--- title: Private Equity Firms Want in on Your 401(k) description: Trump plan may open 401(k)s to private equity, raising hopes for higher returns — and concerns over risk, fees and transparency. authors: - name: Martha C. White role: Writer url: https://money.com/author/martha-c-white/ education: BA, English, Princeton University at_money_since: 2015 articles: 349 covers: - Retirement - Banking - Business - Career Advice - Credit - Credit Cards - Debt - Economy and Politics - Education - Federal Reserve Rate Cuts - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Professional Services - Shopping - Taxes - Technology editors: - name: Katherine Peach role: Associate Editor url: https://money.com/author/katherine-peach/ bio: Katherine Peach is an associate editor with a focus on news and email at Money. She didn’t always intend to write about money. She’s a classically trained pianist who dreamed of becoming an archaeologist. However, in 2007 Katherine began working in financial publishing as an editor for Agora Inc. (Apparently, unearthing ideas about improving your personal finances isn’t such a bad career alternative!) Katherine’s writing and editing work has been featured in Investing Daily, Clever, Investor Junkie, The Palm Beach Letter, Truth & Plenty, Independence Monthly, NICHE, AmericanStyle, AntiqueWeek, Millennial Money, Money Done Right, TheStreet, Sure Dividend and many others. Katherine holds a Bachelor of Arts in Ancient Studies with concentrations in Archaeology and Ancient Languages and a minor in Literature from the University of Maryland, Baltimore County. She is a member of Phi Beta Kappa. education: University of Maryland, Baltimore County at_money_since: 2025 articles: 14 covers: - Retirement - Banking - Career Advice - Credit - Credit Cards - Debt - Economy and Politics - Education - Federal Reserve Rate Cuts - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Professional Services - Shopping - Taxes published: '2025-07-18T12:30:35.000Z' modified: '2025-08-29T18:03:31.000Z' section: Retirement tags: - News word_count: 833 canonical: https://money.com/trump-401k-private-equity-investment-plan/ type: NewsArticle source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![Photo collage of a young woman, looking confused at her computer screenm, with warning signs in the background](https://img.money.com/2025/07/News-Investing-Private-Equity-401K0-2.jpg) If the White House gets its way, ordinary Americans will be able to invest their retirement savings in the private equity market. President Donald Trump is expected to direct the Department of Labor and the Securities and Exchange Commission to give employers and 401(k) plan administrators guidance on how to incorporate private investments within retirement accounts, the [*Wall Street Journal*](https://www.wsj.com/finance/investing/trump-executive-order-to-help-open-up-401-k-s-to-private-markets-c90c6788) reported Wednesday. This is the first step toward a potential big win for private equity, and it didn't come cheap. The slice of the financial services industry that includes hedge funds donated more than $200 million to Trump’s 2024 campaign, contributions [records show](https://money.com/trump-vs-harris-stock-market-forecast/). ## Protect your retirement with a Reverse Mortgage ### If you are over 62, a Reverse Mortgage from Longbridge Financial (NMLS# 957935) can help you take care of expenses or even invest in things that will improve your quality of life. Click on your state to learn more. [Learn More](https://money.com/pr/s978d3010185?ap_referrer=%2Ftrump-401k-private-equity-investment-plan%2F) It’s not unusual for sophisticated investors — pension plans, sovereign wealth funds, insurance companies and so on — to hold private equity positions. But these investments’ relative complexity and lack of transparency, along with the high management fees ranging from 1.75% to 2% at the median, according to [one recent study](https://www.callan.com/blog-archive/2024-private-equity-fees/), have kept them from being embraced by administrators of defined-contribution retirement plans. Proponents of adding private equity investments to retirement plans — mostly private equity firms themselves and organizations that represent their interests — say giving Americans access to these instruments can help them diversify their portfolios. The number of public companies in the U.S. has dropped by about 3,000 over roughly the past 30 years, according to the [Tuck School of Business](https://tuck.dartmouth.edu/news/articles/where-did-all-the-public-companies-go) at Dartmouth University. Private equity companies are positioning themselves as an alternative. Earlier, the [*Journal*](https://www.wsj.com/finance/investing/why-vanguard-champion-of-low-fee-investing-joined-the-private-markets-craze-b12a04e3) said big investment companies, including Vanguard, BlackRock and Empower were planning to roll out private equity instruments for 401(k) investors. It also noted, though, that the president’s executive order is just a first step, and not everyone is as enthusiastic about the possibility. ## Why not everyone is convinced Plan sponsors are likely to remain leery of private equity as long as they face a risk of being sued by accountholders over the high management fees private equity firms charge. Management fees on private equity investments are much higher than those that 401(k) investors [typically pay](https://money.com/401k-fees-how-much-does-it-cost/). According to the [Investment Company