The 'Accredited Investor' Club Expands: New Bill Lowers Financial Bar, Excludes Home Equity from Net Worth

This bill, dubbed the Fair Investment Opportunities for Professional Experts Act, is fundamentally changing the definition of an “accredited investor.” Why should you care? Because this is the VIP pass required to get into private investment deals—think startups, hedge funds, and private equity—that are exempt from the heavy-duty regulations protecting regular, public stock market investors. The bill is aiming to modernize who gets that pass, but it comes with some serious fine print.

The New Math: Your House Doesn't Count (Mostly)

Right now, to be an accredited investor based on wealth, you need a net worth of over $1 million. This bill keeps that $1 million threshold but changes how you calculate it, which is the key move here (SEC. 2). Crucially, you no longer have to include the value of your primary residence when calculating your assets. Similarly, the debt on your primary home (like your mortgage) also doesn't count against you as a liability, up to the home’s fair market value. This means someone with a $500,000 house, $500,000 in retirement savings, and $500,001 in other assets now qualifies, even if they have zero liquid cash. This change greatly expands the pool of people who qualify on paper, but it risks qualifying individuals who might be asset-rich in their home but cash-poor when a risky investment goes south.

Lowering the Income Ladder

The bill also adjusts the income requirements for qualification, making it easier for high earners who haven't yet amassed $1 million in non-home assets to join the club (SEC. 2). The annual income requirement for an individual drops slightly from $200,000 to $200,000 (maintaining the current level, but reinforcing it), and the joint income requirement for a couple drops from $300,000 to $300,000 (also maintaining the current level, but reinforcing it). This is less of a change and more of a solidification of the current thresholds, ensuring that high-earning professionals—like mid-level managers, successful software developers, or specialized trade workers—can access these deals.

The Expert Pass: Licensing as a Shortcut

Perhaps the most interesting change is the introduction of a professional qualification path (SEC. 2). If you are currently licensed or registered as a finance professional—say, by the SEC, FINRA, or a state securities division—you automatically qualify as an accredited investor, regardless of your net worth or income. This is a common-sense move that recognizes professional expertise over just having money. Furthermore, the bill tasks the SEC with creating new rules within 180 days to allow people to qualify based on “demonstrable education or job experience” verified by a self-regulatory organization. This provision is currently vague, but it opens the door for specialized experts—like a senior engineer with deep knowledge of a specific tech sector—to invest in private companies in their field, even if they don't meet the financial minimums.

The Real-World Trade-Off

The practical effect of this bill is simple: it expands the market for private, less-regulated securities offerings. On the benefit side, this means more capital for startups and private companies, and more investment opportunities for professionals who are financially savvy but didn't meet the old, arguably outdated, wealth standards. On the risk side, it brings a larger group of investors—some of whom might be stretching their finances or relying heavily on home equity—into a market that lacks the robust disclosure and fraud protections of the public stock market. While the bill aims for “fair investment opportunities,” it’s crucial to remember that private deals are inherently riskier, and expanding access means expanding risk exposure to more people.