Washington is debating who counts as sophisticated enough to access private markets. The clear next question is what investors do with that access.
By Eric Satz
If you want to invest in a private equity fund, a private real estate deal or a startup, one of the ways is to prove to the federal government that you're wealthy enough. Specifically, you need $200,000 in annual income (or $300,000 combined with a spouse) for two consecutive years, or a net worth above $1 million excluding your home. That's the accredited investor standard, and it has governed access to private markets since 1982.
Congress is now debating whether to update it. The INVEST Act would add a knowledge-based pathway: investors who pass an SEC-administered exam, offered free of charge, would qualify for private market access regardless of their income or net worth. In other words, you don’t have to be wealthy enough to make a bad investment, you have to be smart enough to make a good one.
Separately, SEC Chairman Paul Atkins has signaled that expanding individual access to private markets is a priority, while new SEC guidance is simultaneously tightening verification requirements on issuers. Washington is moving in several directions at once, which is a reasonable signal that something is actually about to change.
What the INVEST Act proposes
The current standard was designed for a different era. In 1982, private market investments were genuinely difficult to evaluate, information was scarce and the asset classes themselves were far less mature. Wealth served as a rough proxy for access to professional advisors, deal information and the capacity to absorb a loss if something went wrong.
The landscape has changed considerably. Private market information is more accessible than it has ever been. Asset classes from direct lending to private real estate to venture-backed startups are broadly covered, well-documented and increasingly standardized in how they present terms and risks. The INVEST Act recognizes this, proposing a knowledge-based pathway that lets investors qualify by demonstrating genuine understanding of private market mechanics rather than by clearing a net worth threshold.
What comes alongside the definition change
Expanding who qualifies is a meaningful step, and it opens a broader conversation about what actually supports good investor outcomes once access is in place.
A knowledge-based exam is a useful start. Investors who understand the asset classes and structures available to them are better equipped to make decisions that match their goals and timeline. The private credit redemption wave earlier this year offered a useful illustration. Some investors, reacting to headlines, tried to cash out of investments that weren't designed to be liquid.
Closing that gap takes more than an exam. The environment around the investor matters as much as the credential: readable disclosures, clear explanations of how structures and liquidity terms work and platforms that make the mechanics of investing genuinely accessible."
The accredited investor standard was built around wealth, and wealth alone doesn't tell you much about whether someone understands what they're buying, how the structure works or what a realistic exit looks like. A retired teacher with a $900,000 self-directed IRA and years of due diligence on private real estate deals may be better positioned to assess a specific investment than a high earner who has never looked at a K-1. Better infrastructure is what captures that distinction.
What investors should be thinking about now
The regulatory environment around private market access is moving. The DOL's proposed rule on alternatives in 401(k)s, the INVEST Act in Congress and the SEC Chairman's stated agenda are not isolated developments. They reflect a shift in how policymakers think about individual investors' relationship to private markets.
Investors don't have to wait for that process to play out. For investors that currently qualify as an accredited investor, a self-directed IRA is a practical structure available today, well-suited to private market investing because the account's time horizon generally aligns with the asset's. Retirement capital is patient capital, with no quarterly redemption windows and no mechanism that encourages treating a long-horizon investment like a liquid position when markets get noisy.
For investors building that foundation now, the INVEST Act adds another layer. Many private funds require accredited investor status as a condition of participation, and that requirement comes from the individual offering, not from IRA rules. If the act passes, the pool of offerings available to investors who currently fall below the income or net worth thresholds would expand meaningfully, making an already useful structure even more versatile.
The definition of who qualifies is evolving, and the infrastructure around private market investing is maturing alongside it. Investors who build the knowledge base now and choose account structures aligned with how these assets actually work will be well positioned for what becomes available to them in the months and years ahead.
For educational purposes only.
1 U.S. Securities and Exchange Commission. "Accredited Investors." Capital-Raising Building Blocks. Last reviewed August 13, 2025.
2 Morgan Lewis, "INVEST Act: Potential Implications for Financial Services," December 2025.
3 SEC Chairman Paul Atkins, public remarks on expanding retail access to private markets, 2026.
4 Regulatory & Compliance, "The Accredited Investor Definition: The SEC Appears Poised to Both Loosen and Tighten It," March 2026.
5 Investments in private offerings are speculative and involve a high degree of risk. As with other investments, you can lose some or all of your investment. Investments in private offerings are not bank deposits and therefore are not insured by the FDIC or guaranteed by any other party. Investors must be qualified as an accredited investor to participate in private offerings and you may be required to verify your status as an accredited investor. No securities commission or regulatory authority has recommended or approved any investment or the accuracy or completeness of any of the information or materials provided by or through us.
6 Investments made through an SDIRA are directed solely by the account holder. The custodian or administrator of the SDIRA does not evaluate, endorse, or perform due diligence on any investment and does not provide investment, legal, or tax advice. All investment decisions and associated risks are the responsibility of the account holder.
