When the wholesale investor tests were written into the Corporations Act, they were meant for a small group of genuinely wealthy, experienced investors. Two decades of rising house prices later, that group isn’t small any more.

From 1 in 50 to 1 in 6

Research by the ANU Centre for Social Research and Methods estimated that about 1.9% of Australian adults met the wealth or income tests in 2002. By 2021 that had grown to around 16%, or roughly 3.25 million people, and the same research projected it could reach more than 40% by 2041 if nothing changes. A parliamentary committee working from those projections put the figure at about 18% in 2024.

The reason is simple. The tests haven’t moved. Net assets of $2.5 million, or gross income of $250,000 in each of the last two years, certified by a qualified accountant. The family home counts. So does wealth held in companies and trusts you control. A couple on the Gold Coast with a paid-off waterfront home and decent super can clear the bar without thinking of themselves as investors at all.

Is anything changing?

The Parliamentary Joint Committee on Corporations and Financial Services reported in February 2025. It recommended against an immediate increase in the thresholds, suggested a periodic review mechanism and proposed replacing the subjective sophisticated investor test with objective criteria. ASIC had floated inflation-adjusted figures of about $4.6 million in net assets and $461,000 in income. As at the date of writing, the thresholds remain as they are.

What it opens up

Direct corporate bonds, wholesale share classes of managed funds, private credit and private equity funds, property syndicates and pre-IPO raisings. Some of these are excellent. Some are not. The trouble is that from the outside they can look much the same.

What it costs you

Being wholesale means issuers don’t have to give you a Product Disclosure Statement or prospectus, design and distribution rules don’t protect you, and advice doesn’t have to come with a Statement of Advice. You’re treated as someone who can look after yourself. Many people who qualify on paper would rather not be treated that way, and that’s a perfectly sensible choice.

Qualifying is easy. Knowing which offers to say no to is the skill.

Before you sign that certificate

• Ask what the investment can do that a listed or retail alternative can’t.
• Find out how and when you can get your money out, and what happens if lots of investors want out at once.
• Understand every layer of fees, including performance fees and fees paid to related parties.
• Decide in advance how much of your wealth should ever sit in illiquid investments.

Sources: B. Phillips, Sophisticated Investor Projections, ANU Centre for Social Research and Methods (2021); Parliamentary Joint Committee on Corporations and Financial Services, Wholesale investor and wholesale client tests report (February 2025). General information only. It does not take into account your objectives, financial situation or needs. Whether you are a wholesale client is assessed individually.