Under the new rule, registered investment advisers may charge clients performance fees if the client’s net worth or assets under management by the adviser meet certain dollar thresholds, and such investors who meet the net worth or asset threshold are deemed to be qualified clients, able to bear the risks associated with performance fee arrangements.
The qualified clients are expected to have at least US$1 million AUM with the adviser, up from US$750,000 earlier, or must have a net worth of at least US$2 million, which is up from the previous requirement of US$1 million.
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
The revised rule will also exclude the value of a client’s primary residence and certain property-related debts from the net worth calculation.
Moreover, a new provision to the performance fee rule will permit registered investment advisers (RIA) to continue to charge clients performance fees if the clients were considered qualified clients before the rule change.
The RIAs can further continue charging performance fees to those clients from whom they were already charging performance fees.
The rule amendments will take effect 90 days after publication in the Federal Register.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalData
