The SEC sends its retail private markets proposal to the White House, performance fees included
A draft SEC rule reached the Office of Management and Budget on 31 August 2026. It would widen retail access to private markets through registered funds and rewrite the framework limiting performance fees to qualified clients.
The US Securities and Exchange Commission sent a draft rule to the White House Office of Management and Budget on Monday 31 August 2026, according to a Bloomberg report carried by Private Equity Wire and Wealth Management. Two things travel together inside it: wider retail access to private markets through registered funds, and a rewrite of the rules governing whom an investment adviser may charge a performance fee.
The proposal would amend the Investment Advisers Act of 1940 and the Investment Company Act of 1940. On the access side it would make it easier for registered investment companies to hold private assets on behalf of ordinary investors. On the fee side it would revise the framework that currently restricts performance fees to clients meeting the definition of a “qualified client” under Rule 205-3.
None of it is settled. OMB review comes first, then publication for public comment, then a Commission vote on a final rule.
The qualified client line has just moved once already
That definition was adjusted for inflation earlier this year. In a notice published on 31 March 2026, the Commission set out its intention to raise the assets-under-management test from $1.1 million to $1.4 million and the net worth test, which excludes the primary residence, from $2.2 million to $2.7 million (Release No. IA-6955). The new figures apply to contracts entered into on or after 29 June 2026, and earlier arrangements are generally grandfathered, Holland & Knight notes.
Every UHNW family clears both tests without thinking about it, which is why the threshold has never been a family office problem. The proposal now sitting at OMB asks a different question: whether the boundary belongs where it is at all. If performance fees can be charged inside registered funds, the qualified client test stops being the thing that decides who pays them.
Access was already loosening
The SEC listed “Enhancing Retail Exposure to Private Markets” among the forty items on its 2026 regulatory agenda, and Chairman Paul Atkins has said that private markets “should not be reserved for wealthy insiders”, as Financial Planning reported in July.
Product has run ahead of the rulemaking. Morgan Stanley registered two of its PMAX private markets funds with the SEC and dropped the accredited investor requirement; the initial minimum is $10,000 and withdrawals are restricted to once a quarter. Morningstar’s State of Semiliquid Funds 2026 puts assets in such vehicles up 120 per cent over four years, at close to $600 billion. Blue Owl and BlackRock have both applied redemption limits to private credit funds in the past year. Investor advocates have questioned whether individual investors can value assets that disclose so little.
What it means for family offices
Access was never the binding constraint for a family office. Terms were. A larger pool of committed capital chasing the same managers weakens the negotiating position that let families extract fee breaks, co-investment rights and better reporting through the last cycle. If a general partner can fill a raise through a registered fund distributed by a wirehouse, the family office ticket that used to close a fund carries less weight in the conversation.
The performance fee element is the one worth following. It draws the line for who can be charged on performance, and lines of that kind tend to become defaults. Families using registered funds for the liquid part of the balance sheet, or for next-generation portfolios, should expect to meet fee structures they currently associate with private funds in wrappers where those structures were previously unavailable.
Liquidity stays the discipline. Redemption gates are a design feature of semiliquid vehicles rather than a malfunction, and a family office that already models illiquidity will price them. A family treating a semiliquid fund as a cash proxy will find out the hard way.
Sources: Private Equity Wire, Wealth Management, Financial Planning, Federal Register, Holland & Knight.