Accredited Investor Rules Are Changing?

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The US House Passed the ‘Fair Investment Opportunities Professional Experts Act.’ Overwhelming vote of confidence with a 397-12 vote. Next stop is the Senate.

The Accredited Investor is someone who earns at least $200k annually or has a net worth of over $1m. The bill that passed is to make access to investments that are restricted to only Accredited Investors more accessible. The details of the bill include a few tasks to be implemented:

• Establish an accredited investor exam within 24 months of enactment

• Include FINRA’s Securities Industry Essentials exam as one of the qualifying creditials

• Adjust the income/net-worth threshold for inflation every 5 years

Overall this is going to open the flood gates to more retail getting access to private investments. PE, VC, Private Funds- anything that falls into the accredited investor bucket will now have a direct path to retail investors that now just need to pass a test. Assuming this test is easily accessible, the pass rate is likely to be high- especially in this AI world we are living in.

Imagine if the exam is offered as an easy multiple choice within your $HOOD ( ▼ 2.68% ) account and then you pass and BOOM- private investments, alternatives, all at your fingertips inside Robinhood. Talk about the next leg of asset gathering and growth.

The restrictions of Accredited Investors and arguably Qualified Purchasers in all reality don’t make sense and having some sort of exam that shows your financial competency is a no brainer. That being said, opening the flood gates to anyone, and everyone investing in Alts might not be the right move either. Should the exams be as hard as getting a CFA or CAIA- probably not.

Either way - it’s good for the alternative investment platforms, and all the financial institutions that make it easy to get access. It’s also good for the alternative investment managers looking for new investors.