High-income, high-net-worth, and investment-savvy individuals who achieve accredited investor status have access to an array of potentially lucrative investment opportunities not available to others outside of their privileged group. There are multiple ways to obtain accredited investor status, but the easiest way is to get a third-party verification letter from a certified public accountant (CPS), licensed attorney, registered broker-dealer, or SEC-registered investment advisor. The other ways to accredited status can be laborious in terms of providing documentation, which can deter potential investors’ participation.
Below we cover the accredited investor letter from CPA requirements (which would be the same requirements as a letter from another qualified professional). What must be in the letter to qualify a candidate for accredited investor status?
Despite the financial risk, accredited investors often participate in private fund investments due to their high potential for financial reward. Accredited investors must do certain things to get the nod from investment sponsors. The methods available to qualify as an accredited investor include, income, net worth, other ways of entry, and the 3rd party verification letter.
Third-Party Letter from a CPA or Other Qualified Professional
With just a signed third-party letter from a CPA or other qualified professional, such as a registered investment advisor, registered broker-dealer, or attorney, a prospective investor can obtain accredited investor status.
The accredited investor letter from CPA requirements includes the verification date, background on why the author of the letter is able to confirm the investor’s accredited status, and the specific qualifications for accredited status the candidate meets. The letter only needs to be one page long as long as it confirms the candidate has met the required benchmarks to qualify as an accredited investor.
Benefits of Choosing 3rd Party Verification
The third-party letter from a CPA or other qualified professional does not need to include a detailed explanation or accompanying documentation. It only needs the approval of a professional who knows the candidate well enough to verify his or her qualifications. This method of verification is the least invasive of privacy and saves time and the hassles of the process otherwise.
If a candidate cannot obtain a third-party verification from a CPA, he or she may use a third-party investor verification service that helps with the process of providing the necessary documentation to the issuer of the securities offering.
However, the accredited investor letter from CPA requirements (or the requirements of a letter from another qualified professional) is the least arduous in terms of the effort required by the candidate for accredited investor status.