President Donald Trump has signed an executive order that could remake the investment options for your 401(k). The directive instructs the Secretary of Labor to make it easier for plans to include alternative investments like private equity, real estate and commodities.

Brookfield Asset Management is a global leader in alternative assets — including private equity. In a recent conference call, president Connor Teskey described defined contribution plans, insurance savings and private wealth as the “next frontier” for asset managers, with 401(k)s seen as a huge new channel.

“We have every intention to be a leader in the space as the opportunity grows,” Teskey said.

He estimates the ability to add funds from millions of Americans’ 401(k) plans could unlock $10 trillion for alternative assets.

In the aftermath of the great stock market crash of 1929, the U.S. created the Securities and Exchange Commission to regulate the investment industry. Since then, the SEC created a set of rules for what they call “accredited investors” that allow certain institutions and wealthy individuals (generally worth $1 million or more, excluding primary residence) to invest in more risky and unregulated securities. Private equity — investment in a business that isn’t listed publicly — is one of those securities. The reasoning behind the exemption is that large funds and wealthy individuals are more able to weather the higher risks and potential losses of these assets.

Before the widespread institution of defined contribution retirement plans, like 401(k)s, a lot of workplace retirement funds were pensions (also known as defined benefit plans). As accredited investors, pension fund managers are able to access private equity funds — and many do. But the rules for the funds that manage your 401(k) have prohibited them from offering more risky private equity investments, even though the returns on private equity have outstripped stock market returns for much of the 21st century.

There may be tradeoffs to investing in private equity that would impact small investors. The Center for Retirement Research at Boston College argues private equity adds higher fees without clear evidence of superior outcomes for participants. What’s more, in some cases it can take years for gains to be realized, which means those who get out early may not benefit. Investments are also more difficult to liquidate, which can be problematic if you need the money for an emergency.

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After the 2008 financial crisis, the argument for private equity was superior returns during a period when interest rates were set to zero. The idea was that private equity’s skilled managers could spot undervalued businesses, improve how they operate and sell their investment for a gain. Many believed these firms had sharper financial judgment than most owners and could unlock value. But research from Harvard Business School has questioned that story and argues that many funds have not outperformed public market equivalents since the crisis, and that investment performance may have as much to do with luck as skill.

In practice, most workers likely would not pick a private fund directly. They would own it indirectly inside a diversified option selected by the plan. If your employer adopts a private-asset option, you could get exposure through a target-date fund or a collective trust that mixes public and private holdings. Advocates say this can add new sources of return and reduce reliance on public markets over a long horizon. Critics, on the other hand, argue that any advantage is uncertain and depends on manager skill and net fees.

If you decide you want to invest in a private equity fund in your retirement account, start by going over your plan’s documents. You should look for whether or not target-date or balanced funds will add private-asset sleeves and in what size, the liquidity policy, fee schedule and valuation method in plain English. If your plan offers a new option, compare its all-in fees and long-term return objectives with your current settings. Understand how redemptions work during market stress and how often private holdings are valued. If you do not see clear, participant-friendly disclosures, ask for them.

Opening 401(k)s to private markets is a big policy shift. Brookfield and other alternative managers are ready with products that can slot into retirement-friendly wrappers. The potential upside is broader diversification and access to assets you could not reach on your own. The risk is that illiquidity, fees and uneven manager performance can turn those promises into disappointment. Until regulators finish their follow-up work to ensure fiduciary obligations are met and plan sponsors can show exactly how these options will look, it may be prudent to treat the idea of owning some of a private equity fund with cautious curiosity.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.