How to Become an Accredited Investor
by Christopher Levarek
“Do the best you can until you know better. Then when you know better, do better.”
- Maya Angelou
I’d been waiting for this day for years, 16 in fact. The good gentleman behind the DMV counter shook my hand and said “Welcome to the Club!” as he handed over my newly minted driver’s license. I could feel the excitement bubbling up as I scoured all the details finely printed on that slick, crisp gleaming little ID card. This was it, I was in!
Most of us clearly remember the first time we got the keys to freedom with a driver’s license, as a new world of possibilities opened up. Now, when it comes to real estate investing, similar advantages and possibilities are available regarding the elusive “accredited investor” status. See our What’s an Accredited Investor article, if this term is new to you.
For many investors it seems like this status is far out of reach yet, trust me, I am here to tell you it is not!
In fact, in recent years, the SEC has amended the accredited investor status to allow many more investors into this elusive club. In this article, I will be showing you just how anyone can become an accredited investor in less than 90 days. Let’s jump in.
So What is Needed?
Ok, so let’s highlight what the SEC requires an investor to have or be to qualify. Really it comes down to meeting any one of these items in the financial or professional criteria :
Financial Criteria :
You must have a personal net worth of over $1 million, not counting your primary residence (home)
OR
You must have had an annual income of $200,000 or $300,000 if joint income for the past two years with the expectation to earn the same or higher in the present year.
OR
Professional Criteria
You must hold a General Securities Representative (Series 7), Private Securities Offerings Representative (Series 82), or Licensed Investment Adviser Representative (Series 65) registration in good standing.
OR
You must be a Director, executive officer, or general partner (GP) of a company selling the securities (or of a GP of that company)
OR
You must be any “family client” of a “family office” that qualifies as an accredited investor
OR
You must work for investments in a private fund, “knowledgeable employees” of the fund
Alright, so depending on your financial or professional situation, you can pick the qualifying criteria. However, here is the easiest one to qualify for in terms of speed and effort :
You must hold a General Securities Representative (Series 7), Private Securities Offerings Representative (Series 82), or Licensed Investment Adviser Representative (Series 65) registration in good standing.
Let me show you how you can in very little time set yourself up with one of these certifications and gain access to the accredited investor title.
How to Become an Accredited Investor
So here’s the rub, to become an accredited investor at it’s simplest, you only need to pass either the Series 7 OR Series 82 OR Series 65 certifications.
Yes, you heard me correctly. You pass a test and you are now considered an accredited investor!
So what are these tests?
Quite simply, these certifications allow the holder to not only qualify for accredited investments but they also can have other credential based advantages. For example the Series 65 enables a financial professional to give clients investment advice and analysis legally.
My recommendation is to focus on the Series 65 as this will be the best option for the average investor. The Series 7 requires the investor to be sponsored by a member of FINRA and the Series 82 is similar requiring employment by a FINRA member securities firm. As these will be some blockers for most, the Series 65 will be the fastest path for most.
What’s it Going to Take to Pass the Series 65
Like any certification you will need a few things to pass. First, you will need to study and second you will need to pay a fee of around $200. Now if you buy test or study materials, this could go up of course. Alright, so here is what it will take :
Studying for 20-40 hours depending on how new investing concepts are for you.
A fee of around $180-$200
A passing grade over 80%
That’s it!
If you are interested in checking out what the Series 65 covers as far as material, visit NASAA.org here see an outline of the exam.
Once you pass the Series 65, you are officially able to invest in accredited investment opportunities.
IN FINAL
As you can see, it is not actually as hard as many think to become an accredited investor. In fact, in just 20 hours and $200, you can completely change your life forever. Accredited investment opportunities are easier to find as they are offered publicly and often open up the doors to another realm of investing options.
So now you know and with that knowledge, the choice is yours. Until next time, Happy Investing!