CFPs, asset managers split over DOL plan for 401(k) alternatives

Certified financial planners pushed back on a Labor Department proposal that would open 401(k) plans to alternative assets such as crypto, private equity and private credit. Asset managers and some advisers backed the plan, and the Employee Benefits Security Administration closed a public comment period on June 1 after receiving nearly 40,000 submissions.

The proposal implements an executive order issued in August 2025 by President Donald Trump directing regulators to create a pathway for alternative investments in plans governed by the Employee Retirement Income Security Act of 1974. The department said it will review the public comments before deciding whether to revise or finalize the rule. The draft includes a safe-harbor framework and lists six factors for fiduciaries to consider when adding designated investment alternatives: performance, fees, liquidity, valuation, benchmarking and complexity.

The CFP Board urged the department to strengthen participant protections and avoid turning ERISA prudence into a procedural checklist. Erin Koeppel, the board’s managing director of government relations and public policy counsel, urged the agency to emphasize both a careful process and a prudent outcome, to move examples from the regulation into guidance and to provide fuller direction on the six factors while preserving asset neutrality. “Fiduciaries must continue to exercise sound judgment in light of the needs of plan participants,” Koeppel added.

Individual certified financial planners filed comments warning of risks to workers’ retirement savings. Seattle CFP Richard Simoneaux wrote that private equity and private credit funds should not be allowed to use plan assets as a source of new capital when funds run into trouble. Retired San Diego CFP Frank Miller wrote that crypto’s volatility and regulatory uncertainty make it inappropriate for retirement portfolios: “Protect the ill informed and uneducated investors from themselves. Don’t let them gamble with their retirement.” By contrast, Jarrod Winkcompleck, CEO of Gap Financial Services and a CFP, wrote that the proposal “doesn’t weaken those protections; it simply gives us more tools to help improve retirement outcomes.”

Trade groups representing asset managers defended the proposed rule. The Investment Company Institute argued that allowing private investments alongside public investments could increase participant returns and that the proposed safe harbors offer sufficient guardrails. ICI research cited in its comment compared mixed portfolios that include private assets with a public-only efficient frontier at an assumed annualized expected return of 7%, finding annualized volatility of about 5.3% to 5.5% for mixed portfolios versus 6.7% for public-only portfolios. ICI President and CEO Eric J. Pan characterized the safe-harbor framework as establishing appropriate guardrails to facilitate broader incorporation of private assets into 401(k) plans.

Other analysts and critics raised practical concerns about liquidity and plan operations. Morningstar research noted that common vehicles for private assets, such as collective investment trusts, are semiliquid and mix public and private positions. Commenters warned that semiliquidity could complicate participant withdrawals, valuation processes and day-to-day plan administration, and they urged clearer guidance on how fiduciaries should assess liquidity and valuation risks.

The department will consider the nearly 40,000 comments as it decides whether to revise or finalize the rule. The submissions reflect differing views on whether expanding permitted investments will affect ERISA fiduciary duties and participant protections.