Yesterday, newly-confirmed U.S. Secretary of Labor Keith Sonderling joined Tony Robbins on his Holy Grail of Investing podcast to discuss President Trump’s initiative to democratize access to alternative investments for 401(k) retirement savers. Last summer, President Trump signed an Executive Order launching this initiative, and Secretary Sonderling and the Department of Labor are now working through final rulemaking.
Watch the full interview here.
Key Excerpts from Secretary Sonderling on the Tony Robbins podcast:
“Nowhere in the law does it say, ‘in your 401(k) plan you can’t have alternative assets.’ But that’s where we are today … in the changing dynamics of so many companies being private, of so many different wealth-building assets that you can’t access solely because it can’t go in your 401(k). …
“The trial bar and the plaintiffs lawyers have really driven what the investments are, to the point where you have these large global corporations who have all the resources in the world to diversify their 401(k) plans. And they can’t, because as soon as they do, they will get immediately sued, that there’s been billions of dollars paid out by these corporations to the plaintiffs bar. …
“Thanks to President Trump and his Executive Order, we now have license to change this. And we have the license to give neutral rules, and you have my promise that this Department of Labor will do that. And we will give all the fiduciaries out there the exact steps to follow to be able to look at that. And that is going to open up alternative investments to 401(k)s. Why? Not because the law doesn’t allow it, but because they now have that framework to follow. …
“Let’s take a step back, what does this mean? We have $14 trillion dollars out there in 401(k). Opening that up to not just the public markets, where it all is right now, but also to the private market, what is that going to do? Where is that money going to go? It’s going to help entrepreneurs build the next biggest tech company. It’s going to help us reinvest in our energy infrastructure. It’s national security – to have all these products manufactured and built back [home]. So when you talk about private equity and private credit, and infrastructure, what does it mean to have that 401(k) money – it’s going right back into America. And it’s going to build more American factories, it’s going to make more American jobs, because that money is going to be invested in America. …
“We work on Trump time, and that was yesterday. We are putting the final touches on this, and our hope is that these products are going to start being offered next year and that companies begin to embrace this. We want them to get over that fear of the Department of Labor. We want them to get over that fear of the trial bar.”
Key Excerpts from Tony Robbins:
“Up until now, 90 percent of pension funds have all these private markets in them – that’s how they get the returns they do. And you’ve got $10 trillion dollars here in 401(k)s that aren’t able to participate. In the past, they couldn’t participate because they didn’t have $1 million – they weren’t an accredited investor. … And our argument has been, why would you possibly take some of the highest returning investments, with some of the least risk, why would you make those unavailable to the average American and only give it to the wealthy? …
“People need to understand this – we used to have 8,000 public stocks. We now have 4,000. We have more money chasing fewer stocks, right? Right now, we have 32 percent of the S&P 500’s revenues being generated by seven companies. Things are out of balance, just a bit. But 87 percent of companies are private, you can’t access unless you have private credit or private equity.”
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