By Nic Millikan, CFA, CAIA, Managing Director, Head of Investment Strategy at CAIS.
Several weeks ago, I highlighted elements of President Biden’s draft Build Back Better bill that could disadvantage investors seeking to leverage the potential diversification and return enhancement benefits of alternative investments in retirement accounts – you can find the original post here.
Since that time, the original $3.5 trillion bill has moved to the House of Representatives and has been scaled back significantly. The now $1.75 trillion framework dropped many provisions[1], including all of those related to retirement accounts which would have, amongst other things, prohibited Individual Retirement Accounts (IRAs) from holding any investment that requires the investor to have a:
- minimum level of assets or income, or
- have completed a minimum level of education, or
- obtained a specific license or credential
The removal of these provisions would appear to bring the bill back in line with the direction of the SEC, which has recently taken several steps to expand access to alternative investments, allowing more investors to unlock the potential of these investments to seek to accumulate wealth in a tax advantaged way, and to help them fund their own retirement.
At CAIS, we welcome the reconsideration by Congress of the draft bill and believe more investors should have access to investment strategies and solutions that are suitable in the context of an individual’s risk tolerance, as well as being in line with the outcome they are trying to achieve. We believe that the removal of barriers such as those proposed by the original draft bill, represent a win for investors, as well as the alternative investment industry more broadly.
[1] 401K Specialist, “All Retirement Provisions Stripped from Biden’s Big Bill”, https://401kspecialistmag.com/all-retirement-provisions-stripped-from-bidens-big-bill/, October 28, 2021
About the Author:
Nic Millikan brings over 18 years of experience in the financial services industry, having previously worked at firms including BlackRock and Salient. As Managing Director of Investment Strategy, he is responsible for developing investment thought leadership and insights to help drive industry-wide education on alternatives. Nic received his Bachelor’s degree from Deakin University and his Master’s of Applied Finance degree from FINSIA, both located in Australia. Nic also holds both the CFA and CAIA charters.
