Advisors Scrutinize Bill to Ease Rules for Accredited Investors
A bill designed to loosen the definition of an accredited investor, one who's eligible to invest in certain private placements, is heading to the Senate after it passed the House of Representatives in resounding fashion last week. Advocates say the proposal would democratize private markets — like private equity, venture capital, hedge funds and real estate — which have long been reserved for the wealthiest investors. The bill would ask the Securities and Exchange Commission to reevaluate the current definition and potentially provide a new one. It's yet another example of the industry opening up alternative products to Main Street investors.
'While this may be a step in the right direction for the asset managers, it remains to be seen if it is a step in the right direction for the new pool of potential buyers,' said Martin Gross, president of Sandalwood Securities.
READ ALSO: 3 Financial Planning Urban Legends and Will Client Testimonials Catch On With Advisors?
While the Fair Investment Opportunities for Professional Experts Act passed by a 397-12 vote in the House, it still has its detractors in the wealth management industry at large. Some financial advisors feel private offerings aren't necessarily the best idea for your average investing Joe. 'If there is no alignment of interests, clients should not invest,' Gross said. 'This is one area where understanding best practices around due diligence is essential.'
Most notably, the bill would open up the designation to holders of certain licenses, education, or job experience, like brokers and financial advisors. Proponents say a new definition would welcome financially savvy investors who don't meet the traditional income thresholds. According to investor.org, the current criteria includes:
Investors must earn at least $200,000 (or $300,000 for married couples) in each of the prior two years.
Or, they are required to have a net worth over $1 million, alone or together with a spouse.
Anyone who holds a Series 7, 65 or 82 license.
Advisors will also need to pay attention to the liquidity needs of their clients, the exposures they have in other asset classes, and risk tolerances, Gross said, adding that alternative investments come with levels of complexity and due diligence not required in public markets subject to the Investment Company Act of 1940, a law that protects investors by reducing conflicts of interest and improving transparency. Like it or not, current accredited investor rules exist for a reason, he said.
Keeping it Accredited. Private markets are 'inherently complex and opaque,' and any new definition must focus on giving investors and investment managers the education and tools necessary to assess the risks, John Bowman, CEO of the CAIA Association, said in an email. Still, expanding the accredited-investor definition is long overdue. 'Sophistication is not solely a function of wealth and is a positive step toward democratizing access to private markets,' he said.
We're still waiting on Congress to democratize access to vacation homes on the French Riviera.
This post first appeared on The Daily Upside. To receive financial advisor news, market insights, and practice management essentials, subscribe to our free Advisor Upside newsletter.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
CNN
30 minutes ago
- CNN
‘Tesla Takedown' protestors have a new target: Elon Musk's Tesla Diner
For months, protesters have gathered outside Tesla showrooms in response to Elon Musk's role in reducing US government spending as part of the Department of Government Efficiency. This weekend, protesters in Los Angeles found a new destination: Musk's new 24-hour Tesla Diner in the Hollywood area. Musk had touted the concept of an 'old school drive-in, roller skates & rock restaurant' in 2018. Since opening on Monday, the retro-futuristic diner with electric vehicle-charging stations has had long lines of customers who are served burgers in Cybertruck-designed boxes. One customer posted to YouTube that he waited 11 hours for the restaurant to open. But Joel Lava, who has helped organize 'Tesla Takedown' demonstrations and has spearheaded protests at the diner, believes that protests could continue throughout the summer and that the buzz around the new restaurant will soon die down. '(Customers are) waiting 11 hours so they can have Tesla-brand burgers and fries,' Lava told CNN. 'This is the world's most renowned anti-trans advocate who just opened a diner in West Hollywood. The community is not very supportive of Elon.' Lava estimates as many as 75 demonstrators joined the diner protest on Saturday. He said organizers began planning protests for this weekend after the diner abruptly opened on Monday. 'Our main message is Tesla funds fascism. Elon Musk, via DOGE, has destroyed our government agencies and people's jobs, and people are dying around the world because of him,' Lava said. Tesla did not immediately respond to CNN's request for comment. Lava said protest attendance for Tesla Takedown events peaked at the end of March, but has 'been going strong.' Protests outside of Tesla showrooms across the United States have remained a weekly staple in many cities, with 40 protests planned on the 'Tesla Takedown' website for the weekend. 'We've already been successful in tarnishing the Tesla brand,' he said. During last week's second-quarter earnings call, Musk highlighted Tesla's future — not its gloomy present-day — by reaffirming ambitious plans for the company's robotaxi service and mass production of its humanoid robot, Optimus, which was serving popcorn at Musk's diner. Tesla's auto revenue fell 16% from April to June and overall revenue was down 12%, according to its earnings report. Sales of its best-selling Model Y and Model 3 fell 12% compared with a year ago, while sales of its more expensive models, including the Cybertruck, plunged 52%. Shares of Tesla (TSLA) were down more than 4% last week, closing at $316.06 on Friday, after falling 9% on Thursday. Since peaking at $479.86 on December 17, Tesla shares have plunged 34%. CNN's Chris Isidore contributed to this report.
