US House passes bill to expand accredited investor definition, aiming to increase access to private markets
From Yahoo Finance: 2025-06-24 14:11:00
The House of Representatives passed the “Fair Investment Opportunities for Professional Experts Act” in a 397-12 vote, championed by Rep. French Hill. The bill aims to expand investor access to private markets by changing the accredited investor definition. Currently, individuals must meet wealth thresholds to qualify for private market access.
Rep. Hill’s bill would broaden the accredited investor definition to include individuals with certain licenses, education, or job experience beyond wealth and income thresholds. Critics argue that these thresholds prevent retail investors from accessing private markets, while supporters claim it protects them from risky investments. Another bill in the GOP-controlled House aims to create a test for retail investors to qualify as accredited investors.
Banrion Capital Management CEO Shana Orzyk Sissel believes that expanding the accredited investor definition further would diminish its significance. Advisors and asset managers may face confusion if the bill passes, as understanding who qualifies as an accredited investor can be complex. Many asset managers may stick with non-registered products due to the costs associated with creating new funds for accredited investors.
The SEC has previously voted to expand the accredited investor definition to include certain professional designations or credentials. However, the monetary thresholds established in 1982 have remained unchanged. Sissel advises advisors to be cautious even if the bill passes, as fiduciary duties still apply. Communicating risks associated with alternative investments is crucial to managing clients’ expectations.
It is important for advisors to carefully evaluate alternative investments and ensure they align with clients’ risk tolerance. Sissel emphasizes the need to sift through marketing noise from asset managers and select products that are suitable for investors. Understanding the structures, liquidity constraints, and risks associated with alternative investments is essential for building portfolios that meet clients’ needs.
Read more at Yahoo Finance: US House Passes Accredited Investor Bill