Expanding retail access to private markets: Regulatory developments and industry trends

Introduction

Recent regulatory and industry developments are reshaping the landscape of retail investor access to private markets. Traditionally, private market investments – such as private equity, private credit and real assets – have been the domain of institutional investors and high-net-worth individuals (HNWIs). However, a confluence of regulatory reforms, industry initiatives and market demand is driving a shift toward broader retail participation. This article summarizes key updates from the past quarter, highlighting regulatory consultations, industry perspectives and the potential implications for investors and market participants.

Regulatory momentum toward greater access

Regulators in the United States and internationally are actively considering ways to expand retail investor access to private markets, while balancing the need for investor protection. The US Securities and Exchange Commission (SEC) has been at the forefront of this discussion. As early as May 16, 2023, SEC Commissioner Mark Uyeda delivered remarks at the Managed Funds Association (MFA) Global Summit, emphasizing the importance of providing retail investors with opportunities to diversify their portfolios through exposure to private assets. Commissioner Uyeda urged the SEC to reconsider its framework for exempt offerings, with particular focus on individual access to private equity. He highlighted research showing that retail investors in private equity "perform similarly to those of institutions and outperform public markets." He identified structural innovations enabling this participation, including "the proliferation of funds with low minimum commitments, pooling capital via advisors, and leveraging advisors' networks to access fund managers." Mr. Uyeda contended that the SEC should not prevent financially sophisticated individuals from participating in private markets simply due to outdated benchmarks. While acknowledging that investments in growth-stage companies are risky, Mr. Uyeda argued they may serve a legitimate role in diversified portfolios, especially when offered through pooled vehicles. He cited survey results showing growing investor interest: "14.4 percent of accredited investors reported being ‘interested’ in investing in this space, while 4.7 percent of non-accredited investors reported interest."

Commissioner Hester Peirce has also voiced strong support for expanding retail access to private markets. In June 2025, she remarked, "Commission rules and regulations along with Commission staff positions have contributed to keeping retail investors out of the private markets." She advocated for "more meaningful expansions" of the accredited investor definition, noting that "many retail investors...resent being cut off from an increasingly large segment of the market." Ms. Peirce further suggested that Commission staff should take immediate steps to allow retail investors greater access to private markets.

Industry initiatives and recommendations

Industry groups and market participants are also advocating for reforms enabling broader participation in private markets. On March 25, 2024, the Investment Company Institute (ICI) announced that private markets are becoming more accessible to a wider range of investors, citing the development of new fund structures and regulatory changes. The ICI highlighted the potential benefits of private market exposure, including enhanced diversification and the ability to capture illiquidity premiums.

On May 1, 2025, ICI President and CEO Eric J. Pan called on the SEC to lift restrictions on access to private markets by retail investors. Speaking at the ICI Leadership Summit in Washington, DC, Mr. Pan urged the SEC to eliminate its informal 15 percent limit on alternative investments by closed-end funds, calling the restriction "an informal position taken by the SEC staff" and emphasizing that "regulators never intended the limit to be permanent."

Mr. Pan underscored that investments in private markets since 2013 have nearly quadrupled in the following decade from $4 trillion to $15 trillion, noting that to date, "private markets [may] have already hit the $25 trillion mark." He said that private fund growth is accelerating even faster than expected. He asserted that "individual investors are largely stuck with the declining number of publicly traded companies, unable to meaningfully participate in the dynamic rise of private markets." He said lifting the 15 percent cap would allow fund sponsors to offer "new products and tailor them to investors who want much more diversification and access to private markets." He defended regulated funds as a safe vehicle for broader access.

On May 10, 2023, SIFMA’s Asset Management Group (AMG) submitted a letter to regulators, urging the modernization of rules governing private market investments. SIFMA AMG’s proposals include updating accredited investor definitions, streamlining disclosure requirements, and encouraging the development of semi-liquid fund structures that can accommodate retail investors’ liquidity needs while providing access to private assets.

Additionally, SIFMA has emphasized that “pooled investment vehicles offer significant benefits for retail investors seeking exposure to private markets, providing economic opportunities for individuals otherwise excluded from investing directly in private issuers.” This reflects a growing industry trend of creating innovative product structures to balance accessibility with appropriate risk management.

The trend is also supported by advancements in data infrastructure, digital advisory platforms, and indexation tools that are helping bridge private and public markets and enabling greater accessibility and transparency for retail investors.

