Trump’s new executive order could dramatically change your retirement account — why you need to be careful now before things spiral out of control

Proponents say this shift “democratizes” access to investment opportunities traditionally reserved for institutions and the wealthy. Critics, however, warn that these assets carry complex risks that may not be properly understood by the average investor.

Here’s why America’s retirement landscape is changing — and how to protect your own portfolio from unnecessary risk.

Eliminating barriers to private assets

Traditionally, alternative assets — such as private equity and hedge funds — were restricted to so-called "accredited investors” who either had a net worth of more than $1 million (excluding their primary residence) or annual income exceeding $200,000, according to the U.S. Securities and Exchange Commission (SEC). [2]

However, retail investors have shown growing interest in recent years. A survey by market research firm Opinium found that 21% of retail investors have considered alternative assets, and another 5% plan to invest in them. [3]

The most common reason cited was diversification. Many investors are seeking to move beyond traditional stocks and bonds in pursuit of higher returns. However, experts caution that alternative assets can carry complex and less transparent risks that may not be suitable for all investors.

Hidden risks

Private market funds often advertise higher return potential than traditional stocks and bonds. But in practice, those lofty targets can obscure high fees, limited liquidity, and inconsistent performance.

As of May 2025, only two of the 14 private equity and venture capital funds tracked by Morningstar had outperformed the S&P 500 since inception. [4] Meanwhile, typical private equity fees include 1% to 2.5% in annual management fees — plus 20% or more in performance fees, according to Hamilton Lane. [5]

Unlike public markets, private assets lack a deep secondary market, making it difficult to exit investments. “If there’s a desire to pull out of private equity, there isn’t a way to actually sell that company or sell shares — there’s just no market for it,” said Charles Rotblut, vice president of the American Association of Individual Investors, in an interview with CNBC. [6]

The risks extend beyond individual portfolios. A report from the Institute for Economic Policy Research (SIEPR) warned that broad retail access to illiquid and opaque assets could create a “systemic risk machine,” increasing the likelihood of financial instability in future downturns. [7]

What can you do?

For most investors, sticking with low-cost index funds remains a sound strategy.

However, if you’re keen on exploring private assets, consult a financial advisor to ensure they fit within your overall financial plan.

Lisa Kirchenbauer, founding partner and senior advisor at Omega Wealth Management, told NPR a sensible approach is to allocate a small portion — around 5% to 10% — of your portfolio to these asset classes. [8]

This allows you to pursue diversification benefits while limiting potential risks to your retirement savings.

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[1]. The White House “Democratizing Access To Alternative Assets For 401(K) Investors.”

[2]. U.S. Securities and Exchange Commission (SEC) “‘Accredited Investor’ Net Worth Standard.”