SEC Tweaks Wealth Rules for Performance Fees Amid Inflation
Published Date: 3/31/2026
Proposed Rule
Summary
The SEC plans to raise the minimum net worth and assets needed for clients to pay performance-based fees to investment advisers, adjusting these amounts for inflation. This change affects investors considered "qualified clients" and aims to keep the rules fair as prices rise. If you want to speak up, you have until April 27, 2026, to request a hearing.
Analyzed Economic Effects
2 provisions identified: 2 benefits, 0 costs, 0 mixed.
Higher "Qualified Client" Dollar Tests
If you invest with an adviser, the SEC plans to raise the dollar tests that let advisers charge performance-based fees: the assets-under-management test would increase from $1,100,000 to $1,400,000, and the net worth test would increase from $2,200,000 to $2,700,000. These amounts are adjusted using the Personal Consumption Expenditures (PCE) Index and would apply under the Commission's forthcoming order.
Timing and Non-Retroactivity of Change
If the Commission issues the order, the new dollar amounts would take effect 60 days after the order date. Contracts entered into before the order's effective date would generally remain governed by the dollar tests in effect when those contracts were made, subject to rule 205-3 transition rules.
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