U.S. regulators should revisit 1980s-era rules designed to prevent people with limited financial literacy from investing too much of their nest eggs in risky private stock deals, an advisory panel said on Thursday.

The U.S. Securities and Exchange Commission's Investor Advisory Committee said the SEC should consider imposing limits on who is allowed to invest based on a person's financial sophistication and experience in trading and investing.

The panel said that approach might make more sense than the current standards, which draw the line by using income and net-worth thresholds. Some say these thresholds are arbitrary, and raising them could still put people at risk because even some wealthy stock market investors may lack financial sophistication to navigate tricky private stock deals.

The SEC will now consider the panel's proposal, which takes aim at how the SEC currently defines who is considered to be an "accredited investor."

The critical definition determines who can invest in private offerings of stock that are typically subject to less financial disclosure, and thus are riskier.

The rule states that to qualify as an accredited investor, an individual must have a net worth of $1 million, excluding the value of a primary residence, an individual annual income over $200,000 or a combined household income of $300,000.

Since the rule was written in the 1980s, the SEC has tinkered with the definition only once. The commission excluded the home value in the net worth calculation in late 2011, after the change was mandated by the 2010 Dodd-Frank Wall Street reform law.

The Dodd-Frank law also requires the SEC to review the definition every four years. SEC Chair Mary Jo White said on Thursday such a review is currently underway.

Since Dodd-Frank was enacted, a second law, known as the 2012 Jumpstart Our Business Startups Act, relaxed some rules governing private security deals.

Such deals can now be broadly advertised by companies and funds, but only "accredited" investors can invest in them.

The SEC's Investor Advisory Committee, experts who meet four times a year to provide policy recommendations, said at Thursday's meeting that it felt the current income and net worth thresholds are an "imperfect proxy" for determining who is sophisticated.

The panel said the SEC needs other ways to measure sophistication, such as whether a person holds certain professional credentials or has worked in the financial sector.

If the SEC opts to retain certain thresholds, then the panel said the agency should explore alternative ways to set them.

One possibility would be to limit the amount that people can invest to a percentage of their assets or income so they will not be at risk of losing their entire life savings.

"What is ongoing now is a very deep-dive study...into the definition," said SEC Chair White on the sidelines of the meeting.

She said the SEC was making progress on its study, but has not reached any conclusions yet.