An executive order opening workplace retirement plans to private equity, private credit and cryptocurrency is being sold as a chance for ordinary savers to reach investments once reserved for the wealthy. What gets less attention is the fine print those investments carry: fees that can run several times what an index fund charges, money that can be locked up for years, and values that are far harder to verify. For a 401(k) balance meant to last decades, those features are the real story.
The fees that eat into a retirement balance
The single number that matters most to a long-term saver is the fee, because it compounds against the account year after year. Private equity and private credit funds are known for charging far more than the low-cost index funds that dominate 401(k) menus. Many follow a structure often described as “2 and 20,” an annual management fee around 2% of assets plus a performance cut of roughly 20% of profits.
By contrast, a broad index fund inside a typical plan may charge a fraction of a percent. The Securities and Exchange Commission’s investor guidance on private equity funds warns that these vehicles impose multiple layers of fees and expenses, some of them charged at the level of the companies the fund owns, which can be difficult for an investor to see or fully add up. Over a working career, a gap of even one or two percentage points in annual fees can consume a large share of an account’s eventual value.
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Money that cannot be sold when it is needed
A second risk is liquidity, or the lack of it. Shares of an index fund can be sold on any business day at a known price. Private equity and private credit investments are the opposite: they routinely lock up capital for years, with limited or no ability to cash out on demand. The SEC guidance notes that these funds are illiquid and that investors may not be able to redeem their money for extended periods.
That mismatch matters in retirement planning, where a saver may need to draw on the account for living expenses or rebalance after a market shift. A retiree who wants to move money, cover an emergency, or simply reduce risk could find a chunk of the balance frozen inside a fund that will not return it for years. Illiquidity also complicates required minimum distributions once a saver reaches the age when withdrawals become mandatory.
Values that are hard to verify
Public stocks and bonds are priced continuously by the market, so an account statement reflects what the holdings would actually fetch. Private investments have no such daily market. Their values are estimated, often by the fund managers themselves, and updated infrequently. That makes it difficult for a saver to know what a holding is truly worth at any given moment.
The opacity cuts two ways. Reported values can look smooth and stable precisely because they are not marked to a live market, which may understate the real volatility of the underlying assets. When the true value is finally realized at a sale, it can differ sharply from the figures that appeared on statements along the way. Thinner and less frequent disclosure than mutual funds provide leaves savers with less information to judge what they own.
Cryptocurrency’s added layer of volatility
The order also clears the way for cryptocurrency in retirement plans, and digital assets bring their own profile of risk. Crypto prices can swing dramatically over short periods, and the assets lack the earnings, dividends or cash flows that anchor traditional investments. A retirement account concentrated in such holdings can gain or lose a large share of its value quickly.
The regulatory and custody protections around crypto also remain less developed than those governing stocks and bonds. For savings meant to fund decades of retirement, the combination of extreme price swings and evolving safeguards is a materially different bet than a diversified fund, and one that behaves very differently in a downturn.
The gatekeepers between the order and a menu
None of these products reach a saver automatically. As coverage of the order makes clear, the directive encourages access but leaves the decision to plan sponsors, the employers and committees that assemble investment menus. Those sponsors remain bound by the fiduciary duty under federal retirement law to act prudently and in participants’ interest.
That duty is a real check, because a sponsor who adds a high-fee, illiquid or hard-to-value option has to be able to defend the choice. The order lowers the regulatory discouragement, but it does not remove the responsibility, and it does not force any employer to offer these funds. For savers, the practical takeaway is that if such options do appear on a plan menu, the fees, the lock-up terms and the disclosure gaps deserve close scrutiny before any retirement dollars go in.
This article was produced with the assistance of artificial intelligence and reviewed by The Financial Wire editorial team.
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Warren Cohen is a finance writer based in Phoenix, Arizona, covering personal finance topics including credit, banking, and beginner investing. He earned his degree in business administration from Arizona State University and began his career working in consumer finance, where he gained direct experience with lending and credit systems. He now writes for personal finance websites and fintech platforms, focusing on clear, practical content that helps readers make informed financial decisions.
