For years, investing in private companies and other alternative assets has largely been the domain of wealthy individuals and institutional investors. If you wanted access to opportunities before a company went public, you generally needed to meet specific financial requirements to qualify as an accredited investor.
That could be about to change.
The US Securities and Exchange Commission (SEC) is considering proposals that could make private markets more accessible to individual investors. One idea has attracted particular attention: allowing people aged 18 and older to qualify as accredited investors by passing an exam, rather than relying solely on income or net worth.
But the exam is only one part of the story.
The SEC is also considering changes to how certain investment funds handle withdrawals and how investment advisers charge performance fees. These proposals could affect how investors access private investments, how funds manage liquidity, and how much investors pay for professional investment management.
The important point is that these are proposals, not final rules. The SEC is seeking public feedback, and the details could change before any measures are adopted.
Let’s break down what is being considered and why it matters.
1. A New Route Into Private Markets
Today, accredited investor status generally depends on meeting specific financial thresholds or qualifying through certain professional credentials.
Under the financial criteria described in the source, an individual generally needs a net worth exceeding $1 million, excluding their primary residence, or annual income of at least $200,000 for the past two years, with a reasonable expectation of earning at least that amount in the current year. For married couples, the annual income threshold is $300,000.
The SEC estimated that 24.3 million US households, or 18.5% of all households, met the accredited investor definition in 2022.
The regulator is now exploring whether people should have another way to qualify.
Could passing an exam be enough?
One proposal under consideration would allow anyone aged 18 or older to take an exam administered by the Financial Industry Regulatory Authority (FINRA). According to the summaries discussed in the source, passing the exam could qualify someone as an accredited investor for ten years.
The idea is to recognise financial knowledge, rather than treating income and wealth as the only indicators of whether someone can participate in private markets.
After all, someone with a high income or substantial savings may not necessarily understand private investments. At the same time, someone with a lower income could have a strong understanding of financial markets and investment risks.
An exam-based route could potentially address that gap.
However, several details remain unclear. The exam’s format, length, cost and passing score have not been established in the material reviewed. The proposal is also still open for public comment.
What other qualifications are being considered?
The SEC is also seeking feedback on whether additional professional qualifications should help individuals qualify as accredited investors.
These include:
- CPA licence: For certified public accountants.
- CFA charter: For professionals holding the Chartered Financial Analyst designation.
- CFP certification: For individuals with the Certified Financial Planner qualification.
- Series 79, 86 and 87 licences: Certain securities industry qualifications.
Holders of Series 7, 65 and 82 licences have already qualified through professional credentials since 2020.
If additional routes are introduced, the definition of an accredited investor could become less dependent on wealth alone.
Why this matters: More people could potentially gain access to private placements, private company shares and other investments that are generally restricted to accredited investors. However, qualifying for access would not automatically make these investments suitable for everyone.
Private investments can be difficult to sell, may offer limited financial information, and can carry a substantial risk of losing money.
2. Interval Funds Could Face New Liquidity Rules
The SEC is also proposing changes to interval funds, a type of registered closed-end investment fund that offers to repurchase a specified percentage of its shares at predetermined intervals.
Unlike traditional mutual funds, where investors can generally redeem shares on a daily basis, interval funds provide liquidity through scheduled repurchase offers.
For investors, this means that the ability to withdraw money depends on the fund’s terms and the size of its repurchase offers.
The SEC’s proposal could change how these funds structure those offers and manage the money needed to meet them.
Monthly withdrawals could become more structured
Under the current framework described in the source, monthly repurchase offers require individual exemptive orders from the SEC.
The proposal would introduce a monthly option into the rules themselves.
However, there is an important detail.
According to the legal summaries cited in the source, the proposal would retain a minimum repurchase offer of 5% for each offer, including monthly offers. Some existing arrangements allow funds to offer 2% monthly, provided they offer at least 5% over a quarter.
The SEC is also asking whether the minimum for monthly offers should be reduced to 2%.
These percentages refer to the amount of shares a fund offers to repurchase, not a guarantee that every investor will be able to withdraw their entire investment.
If investors request more withdrawals than the fund offers to accommodate, the amount each investor can sell may be limited under the applicable terms.
Funds could have more flexibility in managing liquidity
Another proposed change would replace the requirement to hold liquid assets equal to 100% of a repurchase offer with a standard focused on meeting repurchases without selling investments at prices that deviate significantly from their value.
The legal summaries cited in the source identify several potential sources of liquidity, including:
- New money coming into the fund through subscriptions.
- Repayments from existing investments.
- Credit facilities and borrowing arrangements.
The proposal could give fund managers greater flexibility in deciding how to meet withdrawal requests.
But that flexibility also makes liquidity management especially important. A fund may hold investments that cannot be sold quickly without accepting a lower price.
If withdrawal requests increase sharply, the fund’s ability to meet them will depend on its available cash, incoming payments, borrowing capacity and the liquidity of its underlying investments.
Other proposed changes include allowing new interval funds to delay their first repurchase offer for up to two years and allowing certain discretionary repurchases by closed-end funds and business development companies once a year instead of once every two years.
What investors should watch: A fund offering more frequent repurchase opportunities is not necessarily a fund offering unrestricted access to cash. Investors still need to understand the size of each offer, how excess requests are handled, and where the fund expects to obtain the money to meet withdrawals.
3. Withdrawal Limits Are Already Being Tested
The debate around interval funds comes as some evergreen private investment funds have faced growing withdrawal requests.
The source cites a June report by Private Equity Wire, drawing on Bloomberg, about Partners Group’s $8.6 billion Global Value evergreen fund. The report said the fund capped withdrawals at 5% following a spike in requests.
Another private equity evergreen fund was reportedly expecting withdrawal requests of approximately 6% of net asset value against a quarterly limit of 5%.
Three other mature funds, with a combined $9.7 billion in assets, were expected to receive withdrawal requests ranging from 3.5% to 5%.
These examples illustrate a basic challenge in private markets: investors may want their money back faster than the underlying investments can be sold.
A fund holding publicly traded shares can generally sell those shares during market hours, subject to market conditions. Private investments are different. Selling a stake in an unlisted company may take considerably longer, and finding a buyer at an attractive price is not always straightforward.
That creates a potential mismatch between investors seeking liquidity and funds holding assets that may take time to realise.
The broader evergreen fund market is significant. Morningstar and PitchBook counted $607 billion across 567 US evergreen funds as of March 31, according to the source.
However, these reported withdrawal cases should not be treated as direct evidence of what will happen to interval funds under the SEC’s proposal. Evergreen funds have different structures and terms, and the cited examples are not identified as interval funds covered by the proposed changes.
Still, they highlight why liquidity rules matter.
For investors, the lesson is simple: Before investing in a private market fund, understand not just what it owns, but also how and when you can get your money back.
4. Performance Fees Could Become Available to More Investors
The SEC’s second formal proposal focuses on performance fees, which investment advisers may charge based on the returns generated for their clients.
Under the existing framework described in the source, advisers generally can charge performance fees only to qualified clients who meet certain financial thresholds.
These include having at least $1.4 million under management with the adviser or a net worth of at least $2.7 million.
The proposal would expand qualified-client status to include accredited investors and eliminate those two financial tests.
In practical terms, this could allow a wider group of investors to access investment arrangements that charge fees based on performance.
What could this mean for investors?
Performance-based fees can align an adviser’s compensation with investment gains, but the structure matters.
Investors need to understand how gains are calculated, when fees are charged and whether losses affect future fee calculations.
The proposal would cap performance compensation at 20% of net gains over a specified period for registered funds and business development companies. It would also require a majority-independent board and written findings by the board. Performance fees could not differ by share class.
Several important questions remain unresolved.
For example:
- Could performance fees be charged on unrealised gains, even when an investment has not been sold?
- Should valuations used to calculate fees be independently determined?
- Should fees apply to an entire portfolio or only the portion invested in private markets?
These details could make a significant difference to investors.
Imagine a fund whose private company investments rise in estimated value over a year, even though none of those companies has been sold. If fees could be charged on unrealised appreciation, investors might owe performance fees without the fund having generated cash from those gains.
That is why the final rules around valuations and fee calculations will matter.
The bigger picture: Expanding access to performance-fee arrangements could create more options for investors, but it also makes fee transparency and independent oversight essential.
