the news with a healthy amount of skepticism.

Alternative assets have historically been restricted to investors who meet the benchmark of an “accredited investor.” While the term casts a pretty wide net, it’s still intended to ensure that only investors with reliable indicators of financial sophistication are putting their money into investments like private equity.

This is important because alternative assets are more complex than traditional investments like stocks or bonds. They can be riskier, with longer investment horizons leading to higher illiquidity. Private funds generally charge higher fees while offering their investors less transparency. And crypto, well… is crypto (and while one could read our views on crypto and point out how wrong we were, our views haven’t changed. Just wait).

So is your retirement fund actually better off adding in alternative investments?

When it comes to PE, some say yes, retirement funds are better off adding PE funds to the investment mix over a lifetime. The left-leaning Urban Institute, for example, published a paper saying so. However, we note that said paper was funded by the American Investment Council, a private-equity industry trade group. Just saying…

And to be sure, there are counterexamples. A recent Johns Hopkins study (yes, the same place you think of for surgeons and stitches also offers financial fundamentals), for example, concludes that private equity funds are not suitable for many retirement plans.

The verdict is also split when it comes to crypto, which is increasingly becoming a mainstream investment. On one hand, it’s undeniable that crypto has been riding strong tailwinds in 2025. As of this week, the price of Bitcoin has risen by 21.3% since the start of the year, and it even hit a record high of $124,000 in August.

But even assuming you don’t agree with our view that Bitcoins are modern-day tulips, you certainly must agree that crypto prices can see-saw. Younger investors can better weather the risks driven by volatile price fluctuations, but it’s a different story if you’re approaching retirement age. (Side note: maybe don’t invest over 55? Here’s a mnemonic, just replace some of the words. Hagar is worth about 3x more than Roth, if that helps persuade you.)

A 2024 study found that cryptocurrency investors were 7.4% more likely to make a hardship withdrawal from their retirement accounts. Nothing says sound retirement strategy like an early withdrawal.

While we’re at it, just because the door is now open doesn’t mean everyone should be allowed in.

Since we’re on the topic of having healthy skepticism toward shiny new investment opportuni

ties, this is also a good time for us to direct your attention to the JOBS Act and its recent changes earlier this year.

A bit of background here: The JOBS Act of 2012 was intended to ‘democratize’ access to capital markets. It expanded the private markets by allowing issuers to advertise investment opportunities more broadly and thus reach a wider pool of investors.

Unfortunately, this was revolutionary only on paper. Issuers (i.e., those seeking investment capital) were given the responsibility of verifying accredited investor status, which meant asking investors for tax returns, brokerage statements, or even letters from accountants…basically everything short of a blood sample. As you can imagine, most investors weren’t thrilled about such a cumbersome and intrusive process. So many issuers stuck to the old playbook: raising money from their existing networks rather than running splashy ad campaigns.

Fast-forward to March 2025, and the SEC has eased up, letting investors self-certify if they’re putting in at least $200,000 (or $1 million for entities). This means issuers can now solicit more freely with fewer compliance headaches. Meanwhile, investors are left to grade their own homework. This change may appear investor-friendly, but it’s clear who’s really benefiting from laxer safeguards.

Again, we caution you, dear readers (you are dear to us, you know), that it’s more important than ever to be skeptical when seeing advertised investment opportunities. Now that the doors have opened, you’re probably going to see more ads popping up on your social media feed, in between the cat memes and pictures of your friend’s kids. These ads will promise you great returns, exclusive opportunities, everything short of a free puppy.

A fair warning: Don’t assume everything that’s pitched to you is true, especially if it’s something you come across online.

This warning is more relevant than ever. In June, Meta announced its vision of automating ad creation using AI. The goal is to enable companies to fully create and target Facebook and Instagram ads using AI by the end of 2026. It’s only a matter of time before you’ll be getting videos of Warren Buffett dancing to a TikTok trend while he sells you the latest crypto coin (spoiler alert: it won’t really be him).

That’s why it’s crucial to conduct your own due diligence. Dig into the company’s SEC filings, study its financials, and get a real sense of its trajectory before you hand over your hard-earned money. Or hire a professional to help.

To paraphrase a quote from a well-loved superhero franchise, with greater access to investment opportunities comes greater investor responsibility.

©2025. DailyDAC^TM, LLC d/b/a/ Financial Poise^TM. This article is subject to the disclaimers found here.

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