SEC Proposes Exam Route to Accredited-Investor Status

The Securities and Exchange Commission voted unanimously on Wednesday to seek public comment on a proposal that would let individuals qualify as accredited investors by passing a securities exam or holding credentials such as CFP, CPA or CFA designations or specified FINRA licenses.

Under the proposal, FINRA would develop the exam, which is likely to be modeled on FINRA’s Securities Industry Essentials test. The SEC explained the test would be open to anyone 18 or older and intended to show a prospective investor can evaluate the merits and risks of private offerings. The agency will publish the proposal in the Federal Register and open a 60-day comment period.

Under current rules, individuals qualify as accredited investors if they have at least $1 million in assets excluding their primary residence, or if they reported at least $200,000 in annual income ($300,000 for joint filers) for each of the past two years. The commission reported that 24.3 million U.S. households, or about 18.5% of households, met that definition in 2022.

The SEC cited shifts in capital and listings as context for the proposal. The commission reported the number of publicly traded U.S. companies fell from roughly 8,000 in 1996 to about 3,700 in 2024. Nearly $2.4 trillion flowed into private placements and other unregistered funds in 2025.

Supporters said knowledge should factor into access to private markets. Lance Dial, a partner at K&L Gates, argued: “Just because you have money doesn’t mean you’re necessarily smarter than anybody else. There are plenty of people who are very able to understand the risks and benefits of these investments but who may just not have earned enough money to become an accredited investor.” Erin Koeppel, government relations and public policy counsel for the Certified Financial Planner Board of Standards, welcomed the proposal as recognition of CFP competency.

Some advisers objected to broader retail access. Noah Damsky, principal at Marina Wealth Advisors, called qualifying by exam “horrible” and warned private offerings can carry high fees, limited transparency and restrictions on liquidity. The SEC’s Investor Advisory Committee last year declined to endorse exam-based accreditation and recommended stronger reporting and protections for registered private funds.

The commission also sought comment on a separate proposal to allow advisers to charge performance fees to a broader set of clients. At present, advisers may charge performance-based fees only to “qualified clients” who have at least $1.4 million invested with an adviser and more than $2.7 million in net worth. The SEC would permit performance fees for accredited investors subject to limits, including a cap intended to keep fees from exceeding 20% of a fund’s net gains over a specified period. Brian Daly, director of the SEC’s Division of Investment Management, described performance fees as “a defining characteristic of private funds,” noting they can align advisers’ and clients’ incentives.

A 2020 rule expanded the accredited definition to include holders of certain FINRA licenses. If the current proposals are adopted after the public comment period and any follow-up rulemaking, accreditation would no longer rely solely on financial thresholds and would also reflect demonstrated industry knowledge or professional credentials.