The Securities and Exchange Commission is exploring whether to allow holders of certain professional credentials—such as Certified Financial Planners, CFA charterholders, and CPAs—to qualify as accredited investors. This move is part of a broader regulatory push to broaden access to private-market investments through regulated fund structures.
On Wednesday, the commission voted to propose amendments that would expand retail investor choice and foster innovation in regulated funds. One proposal would widen the circumstances under which registered investment advisors can charge performance-based fees, while another would overhaul the interval fund framework and permit closed-end funds to offer multiple share classes. The SEC also separately requested public comment on expanding the accredited investor definition to include additional professional certifications and designations.
SEC Chairman Paul S. Atkins linked the initiatives to the Trump administration's executive order on democratizing access to alternative assets for 401(k) investors. He emphasized that the proposals aim to expand opportunities for investors' post-tax, pre-retirement dollars.
Accredited investor criteria expansion
Currently, the accredited investor label is largely based on wealth thresholds: individuals must earn over $200,000 annually (or $300,000 with a spouse) or have a net worth exceeding $1 million excluding a primary residence. The SEC has already designated Series 7, Series 82, and Series 65 licenses as qualifying credentials. The new proposal would add five more: U.S. CPA license, CFA charter, CFP certification, FINRA Series 79 (investment banking), and FINRA Series 86/87 (research analyst).
The commission is also seeking comment on a potential accredited investor exam developed by FINRA, which would provide a non-financial pathway for investors to demonstrate sophistication. If implemented, this could make more clients eligible for private offerings, prompting more advisor-client discussions about suitability.
Performance fees in regulated funds
While performance-based compensation is common in hedge funds and private equity—often structured as "2 and 20"—the SEC is considering allowing investment advisors to regulated funds to earn such fees under certain conditions. The proposal would cap performance fees at 20% of net gains over a specified period, require compliance with governance standards under Rule 0-1(a)(7), and mandate that the fund's board, including a majority of independent directors, determine the arrangement is in shareholders' best interest.
The proposal also seeks to align the definition of "qualified clients" with the accredited investor definition under Regulation D, eliminating separate net worth and assets-under-management tests. This would effectively tie eligibility for performance fees to eligibility for private placements. Funds would also need to disclose performance fees in registration and reporting forms.
Interval fund liquidity enhancements
Interval funds have become a key vehicle for advisors accessing private markets. According to Alternative Fund Advisors, 80% of RIAs used interval funds as their primary vehicle for private credit in 2025, up from 58% the prior year. The SEC's proposal would add monthly repurchase intervals, allow more frequent discretionary repurchases, and permit a longer delay before a fund's first repurchase offer. It would also let funds deduct deferred sales loads from repurchase proceeds in certain cases and replace the fixed liquidity requirement with a principles-based approach.
Additionally, the proposal would allow regulated closed-end funds to offer multiple share classes and pay asset-based distribution and service fees, with enhanced expense disclosures. This would replace the current system of fund-by-fund exemptive orders.
Atkins said the proposals are "important steps towards providing individual investors with more access to private market investment opportunities, including through the registered fund channel." The SEC's moves come amid growing interest in private markets, as highlighted by advisors being urged to treat private markets as portfolio construction rather than product picks. However, operational hurdles remain, as noted in wealth managers facing operational hurdles as private market access expands.
