Wall Street ready to 'tap into' Americans' retirement under new Trump rule: finance expert

A new rule proposed by the Trump administration purportedly designed to bolster “American workers’ retirement accounts” is expected to be finalized later this year, but one financial expert is warning that, in actuality, the rule is a “massive greed grab for Wall Street,” and one at the expense of Americans’ retirement savings.

“Not for a second do I believe this is a move to help regular investors,” argued Michelle Singletary, personal finance columnist for The Washington Post, in an analysis published in the outlet on Wednesday. “Instead, it’s a massive greed grab for Wall Street firms looking to tap into the money workers are trying to save for retirement.”

Dubbed “Democratizing Access to Alternative Assets for 401(k) Investors,” the proposal was initiated last August via executive order, with the rule now in its public comment period through May, expected to be finalized later this year. The change would allow Americans to more easily invest in “alternative assets,” or markets not historically available to them through their retirement accounts, including the private credit market.

While expanding the investment options available to Americans has been pitched by the Trump administration as a tool to help enrich working-class Americans, Singletary said that the rule would likely have the opposite effect, and only work to shield companies from being held accountable for mismanagement of Americans' retirement savings.

“If finalized, this rule would add protection against lawsuits. As long as the people managing your 401(k) can demonstrate they’ve checked certain boxes, like reviewing fees, this rule would provide companies with a ‘safe harbor,’” Singletary wrote. “It essentially creates a legal shield that makes it much harder for you to hold your company accountable if they choose to offer riskier investments.”

Furthermore, Singletary argued that the rule appeared to be designed from the ground up to cater to Wall Street’s interests first and foremost.

“This push to add complex investments feels like a case of ‘misplaced priorities,’ focusing on Wall Street’s needs while ignoring the struggles of average workers, according to Christine Benz, the director of personal finance and retirement planning for Morningstar,” she wrote.

“The companies behind these alternative investments have lobbied hard to get onto plans, arguing investors could see higher returns than traditional stocks and bonds. But with higher returns come higher risks. Employees are better off in the simple, and yes, boring low-cost index funds.”