Not so Fast!
trumps EO is not a green light for 401k
Whatever changes may come from Trump's order, it likely will not happen overnight, private equity executives say. Plaintiffs lawyers are already preparing for lawsuits that could be filed by investors who do not understand the complexity of the new forms of investments.
However, CEO Larry Fink acknowledged in a recent call with analysts that the change may not be a panacea for the industry."The reality is, though, there is a lot of litigation risk. There's a lot of issues related to the defined contribution business," Fink said. "And this is why the analytics and data are going to be so imperative way beyond just the inclusion."CFO Martin Small said the industry may seek litigation reform before it can expand into the
market.The
Department of Labor issued guidance during Trump's previous presidency on how such plans could invest in private equity funds within certain limits, but few took advantage, fearing
litigation.Proponents
argue that younger savers can benefit from potentially higher returns on riskier investments in funds that get more conservative as they approach
retirement.Democratic
Senator Elizabeth Warren wrote in June to the chief executive of annuity provider Empower Retirement, which oversees $1.8 trillion in assets for more than 19 million investors, asking how retirement savings placed in private investments could be safeguarded "given the sector's weak investor protections, its lack of transparency, expensive management fees, and unsubstantiated claims of high returns."
get ready for $111,000