Alternatives in 401(k)s—Should Investors Bite?

A sweeping new White House executive order could open workplace retirement plans to alternative assets like private equity, real estate, commodities, and even cryptocurrency. Proponents argue it “democratizes access,” allowing workers to diversify beyond the usual menu of mutual funds and index trackers found in most 401(k)s. As I shared with TheStreet, the appeal is obvious: Most 401(k)s today feel bland, offering little shelter from inflation or market shocks.

But there’s another side to this story. Adding more investment choices doesn’t always add value—especially when it means more complexity, less transparency, and higher risk. Alternative assets are often illiquid and thick with hard-to-dig-under fees, tricky valuation, and enough jargon to make a medieval alchemist blush. There are behavioral pitfalls, too: When investors face new assets they don’t fully understand or can’t quickly sell in a downturn, biases like recency, herd mentality, or overconfidence can lead to even riskier choices.

My advice to clients is clear: Welcome innovation, but don’t lose sight of the time-tested principles—transparency, liquidity, simplicity, and staying anchored to your financial plan. Alternatives can provide meaningful diversification for sophisticated investors, but for most retirement savers, they should be treated as side dishes, not the main course. Be curious, not caught up in the hype. If your plan does someday offer these options, approach them with care, not FOMO.

Bottom line? Your 401(k) or IRA is your “one shot” at a secure retirement—there are no do-overs. If you’re unsure how changes in plan offerings or regulations could affect your financial glidepath, or if you simply want objective guidance before making any big moves, let’s talk. Together, we’ll help you innovate prudently—without losing sight of what actually works for your long-term well-being.