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ARTICLE · 21 MAY 2026

SEC Raises Threshold For ‘Qualified Client’ Status, Effective June 29, 2026

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The U.S. Securities and Exchange Commission has raised the financial thresholds that determine which clients qualify for performance-based fee arrangements under the Investment Advisers Act.

United StatesFinance and Banking
Arthur Don
Arthur Don
Steven Malina
Steven Malina
Richard M. Cutshall
Richard M. Cutshall
Rachel Cohen-Deaño
Rachel Cohen-Deaño
Efraim Burle
Efraim Burle

On April 28, 2026, the U.S. Securities and Exchange Commission (“SEC”) issued an Order increasing the thresholds for a client or private fund investor to be deemed a “qualified client” under Rule 205-3 under the Advisers Act.

Threshold Changes in the SEC’s Order

  • From $1.1 million to $1.4 million in assets under management with the adviser immediately after entering into the advisory arrangement (an investment in a private fund, for example); or
  • From $2.2 million to $2.7 million in net worth (together with assets held jointly with a spouse, but excluding the value of the person’s primary residence and related debt) at the time of entering into the advisory arrangement (an investment in a private fund, for example)

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