There’s growing evidence in Washington, on Wall Street, and on Main Street that America’s financial markets are experiencing a once-in-a-generation transformation. Today’s retail investors are more informed, engaged, and active in the markets than at any point in history. As the boundaries of participation expand, everyday retail investors want and deserve access to the same diverse range of financial assets that have long been the exclusive domain of the wealthy elite.
This moment presents an ideal opportunity for the U.S. Securities and Exchange Commission (SEC) to modernize the definition of an accredited investor in ways that preserve investor protection while expanding retail access to investment opportunities.
For far too long, retail access to private market investments, including private equity, venture capital, and alternative assets, has been limited to so-called “accredited investors” — a gatekeeping threshold rooted primarily in wealth, resulting in a system that often excludes highly capable investors while privileging those who simply have the deepest pockets.
This antiquated paradigm not only undermines investor choice; it also limits innovation and reinforces inequality in our financial system. Wealth and wisdom are not synonymous; many Americans who lack a seven-figure bank account nevertheless hold advanced degrees, respected professional credentials, and years of hands-on experience in finance, business, law, economics and, yes, even investing.
Fortunately, the Chairman of the SEC, Paul Atkins, recognizes that the current accredited investor definition is not fit for purpose, asking during a recent congressional hearing, “why should an economics professor who makes $100,000 a year not be an accredited investor, but somebody who is a teenager [who] inherited some wealth becomes an accredited investor?” That’s why now is the time for the SEC to expand the accredited investor definition by adding additional commonsense eligibility criteria that have nothing to do with wealth.
First, the list of recognized professional licenses should be expanded to include all FINRA certifications, as well as other professional certifications in finance and accounting, such as CFA, CFP, and CPA. Second, an undergraduate or graduate degree in a relevant field — such as finance, accounting, economics, or law — should serve as a valid qualification to invest in private securities.
Finally, the SEC should recognize at least one year of non-ministerial professional experience in sectors like banking, consulting, brokerage, or investment advice as proof enough of one’s ability to responsibly invest in private securities.
Simply put, a retail investor’s eligibility to participate in the private markets can and should be measured by education, demonstrated expertise, and professional accomplishment, not wealth.
The SEC already has the legal authority under existing rules to recognize additional credentials and qualifications that reliably demonstrate financial sophistication. Predictably, former Biden administration SEC Chairman Gary Gensler, whose tenure was defined by his paternalistic approach toward limiting investor access, buried this authority in the bottom drawer. It’s past time to take it back out and use it. Doing so would be a meaningful step toward making market participation more fair, open, and forward-looking.
Let’s be clear: this isn’t about lowering standards. It’s about aligning them with competence rather than net worth. Qualified financial professionals, from CFAs and CFPs to CPAs, attorneys, economists, and experienced industry practitioners, possess the skills to evaluate risk, understand disclosures, and make informed investment decisions. Let’s face it — how could anyone honestly argue that a Harvard MBA isn’t sufficient to invest in the private markets?
Our capital markets work best when they include more, not fewer, participants. If we can agree on the commonsense principle that knowledge and judgment are at least as meaningful indicators of investor sophistication as wealth, we can unlock opportunities for millions of Americans to participate more fully in the growth of our economy.
Rep. Blaine Luetkemeyer, a Republican, is the CEO of the American Consumer and Investor Institute and a former Member of Congress who served as Ranking Member of the House Small Business Committee and as a Member of the Committee on Financial Services. Rep. Ron Klink, a Democrat, is a former Member of Congress who served on the Banking Committee.
