The White House has addressed two areas: widening access to private markets, and the controversy over alleged mistreatment of bank clients on political and religious grounds.

President Donald Trump has signed executive orders that are designed to change banking and wealth management, including widening access among mass-market retirement investors to private markets.

The administration is acting – as trailed here in recent days – to allow holders of 401(k) retirement plans to hold assets such as private equity and credit. These assets are typically less liquid than stocks or government bonds but have boomed in response to a decade-plus of ultra-low interest rates and a shift away from listed markets by companies. 

A second order from the administration takes aim at alleged political and religious “debanking” of clients. 

“Many wealthy Americans, and government workers who participate in public pension plans, can invest in, or are the beneficiaries of investment in, a number of alternative assets. Yet, while more than 90 million Americans participate in employer-sponsored defined-contribution plans, the vast majority of these investors do not have the opportunity to participate, either directly or through their retirement plans, in the potential growth and diversification opportunities associated with alternative asset investments,” Trump’s executive order said. 

“Fiduciaries of 401(k) and other defined-contribution retirement plans must carefully vet and consider all aspects of private offerings, including investment managers’ capabilities, experiences, and effectiveness managing alternative asset investments. They do so to protect the Americans whose retirement accounts they administer and for whom they have fiduciary duties to invest safely and prudently,” it said. 

Trump’s move chimes with a more general attempt across the wealth management sector to “democratize” investor access to such assets – a trend not without controversy. Congressional lawmakers in June recast the Accredited Investor Rule as part of the process.

Elsewhere in the statement yesterday, Trump said: A combination of regulatory overreach and encouragement of lawsuits filed by opportunistic trial lawyers has stifled investment innovation and largely relegated 401(k) and other defined-contribution retirement plan participants to asset classes whose returns lack the very same long-term net benefits allowed for and achieved by public pension plans and other institutional investors. 

“My Administration will relieve the regulatory burdens and litigation risk that impede American workers’ retirement accounts from achieving the competitive returns and asset diversification necessary to secure a dignified, comfortable retirement.  

“One order seeks to make it easier for everyday Americans to invest their retirement savings in assets that lie outside public markets, such as private equity, cryptocurrency and private real estate,” he said. 

The order said the move fulfilled a “long-sought goal of Wall Street hedge funds and private-equity firms” that had wanted to “tap in to the giant pool of money in 401(k) and other defined-contribution plans.” 

In a second order, the Trump administration has directed regulators to see if banks discriminate on political or religious grounds against clients and punish those firms that do so. It speaks to controversies – on both sides of the Atlantic – about alleged political “debanking” of clients. 

"Financial institutions have engaged in unacceptable practices to restrict law-abiding individuals’ and businesses’ access to financial services on the basis of political or religious beliefs or lawful business activities.  Some financial institutions participated in Government-directed surveillance programs targeting persons participating in activities and causes commonly associated with conservatism and the political right following the events that occurred at or near the United States Capitol on January 6, 2021. The Federal Government suggested that such institutions flag individuals who made transactions related to companies like 'Cabela’s' and 'Bass Pro Shop' or who made peer-to-peer payments that involved terms like 'Trump' or 'MAGA,' even though there was no specific evidence tying those individuals to criminal conduct.

In other changes to rules affecting financial services, the US Treasury has postponed introducing its new anti-money laundering and counter-terrorism financing regulations by two years until January 1, 2028. The government said it wants to “ensure efficient regulation that appropriately balances costs and benefits.”

(Editor's note: These moves are bound to stir debate, and we welcome comments. Please email tom.burroughes@wealthbriefing.com)