How to Be an Accredited Investor Through Education

by | Feb 10, 2021 | Money and Finance

The accreditation requirements present some of the most challenging obstacles to people accessing private investments. However, once you meet these requirements as laid out by the Securities and Exchange Commission (SEC) for how to be an accredited investor, a new world of investment opportunities becomes available to you, which many are not qualified to access.

Another path has been made available from the SEC to reach this status for individuals who fall short of the income or net worth accredited investor requirements. That path is through meeting certain education criteria.

Gaining Accredited Investor Status Through Education

The Series 65 license offers the easiest and fastest avenue for being an accredited investor and investing in private placements. This is one of the alternate ways to qualify if you do not qualify through the income or net worth criteria.

You can gain accredited investor status via Series 65 licensing that involves about 60 hours of study, passing a 3 hour, no sponsor by a firm, 130 question exam, and the payment of about $175 in fees. Upon receiving your license, you will have the opportunity to invest in real estate funds, capital funds, venture capital, and more.

Why About Accreditation for Self-Directed Investors?

Accreditation is a sensible choice for self-directed investors because they can access investments through their retirement funds. If your retirement savings are located in mutual funds, you may not possess the minimum amounts necessary for private investments with cash. However, the same persons may possess savings in retirement accounts that allow them to meet the minimums.

For those with self-directed accounts, becoming an accredited investor makes sense due to the options these investors have with full autonomy and control to invest retirement savings in alternate assets.

The Series 65 License

The Financial Industry Authority (FINRA) administers the Series 65, an exam and securities license persons must take to legally operate as investment advisors in the United States. It has 130 questions covering investment vehicle characteristics, business information and economic factors, guidelines, strategies, client investment recommendation, and laws.

Passing the exam requires the correct answer supplied to 94 of the 130 questions. It lasts 3 hours and, due to the current ongoing COVID-19 restrictions, can be taken online. This exam presents one way on how to become an accredited investor.

In Summary

The Series 65 license may be a strong consideration for serious investors regardless of their net worth. This is particularly the case for individuals who, for the first time, are participating in alternative and private investments.

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