The U.S. Securities and Exchange Commission announced it is evaluating new pathways for retail investors to gain accredited investor status, which currently grants access to private equity funds, venture capital, hedge funds and other alternative investments. Under existing rules, accredited status requires annual earned income of $200,000 for individuals or $300,000 for married couples across two consecutive years, or a net worth of at least $1 million excluding primary residence value.
SEC Chairman Paul Atkins stated that financial thresholds should not be the sole determinant of accredited investor eligibility. The commission is considering a new exam that would be developed by FINRA, the self-regulatory organization overseeing U.S. broker-dealers. The test would be modeled on existing FINRA assessments used for securities professionals, consisting of approximately 75 multiple-choice questions administered within two hours at testing sites nationwide. Officials indicated the exam would likely cost around $100, with valid results lasting 10 years before retesting would be required.
The proposal forms part of the Trump administration’s broader initiative to increase retail access to alternative investments, which include real estate, cryptocurrencies and private market assets. Proponents argue expanded access could provide greater portfolio diversification and potentially higher returns, while noting that knowledge-based qualification could benefit younger investors who possess investment sophistication but lack the income or net worth needed under current standards. The SEC is also considering recognizing certain professional credentials, including certified public accountants, certified financial planners and chartered financial analysts, as qualifying credentials.
Opposition to the proposal exists among consumer advocates and financial reform organizations. Critics contend that private assets carry greater complexity, lower liquidity and higher fees than public investments, raising concerns about retail investor suitability. Some experts emphasize that testing financial terminology alone proves insufficient without assessing investors’ capacity to withstand losses. Policy analysts also note the political challenge of developing a test rigorous enough to withstand public scrutiny should losses occur, while remaining accessible enough to meet the SEC’s goals.
The public will have 60 days to comment on the proposal, with analysts expecting a final SEC order could arrive in the spring of next year.
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