Recently, Donald Trump opened the door to trillions of dollars in new investments from American retirement savers for the private equity and cryptocurrency industries, which could reshape the financial futures of 90 million Americans and accelerate the growth of asset management firms and digital currency groups.

However, this executive order allowing 401k savings plans to invest in a range of alternative assets also exposes U.S. retirees to new risks.

The move came after intense lobbying by private capital groups such as Apollo Global Management and BlackRock, which argued that gaining access to these retirement plans was a pathway to attracting hundreds of billions in lucrative assets.

The measure is expected to enable retirement funds to invest in a range of unlisted investments, from corporate buyouts and private loans to infrastructure deals. This could expose them to higher fees and lower transparency. Some of the $9 trillion in assets held in these 401k plans could be directed toward assets that are difficult to value and sell, unlike traditional stocks and bonds that currently dominate retirement portfolios.

"The door to alternative investments is more open than it's ever been," said Sean McKee, global head of asset management at KPMG's audit division. He added, "Many leaders will see this as a business model opportunity."

Benjamin Schiffrin, director of securities policy at Better Markets, warned that the move is "bad news" for 401k plan holders. He said, "Retail investors will be exposed to a completely different asset class, and they may not even realize it."

Buyout groups have been struggling to sell trillions in investments and deliver returns to investors. This has prompted pension funds and foundations to retreat from the industry, cutting off a critical source of cash. Large private capital groups like BlackRock have instead pinned their future growth on managing the savings of retirees and wealthy individuals.

Wall Street successfully persuaded Trump to sign the order, which will provide the industry with important political and legal cover as they seek to convince 401k plan administrators to include their funds in investment options. According to their financial disclosures, Apollo, Carlyle, and BlackRock engaged in heavy lobbying.

Other groups, like BlackRock, worked through industry associations.

Some of the industry's most influential leaders—including Apollo's Marc Rowan—publicly supported the effort.

Rowan and his peers have argued publicly that 401k savers not exposed to private markets are missing out on diversification and higher returns.

"In February, Rowan said, 'We've basically bet the nation's retirement system on Nvidia,'" referring to the heavy concentration of 401k savings in a few tech-stock-dominated index funds. This week, he reiterated his call to open 401k markets to private investments, calling it "common sense."

According to people familiar with the matter, the influential lobbying group Defined Contribution Alternatives Association, favored by many large private equity groups, even claimed in Washington that 401k plans could be sued for failing to offer the higher returns of deals.

Carlyle CEO Harvey Schwartz said the order was "long overdue," as "wealthy clients have long had access to this space."

BlackRock said adding private investments to retirement plans would "ensure millions of Americans build stronger, more diversified portfolios."

At the White House, Trump's National Economic Council and Council of Economic Advisers acted as liaisons between the private capital industry and the president, according to one official. The office of Deputy Chief of Staff Stephen Miller assisted in drafting the order.

A senior adviser said the administration's interest in cryptocurrencies played a role in getting the order to the president's desk, noting its popularity within the White House.

Trump has made deregulating digital assets a central issue of his administration and credits the industry with helping him win the 2024 presidential election. Entities controlled by the Trump family have also recently invested billions in cryptocurrencies.

Some in the private equity industry worry the order will link their funds to newer, more speculative cryptocurrencies, especially if 401k plans suffer painful losses from digital asset investments. But people familiar with the matter said they view this as an acceptable trade-off.

While there is no explicit prohibition on investing in alternative assets, 401k plan administrators have been wary of investing in them. Most fear lawsuits from employees for investing in such funds, both because of their high fees and the higher leverage many strategies employ.

"These lawsuits are expensive, and there are many settlements, but plaintiffs rarely win in court," said Rajib Chanda, a partner at Simpson Thacher & Bartlett. He added that this concern "creates a massive chilling effect regardless of the merits of the litigation."

Trump has directed government agencies to make it easier for 401k plan administrators to offer private investments, including by adding provisions designed to curb lawsuits against private investment strategies.

"President Trump's decisions are guided solely by the special interest of what's best for the American people," said White House Deputy Press Secretary Kush Desai.

"The president's historic executive order delivers on his promise to make America wealthy again by democratizing alternative asset classes, modernizing, and expanding retirement investment options for everyday Americans."

The focus now shifts to the Labor Department, which oversees and enforces the 1974 law that sets standards for companies offering 401k benefits.

Asset managers are racing to prepare 401k products ahead of expected Labor Department guidance within the next six months. Many have announced partnerships to offer private investments in target-date funds, where professionals select assets for decades-long retirement plans. These funds would mix publicly traded stocks and bonds with more opaque private assets.

Others are offering more direct access to private investments but require companies to provide advisory services to 401k participants who wish to invest.

Empower, the second-largest U.S. retirement plan provider, said in May it would partner with Apollo, Goldman Sachs Asset Management, and Partners Group, among others, to offer private asset investment access to retirement plans.

A month later, BlackRock said it would provide target-date funds blending public and private investments to 401k investment provider Great Gray Trust. Separately, BlackRock is developing its own target-date funds that include private assets.

Other partnerships have emerged. BlackRock has formed a "strategic alliance" with Vanguard and Wellington Management to create blended public-private funds for retirees, while KKR and Capital Group are exploring model portfolios and target-date funds that span public and private markets.

Michael Pedroni, a former Treasury official who now runs policy advisory firm Highland Global, said the "big question" of how much extra American families are willing to pay for access to private assets—which are more expensive to identify and manage and thus carry higher fees—remains unanswered.

"Right now, Americans are used to paying 30 to 50 basis points for their 401k. Will they pay if it goes to 80 basis points?"