Opening the 401(k) door to private equity and alternatives – what managers need to know

President Trump’s latest executive order directs federal agencies to develop regulatory guidance on how 401(k) plans could include private equity, infrastructure, and digital assets. While this does not immediately permit these investments, it sets regulators on a path toward rules that could open the door in the future.

For investors, the change could eventually mean access to strategies and returns once reserved for institutions and ultra-high-net-worth individuals. For managers and plan sponsors, it signals the need to prepare for potential demand now – considering product design, operational readiness, compliance frameworks, and investor education.

“It’s easy to generalize the excitement this provides both investors, who could gain access to strategies and returns once reserved for only institutions and ultra-high-net worth individuals – and asset managers, who would gain access to trillions in new sources of investor capital,” says Vincent Calcagno, Head of US Growth at Ocorian. “However, we’ve seen what can happen when major industry shifts like this occur. It’s precisely why at Ocorian we’ve built solutions for our partners that can aid in navigating the minefield of considerations these shifts present. From product design, operational readiness and compliance frameworks, through to investor education and access.”

“While the open doors and compliance frameworks will shift to accommodate these new investment options, managers are reminded that what will not change is their fiduciary responsibility to make appropriate investments for their clients,” notes Portia Amato, US Practice Lead at Ocorian. “Given the added risk of such time of investments that would be allowed, managers will need to strike a balance between opportunity and what is right for the client based on the nature of the 401K investment purposes for retirement income.”

Lynne Westbrook, Head of Funds – Dallas, at Ocorian, adds: “We anticipated that 401(k) access to private equity under the Trump administration would signal a shift that could transform the investment landscape –  opening the door to a broader base of institutional and, ultimately, retail capital. It’s part of a wider trend we’re seeing toward the democratisation and retailization of private equity, themes explored in our recent Global Asset Monitor.”

At Ocorian, we are already working with clients to explore the structures, custody solutions, and governance models that would be essential if these opportunities move from policy to practice. As Ocorian’s Robin Harris, Head of APAC, recently highlighted in How the democratisation of private equity is reshaping investment, broader investor access is already underway, and success will depend on having the right infrastructure and guidance in place.

Whether you are preparing for potential ERISA changes or looking to unlock a new investor base, Ocorian is ready to support the next era of alternative investing.