5. Why the SEC Is Looking at These Changes Now
The proposals reflect a broader debate about who should be allowed to invest in private markets.
Historically, income and net worth have played a central role in determining who qualifies as an accredited investor. Supporters of changing the rules argue that these financial thresholds do not necessarily measure an individual’s understanding of investments.
An exam-based qualification route would approach the question differently by recognising financial knowledge.
But there is another side to the debate.
Private investments often involve complex structures, limited disclosures, long holding periods and uncertain exit opportunities. Even an investor who understands financial concepts may struggle to evaluate a particular private company or fund.
The ability to pass an exam does not eliminate these risks.
The source notes that reactions to the proposed exam route have been mixed. Some commentators have questioned whether an exam can adequately protect retail investors from the risks associated with complex private offerings. The SEC’s Investor Advisory Committee had also declined to endorse an exam-based route in the previous year and recommended stronger reporting and protections for registered private funds.
The central question is whether expanding access can be balanced with appropriate safeguards.
Opening the door to more investors may create additional opportunities, but access alone does not guarantee better outcomes.
6. What Could Change for Private Companies and Fund Managers?
The proposals could have implications beyond individual investors.
If additional people qualify as accredited investors, companies raising capital through private placements may have a broader pool of potentially eligible investors.
That could matter for businesses seeking funding outside public markets, as well as investment vehicles that provide access to private company shares.
However, the exact impact would depend on how the final rules are written and how the new qualification routes interact with existing securities exemptions. The source does not establish all the details of that interaction.
For fund managers, the proposed interval-fund changes could require a closer look at repurchase schedules, liquidity planning and the policies used to meet investor withdrawals.
Managers may also need to evaluate how their funds calculate performance fees if the proposed expansion of qualified-client eligibility is adopted.
For investors, these developments are worth following because changes to eligibility, withdrawal arrangements and fees can influence how private market investments are structured and distributed.
But none of the proposals guarantees that more private investment opportunities will become available immediately, or that those investments will become easier to sell.
7. What Investors Should Check Before Investing
Regardless of whether the SEC adopts these proposals, investors considering private market funds should pay close attention to the details.
Here are five questions worth asking before committing money:
- How often can I withdraw? Check whether the fund offers monthly, quarterly or less frequent repurchases.
- How much can I withdraw? Understand the minimum and maximum repurchase offer, along with any limits that apply when demand exceeds available capacity.
- Where will the fund get the cash? Look at whether withdrawals depend on incoming subscriptions, repayments, asset sales or borrowing.
- How are performance fees calculated? Check whether fees apply to realised gains, unrealised gains or both, and how losses are treated.
- How are investments valued? Private company valuations may involve estimates and limited transaction data, so understand how the fund determines the value of its holdings.
These questions can help investors understand the practical terms of an investment rather than focusing only on its potential returns.
Private securities typically have limited pricing transparency and can be difficult to sell. Investors may need to hold them for extended periods, and there is no guarantee of an IPO, acquisition or other liquidity event.
8. What Happens Next?
The SEC has not finalised the proposals discussed here. The regulator is seeking public feedback, and the details could change following the consultation process.
According to the source, the deadlines are:
- December 4, 2026: Comments on the interval-fund proposal and accredited-investor notices.
- December 7, 2026: Comments on the performance-fee proposal.
The next stage is to examine the underlying SEC documents and the feedback submitted by investors, industry participants and other stakeholders.
Those documents will help clarify how the proposals are intended to work and which questions remain open.
For now, investors should distinguish between the ideas being considered and rules that are already in force.
The Bottom Line
The SEC’s proposals could reshape parts of the private investment landscape by changing who can qualify as an accredited investor, how certain funds handle repurchases and liquidity, and who may be eligible to pay performance fees.
The potential exam route has attracted the most attention because it could provide an alternative to traditional income and wealth requirements.
But the other proposals deserve just as much attention. Withdrawal rules determine how investors access their money, while performance-fee arrangements affect how much they pay for investment management.
If adopted, these changes could broaden participation in private markets. Whether they improve the experience for investors will depend on the final rules, the safeguards put in place and how funds implement them.
Greater access can create more opportunities, but understanding the risks, fees and limits on liquidity remains essential.