Fiduciary Duties In Selecting Designated Investment Alternatives

Employee Benefits Security Administration. (2026, March 31). Fiduciary duties in selecting designated investment alternatives. Federal Register. https://public-inspection.federalregister.gov/2026-06178.pdf

• The Employee Benefits Security Administration issued a proposed rule to establish a process-based safe harbor for fiduciaries selecting designated investment alternatives under participant-directed defined contribution plans.

• This regulation aims to reduce the regulatory burdens and litigation risks that have historically discouraged plan sponsors from including alternative assets in 401(k) lineups.

• Alternative assets covered by the proposal include private equity, real estate, digital assets like cryptocurrency, commodities, infrastructure, and lifetime income strategies.

• The proposed rule mandates that fiduciaries must objectively and thoroughly evaluate all potential product offerings based on specific factors such as performance, fees, liquidity, valuation, benchmarks, and complexity.

• Emphasizing an asset-neutral approach, the regulation refrains from endorsing or prohibiting any specific asset class, instead grounding compliance entirely in a prudent fiduciary process.

• This initiative follows a recent executive order intended to democratize access to alternative assets for retirement investors and supersedes prior guidance that restricted cryptocurrency investments.

• Upon publication in the Federal Register, the proposal will be open to a 60-day public comment period to allow industry stakeholders to evaluate the new fiduciary guidelines.

Knote: A big move forward for Alts2Wealth, except that our observation is that the defined fiduciary mandate that all fiduciaries "objectively and thoroughly evaluate all potential product offerings based on specific factors such as performance, fees, liquidity, valuation, benchmarks, and complexity" is not really feasible at the moment. Whoever steps into this gap with a due diligence product could build themselves a business as big or bigger than Morningstar, even if it is Morningstar itself.