Institute](https://www.ici.org/system/files/2025-03/per31-01.pdf), the average expense ratio for mutual funds invested in stocks dropped by 62% between 1996 and last year. In 2024, the average fee was 0.4% — or about one-fifth of a typical private equity management fee. Fees for passively managed funds that track the performance of an index like the S&P 500 can be even lower. What’s more, not everyone is gung-ho about the idea of letting private equity firms get their hands on some of the roughly $12 trillion American workers have socked away into 401(k)s. Some people worry that ordinary Americans won't really know what they're getting into. The concern is that retirement savers could make investment choices that don't justify what they're paying — or worse. In a letter to Empower, one of the private equity firms advocating for giving 401(k) investors access, Sen. [Elizabeth Warren](https://money.com/changemakers/elizabeth-warren/) [criticized](https://www.cnn.com/2025/07/12/business/elizabeth-warren-empower-private-equity-401k) “risky, expensive private markets” and questioned whether ordinary people with limited investing skills or education would really benefit from having this option in their 401(k)s. "Private funds have weak transparency, liquidity, and compliance requirements and lack investor protections," Warren [wrote](https://www.banking.senate.gov/imo/media/doc/20250711%20Response%20Letter%20to%20Empower.pdf) in a follow-up missive to Empower. She [stressed the need](https://www.investmentnews.com/retirement-planning/senator-warren-presses-empower-for-more-details-on-pe-in-401k-plans/261280) to protect investors — and the nest eggs they spent decades building — from taking risks they don’t fully understand with money they can’t afford to lose. One of the factors that can make these instruments so complex is their high leverage. While this offers the potential for higher returns, it also raises the risk of greater losses. In addition to their complexity, private investing doesn't take place in a large, transparent, liquid market. Putting money into private equity could mean potentially tying it up for years in exchange for the promise — but not the guarantee — of higher yields than plain-vanilla investing could deliver. A new [study](https://www.pm-research.com/content/iijaltinv/early/2025/02/05/jai20251232) from a faculty member at the Johns Hopkins Carey Business School warned about the heightened risks investors face. Jeffrey Hooke, a senior finance lecturer and author of the study, said the lack of regulation and transparency are concerning downsides. He also found that these investment vehicles often failed to beat the stock market’s overall performance or deliver returns much higher than an investor could get with an ordinary portfolio of stocks and bonds. Hooke also took issue with the cost, telling an investment industry [trade publication](https://i3-invest.com/2025/04/how-good-are-private-equity-returns-really/) that there is “a long period of time for the private equity fund to be collecting fees” before the investor sees any gains. A Carey Business School [article](https://carey.jhu.edu/articles/five-reasons-rethink-how-your-retirement-invested) about the research summed up the primary concern with adding private equity to retirement accounts. “These riskier investment vehicles may not align with the financial security and predictability most 401(k) participants expect,” it said. ## With a Reverse Mortgage, you can invest in your future starting today ### Work with a licensed Finance of America (NMLS# 2285) representative today. [Learn More](https://money.com/pr/t879fd448b2c?ap_referrer=%2Ftrump-401k-private-equity-investment-plan%2F) ![](https://s3.consumersadvocate.org/prd/image/image/39553/medium_d01d803f-1110-4310-8997-bada342c27e4.webp) Get the most out of your Reverse Mortgage with Finance of America (NMLS# 2285) [Learn More](https://money.com/pr/ed1a928f8683?ap_referrer=%2Ftrump-401k-private-equity-investment-plan%2F) ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/trump-401k-private-equity-investment-plan/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Retirement", "item": "https://money.com/retirement/" }, { "@type": "ListItem", "position": 3, "name": "401(k)", "item": "https://money.com/401k/" }, { "@type": "ListItem", "position": 4, "name": "Private Equity Firms Want in on Your 401(k)" } ] }, { "@type": "WebSite", "@id": "https://money.com/#website", "url": "https://money.com", "name": "Money", "publisher": { "@id": "https://money.com/#organization" } }, { "@type": "WebPage", "@id": "https://money.com/trump-401k-private-equity-investment-plan/#webpage", "url": "https://money.com/trump-401k-private-equity-investment-plan/", "name": "Private Equity Firms Want in on Your 401(k)", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2025-07-18T12:30:35.000Z", "mainEntity": { "@id": "https://money.com/trump-401k-private-equity-investment-plan/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/trump-401k-private-equity-investment-plan/#breadcrumb" }, "dateModified": "2025-08-29T18:03:31.000Z" }, { "@type": "NewsArticle", "headline": "Private Equity Firms Want in on Your 401(k)", "articleSection": "Retirement", "image": [ { "@type": "ImageObject", "url": "https://img.money.com/2025/07/News-Investing-Private-Equity-401K0-2.jpg", "width": 1972, "height": 1315, "caption": "News-Investing-Private-Equity-401K" } ], "author": [ { "@type": "Person", "name": "Martha C. 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