CBS News
31 minutes ago
- CBS News
Dozens protest at BWI Airport over Avelo Airlines role in ICE deportations
About 100 people protested at Baltimore-Washington Thurgood Marshall International Airport on Sunday over a budget airline's role in immigration deportations, according to our media partner, The Baltimore Banner. Avelo Airlines, a Texas-based air carrier founded in 2021, has only two direct flights from BWI, according to the Banner. According to CBS News, Avelo has partnered with the U.S. Department of Homeland Security to operate deportation flights for U.S. Immigration and Customs and Enforcement (ICE). According to the Banner, Sunday's protest at BWI was organized by Doctors for Camp Closure, Ground ICE, and the Greater Baltimore Democratic Socialists of America. Protesters met outside the Maryland Area Rail Commuter station at BWI and walked to a pedestrian bridge over Interstate 195, according to the Banner. The Banner reports that signs were held that read, "Avelo Airlines fuels fascism," "Avelo is disappearing people for Trump," and "Evilo." The protesters told the Banner they were pressuring the airline and discouraging travelers from flying with Avelo. "It's toxic to your brand," Kate Sugarman, an organizer with Doctors for Camp Closure, told the Banner about the deportation flights. "We want to make sure that Avelo and every other airline knows that it is unacceptable to have any kind of cooperation with ICE." Avelo shared this statement with the Banner: "We recognize the right of individuals to peacefully assemble and assert their freedom of speech. Avelo's main priority continues to be maintaining the safety and timeliness of our operation that over 7.3 million Customers across the country continue to enjoy." According to CBS News, Avelo's domestic and international flights flying migrants started in mid-May. Avelo says the aircraft used for the trips will not bear Avelo's logo. Avelo said the agreement with ICE is a "long-term charter program." The airline has been recruiting flight attendants to staff the flights, according to a job posting for what it calls a "charter program for the Department of Homeland Security," CBS News reported. The job pays $28 an hour for the first year of service. "We are seeking energetic, highly motivated Flight Attendants who wish to join a committed group of safety and service professionals at Avelo Airlines," the listing reads. "Flights will be both domestic and international trips to support DHS's deportation efforts," the post adds, although it makes no references to migrants.
Forbes
31 minutes ago
- Forbes
10 Tiny Habits That Make Or Break A Founding Team
The habits that define strong startup teams aren't flashy - they're consistent. Learn 10 small, ... More high-leverage rituals that early-stage founders use to build alignment, trust, and momentum. The success of an early-stage startup often comes down to a few key habits. Not vision. Not funding. Not product. Just the repeatable behaviors a team establishes in the first few months. These small patterns shape how decisions get made, how conflict is resolved, and how momentum builds or stalls. Here are ten habits that often fly under the radar but make a disproportionate difference. 1. Start Every Week With A Quick Priorities Check High-functioning teams get aligned often. A 10-minute Monday standup (async or live) focused solely on what matters most for the week helps avoid drift. It's not a status update. It's a coordination tool. Just one shared Google Doc or Slack thread each week can clarify who's pushing what forward. 2. Write Things Down Before Debating Them Discussions go faster and deeper when each person writes their thinking down first. Stripe famously used written memos for key decisions, helping to clarify logic and reduce groupthink. In small teams, this habit prevents dominant voices from steering conversations without scrutiny. 3. Close The Loop, Every Time It sounds basic, but closing the loop - on a bug report, a sales follow-up, or a customer message builds trust. Early teams that make this a reflex are more operationally tight. Users and teammates start to feel like action follows words. That makes everything else easier. 4. Default To Showing, Not Telling Instead of talking about a problem for 30 minutes, show a mockup, spreadsheet, or quick Loom video. A rough version beats a vague explanation. Founders at Figma and Superhuman made this a habit early - visual, concrete communication shortened feedback loops and made their teams feel faster. 5. End Each Week With A Lightweight Retro Even a 15-minute end-of-week reflection helps early teams improve. What worked? What didn't? What felt off? You don't need fancy tooling. Just capture a few bullet points and a single improvement to try next week. Tiny improvements compound faster than you'd think. 6. Discuss How You Communicate, Not Just What You're Communicating Most teams wait until things are tense to talk about how they talk. But tiny misalignments in communication style create friction early. Do you use Slack or email for decisions? Are async replies expected within hours or days? These patterns can quietly sabotage trust if they're not clarified early. You can check our Startup Communication & Negotiation Guide for a bit more in-depth insights into the importance of how to communicate effectively in the team and with outside stakeholders. 7. Name The Hard Stuff Out Loud It's tempting to avoid naming difficult truths like a strategy that's not working or a cofounder dynamic that's drifting. But high-trust teams normalize surfacing tension early. That doesn't mean oversharing. It just means saying the quiet part out loud, before it becomes resentment. 8. Keep The Calendar Sacred In the early days, teams often overbook meetings or swing to the other extreme and meet only when there's a fire. A consistent cadence, like for example a product review every Friday, a retro every two weeks, helps establish a rhythm. Rituals aren't bureaucracy. They're a defense against chaos. 9. Limit Who Touches What Too many founders try to "co-own" everything. But the strongest teams make clear calls on ownership. Who owns marketing copy? Who decides on design changes? Ownership creates clarity. Clarity reduces churn. It doesn't mean people stop collaborating - it just means someone decides. 10. Celebrate Progress Publicly (Even If It's Small) Momentum is fragile. Especially in a startup's first year. Teams that develop a habit of sharing wins, even small ones, build morale. This doesn't require parties or bonuses. A simple Slack thread or internal weekly email can remind everyone that forward motion is happening.
