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Advisers need to establish clear frameworks to address client interest, navigate significant risks, such as volatility and regulatory uncertainty, and ensure they meet their fiduciary responsibilities.
By
Ben Sullivan, CFA®, CFP®
published
19 January 2026
in Features
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The regulatory landscape for retirement investing shifted dramatically last August. A signed executive order opened the door for alternative assets — including cryptocurrency — to enter 401(k) plans.
For advisers, this creates both opportunity and obligation: Clients will ask about crypto, and you need a clear framework for responding.
What changed (and what didn't)
This change doesn't mandate that plans adopt cryptocurrency. Rather, it compels regulators at the Department of Labor, SEC and Treasury to revisit previous guidance that discouraged digital assets in retirement accounts.
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Sign upPreviously, the DOL issued guidance suggesting plan administrators exercise "extreme care" before adding cryptocurrency options, effectively discouraging adoption without outright prohibition. The August order rescinded these "extreme care" warnings, restoring a more neutral regulatory stance.
The absence of restrictive guidance doesn't mean the absence of fiduciary responsibility. Plan sponsors and advisers still must demonstrate prudent processes, ongoing monitoring and appropriate risk management.
About Adviser Intel
The author of this article is a participant in Kiplinger's Adviser Intel program, a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.
The practical effect is that crypto in 401(k)s has moved from "highly discouraged" to "proceed carefully with proper safeguards."
New rulemaking expected early this year should provide clearer parameters on key issues such as tax concerns and digital assets permitted within retirement strategies, but advisers working with clients interested in this space need frameworks now to address uncertainties.
The client perspective: Benefits and risks
If you haven't already, you may begin hearing from clients who are curious about adding crypto to their retirement plan. Clients considering adding crypto to their account need balanced information about both the potential benefits and risks.
Here's a look at some of the potential benefits:
Diversification beyond traditional assets. Crypto behaves differently from stocks and bonds, potentially providing portfolio diversification benefits during certain market conditions.
Exposure to digital asset growth. Clients who believe in long-term blockchain adoption gain access to this emerging asset class within their retirement savings.
Access to broader alternative investments. The regulatory shift applies not just to crypto but potentially to private equity, real estate, infrastructure and other alternative assets previously difficult to include in 401(k) plans.
Despite these benefits, significant risks exist that demand clear communication:
Extreme volatility. Crypto prices can swing dramatically in short periods, creating substantial account value fluctuations that many retirement savers aren't prepared to handle.
Valuation and liquidity challenges. Unlike publicly traded securities with daily pricing, some crypto holdings lack consistent valuation methodologies and may not be easily redeemable.
Regulatory uncertainty. Rules continue to evolve, potentially affecting the tax treatment, custody requirements and permissibility of various digital assets.
Operational complexity. Custody, security, recordkeeping and reporting for crypto require specialized infrastructure that many plan providers don't currently offer.
Fiduciary liability. Plan sponsors and advisers must document their prudent process for adding, monitoring and potentially removing crypto options.
The education challenge is substantial. Your role includes helping clients understand not just what crypto is, but whether it belongs in their specific retirement strategy.
Clarifying crypto through education
Perhaps the biggest challenge is that many clients who express interest in crypto lack a fundamental understanding of what they're actually buying, how it's valued or what risks they're taking.
Some participants approach crypto as a lottery ticket, hoping for life-changing returns without appreciating the equally life-changing potential for losses.
Others extrapolate recent performance into the future, assuming past gains will continue indefinitely. Still others hear about crypto from friends, family or media without understanding how it differs from traditional retirement investments.
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Consider creating a client education framework, developing or sourcing educational materials that explain crypto basics, risk characteristics and appropriate use within retirement portfolios. Your client education could address:
Basic mechanics. What crypto is, how blockchain technology works and why digital assets might (or might not) have long-term value.
Risk characteristics. The potential for substantial losses, not just gains, and how crypto volatility compares to traditional retirement assets.
Portfolio context. Why allocation limits matter and how crypto fits within diversified retirement strategies.
Behavioral pitfalls. The dangers of emotional trading, over-concentration in speculative assets and investment decisions driven by the fear of missing out (FOMO).
Moving forward carefully
Cryptocurrency in 401(k)s represents a significant shift in retirement investing. For some clients and plans, carefully implemented crypto access provides valuable portfolio diversification and meets legitimate participant interest in emerging assets.
For others, the risks and complexities outweigh potential benefits.
Your role as an adviser is to help clients navigate this decision thoughtfully, implementing appropriate safeguards when crypto makes sense and explaining why it doesn't when circumstances don't support it.
Start with small pilots if you're exploring this space. Test infrastructure with a limited number of participants before doing a broader rollout. Gather feedback about education effectiveness and operational friction points. Document your process meticulously, including risk assessments, client communications, education efforts and the rationale behind investment decisions.
The evolution of retirement investing is underway. Advisers who develop clear frameworks for addressing cryptocurrency questions — whether that means carefully implementing access or explaining why they're waiting for greater regulatory clarity — will serve clients better than those who simply ignore the topic or react defensively.
The key is approaching crypto in 401(k)s the same way you approach any retirement investment option: With due diligence, appropriate risk management, clear client communication and a well-documented fiduciary process.
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AE Wealth Management, LLC (AEWM) is an SEC Registered Investment Adviser (RIA) located in Topeka, Kansas. Registration does not denote any level of skill or qualification. Information regarding the RIA offering the investment advisory services can be found on brokercheck.finra.org. Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. The personal opinions expressed by Ben Sullivan are his alone and may not be those of AE Wealth Management or the firm providing this report to you. This information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual's situation. None of the information contained herein shall constitute an offer to sell or solicit any offer to buy a security or insurance product. CFP Board owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, and CFP® (with plaque design) in the U.S. 5072564– 1/26
DisclaimerThis article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
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Ben Sullivan, CFA®, CFP®Social Links NavigationChief Investment Officer, AE Wealth ManagementBen joined AE Wealth Management in early 2017 after working for a local accounting firm. He served advisers on the trade desk and as a director of wealth before becoming vice president of wealth management in 2022. Ben has passed the Series 7, 24, 66 and is a CFA® charterholder and a CFP® professional. Ben graduated from York College, where he played soccer. He spends his free time with his wife, Maggie, and their son, Declan.
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