Modernizing Investment Access for Americans

For a long time, access to some of the most lucrative areas of the global economy has been restricted to a chosen few investors. Major institutions—like pension funds, endowments, and sovereign wealth funds—have branched out into private markets, infrastructure, and other alternative assets that can potentially improve long-term returns. Meanwhile, many Americans who save through 401(k)s find themselves with a limited array of options.

This gap no longer represents the current economic landscape, and it’s becoming increasingly hard to justify.

More critically, the retirement system in the U.S. isn’t serving the average saver effectively. About one-third of Americans don’t have any retirement savings at all. For many others, a 401(k) is their sole experience with investing—but these plans aren’t delivering the kind of outcomes typically seen with pensions. The existing system seems to prioritize simply preventing poverty in old age—a “safety net.” What’s truly needed is a framework that also acts as a “ladder” for wealth-building and long-term financial security.

As traditional pensions have dwindled, more responsibility has shifted to individuals, yet the resources available to them haven’t adapted. Savers are expected to achieve more with fewer options, limited diversification, and reduced access to areas generating much of today’s economic growth.

One way to balance this inequality is by expanding investment choices—essentially, making investing more accessible.

Right now, trillions of dollars are stuck in low-yield savings accounts, while opportunities in private markets remain largely out of reach for everyday investors. Private markets now account for a larger portion of economic activity. In 2024, assets under management in private markets reached roughly $15 trillion, up from $11.87 trillion in 2023 and $10.89 trillion in 2022. Many companies are staying private longer, and significant phases of innovation are occurring outside public exchanges, which leaves regular investors on the sidelines.

This exclusion has tangible consequences.

Pension plans—also called defined benefit plans—have gradually incorporated private assets over the decades to enhance returns and manage volatility. Accessing private markets can significantly boost compounding through three significant mechanisms: the illiquidity premium, value creation, and structural stability. In contrast, 401(k) savers without this access might be forfeiting nearly 15 percent in lifetime returns due to lack of compounding. Even a one-percentage-point increase in returns can mean a $365,000 benefit over thirty years. A diversified approach can provide protection against inflation, lessen volatility, and enhance long-term results.

Critically, private assets aren’t banned in retirement accounts; the existing barriers are more structural than legal. While there are legitimate concerns about fees, transparency, and liquidity, these are increasingly being addressed through better fund designs, enhanced data, and stronger fiduciary oversight. The focus should be on innovation and education, not exclusion.

Policymakers are beginning to recognize the need for change. The Department of Labor’s suggested rule for broadening access to alternative investments in 401(k) plans is a much-needed step toward aligning retirement policies with the current investment landscape. By clarifying how fiduciaries can assess these assets and establishing process-based protections, the proposal reduces uncertainty while maintaining robust safeguards.

This initiative isn’t about pushing investors toward specific assets. It’s about bringing back flexibility—allowing fiduciaries to consider choices based on factors like fees, performance, liquidity, and complexity while fostering competition and innovation. In simple terms, it’s about letting the market operate more effectively by broadening the choices to enhance retirement outcomes. Concerns about risks are valid, but the risks of inaction should be weighed equally. Limiting access can result in limiting returns, especially as value creation moves away from public markets.

Recent efforts in policy show that progress is attainable. An executive order from President Trump aimed at increasing access to alternative assets reflected a commitment to more opportunities. Ongoing efforts to reduce unnecessary blocks can help bridge the gap between everyday investors and the advantages enjoyed by institutions.

The retirement crisis is pressing, but it cannot—and shouldn’t—be tackled through government spending alone. The traditional retirement structure—comprised of Social Security, employer pensions, and personal savings—still exists, though it has become heavily weighted toward individual accountability. Expanding investment choices is a market-driven solution that equips individuals with better resources and broader access.

A more inclusive investment landscape—allowing access to a wider variety of asset classes—can better prepare Americans to build wealth rather than merely escaping financial hardship. By modernizing investment options and narrowing the gap between institutional and individual access, we can enhance results for savers and ensure that the benefits of economic growth are more equally distributed. An economy that benefits a wider array of investors ultimately performs better overall.