401(k) plans and retirement portfolios

A significant milestone in the US market occurred on March 25, 2024, when a major 401(k) plan provider announced it would allow private market investments within its retirement portfolios. This move reflects growing recognition of the role that private assets can play in enhancing retirement outcomes. By incorporating private equity and other alternatives into target-date funds and other retirement vehicles, plan sponsors aim to improve risk-adjusted returns and offer participants access to investment opportunities previously reserved for institutions.

The US Department of Labor (DOL) provided guidance in June 2020 clarifying that private equity investments, when offered as part of a diversified investment option, can be appropriate for defined contribution plans. This development is expected to pave the way for broader adoption of private market strategies in retirement savings plans, subject to fiduciary oversight and participant education.

Global perspectives and retail empowerment

The World Economic Forum, in a story published on May 25, 2023, underscored the importance of empowering retail investors to participate in private markets. The organization argues that democratizing access can help close wealth gaps, foster financial inclusion and support economic growth. However, it also cautions that retail investors may face unique risks, including illiquidity, complexity and limited transparency. As such, robust investor education, clear disclosures and effective regulatory safeguards are essential components of any access expansion.

Related trends in wealth management

Broader trends in the wealth management industry are also shaping the evolving retail access to private markets. Two distinct segments of this market are emerging:

One segment serves sophisticated private individuals with substantial disposable income and investable wealth. In the US, the SEC defines accredited investors as those with a net worth over $1 million or an annual income exceeding $200,000.

Another segment consists of private individuals engaging in investment activity on a more limited basis but with substantial savings – often held in cash. Increasingly, this group is seeking exposure to private markets through innovative products.

There is a noticeable trend toward increasing retail participation in sophisticated products. SEC Commissioner Crenshaw recently cautioned about the “rush to expose retail investors to riskier or less liquid markets through an ETF wrapper,” urging thoughtful product development and risk disclosure.

Product innovation is also bridging private and public markets, with private market active ETFs gaining momentum, especially in the US, alongside established structures like UK investment trusts. New partnerships between institutional/private equity firms and retail wealth managers are emerging on both sides of the Atlantic.

Recent US analysis shows that HNWIs allocate a greater share of their assets to self-directed channels compared to their mass affluent counterparts. A Bank of America study (2024) revealed that 72 percent of US investors aged 21 to 43 believe it is no longer possible to achieve above-average returns using only traditional stocks and bonds – highlighting demand for alternative investment exposure.

In parallel, US regulators are expected to streamline disclosure requirements to reduce ‘information overload’ for investors, a pivot from previous expansions of mandated disclosures. With Paul Atkins poised to influence SEC direction, further easing of regulatory burdens is anticipated, especially regarding cryptocurrency, shareholder rights, and corporate disclosures.

Challenges and considerations

While the trend toward greater retail access to private markets is gaining momentum, several challenges remain:

• Investor protection: Ensuring that retail investors understand the risks and characteristics of private market investments is paramount. Enhanced disclosure, suitability assessments, and ongoing education are critical.
• Liquidity management: Private assets are inherently less liquid than public securities. Fund structures must balance the need for investor liquidity with the long-term nature of underlying investments.
• Systemic risk and market stability: A recent study by Moody’s Analytics, SEC researchers, and a former top US Treasury adviser warns that private credit has become so intertwined with banks and insurers that it could serve as a “locus of contagion” in a future financial crisis. The report, published by Moody’s in June 2025 and cited by the Financial Times, found that the opacity of private credit funds, and their growing linkages with the banking system, introduce new channels of systemic stress, which could disproportionately amplify market turmoil. It called for greater public data transparency and more explicit systemic risk monitoring of the sector.
• Regulatory harmonization: Differences in regulatory approaches across jurisdictions may create complexity for global asset managers and investors. Ongoing dialogue between regulators and industry stakeholders is necessary to develop consistent and effective frameworks. Efforts to foster global consistency are also supported by the International Organization of Securities Commissions, which in November 2023 published recommendations on retail investor protection and marketing practices for complex financial products, including private market offerings.

Conclusion

The expansion of retail investor access to private markets represents a significant evolution in the investment landscape. Regulatory reforms, industry innovation, and growing demand are converging to create new opportunities for individual investors to participate in asset classes that have historically been out of reach. As these changes unfold, it will be essential for market participants, regulators, and investors to work collaboratively to ensure that access is accompanied by appropriate protections, transparency, and education. The coming quarters are likely to see continued progress and debate as the industry adapts to this new era of democratized private markets.