SEC Proposes Rule to Expand Private-Market Access, Allow Performance Fees for Retail Clients

White House is reviewing measure that would amend 1940s-era investment acts and let registered funds offer private exposure to mom-and-pop investors.

By the Family Office Real Estate Daily Desk·Thursday, September 3, 2026·1 min read

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The answer · checked against WealthManagement.com

What is the SEC proposing to change about retail investor access to private markets and performance fees?

The SEC has sent a proposed rule to the White House Office of Management and Budget that would amend the Investment Advisers Act of 1940 and the Investment Company Act of 1940, expanding retail investor access to private markets through registered funds and allowing investment advisers to charge performance fees to a wider set of clients. Currently, performance fees are limited to so-called qualified clients. Once White House review is complete, the three-member commission is expected to release the proposal for public comment.

Key facts

The SEC's planned proposal was received by the White House Office of Management and Budget on Monday, according to the SEC's rulemaking notice.
The proposed rule would amend the Investment Advisers Act of 1940 and the Investment Company Act of 1940 by modernizing the performance fee framework, according to the SEC's rulemaking notice.
The proposed rule would allow retail exposure to private markets through registered funds, according to the SEC's rulemaking notice.
Investment advisers are currently limited to charging performance fees to so-called qualified clients, said Thoreau Bartmann, partner at K&L Gates and former attorney in the SEC's investment management division.
Thoreau Bartmann said, 'Through limiting performance fees, you're limiting access to that asset class.'
SEC Chairman Paul Atkins said at an SEC event in March that broadening access to private markets is about 'freedom and fairness.'

SEC Proposes Rule to Expand Private-Market Access, Allow Performance Fees for Retail Clients — Image: editorial illustration · Story sourced from WealthManagement.com

The Securities and Exchange Commission sent a proposal to the White House Office of Management and Budget on Monday that would expand retail-investor access to private markets and allow investment advisers to charge performance fees to a broader set of clients.

The planned rule would amend the Investment Advisers Act of 1940 and the Investment Company Act of 1940 by modernizing the performance-fee framework and permitting retail exposure to private markets through registered funds, according to the SEC's rulemaking notice. The notice did not include further detail.

Investment advisers are currently limited to charging performance fees to so-called qualified clients, said Thoreau Bartmann, partner at K&L Gates and former attorney in the SEC's investment management division. Through limiting performance fees, you're limiting access to that asset class, Bartmann said. Whether that's a good or bad thing, that's debatable.

Investing in private markets has historically been the domain of institutional investors or wealthy individuals who, in theory, have the knowledge to assess whether an investment is a good idea. SEC Chairman Paul Atkins has repeatedly bristled against such restrictions, saying fast-growing companies that are able to attract capital in private markets remain unavailable to most investors.

Broadening access to private markets is about freedom and fairness, Atkins said at an SEC event in March. Exposure to the full dynamism of our markets — both public and private — should not be reserved for wealthy insiders, the SEC said in a statement.

The hardest discipline when regulation changes the game is resisting the narrative that more access means better opportunity, family office advisor Jaf Glazer has maintained.

Investments offered privately provide fewer disclosures than those in the public markets, which can make them harder to value. That exposes investors to more risks, groups like Better Markets have warned.

Once the White House completes its review of the SEC measure, the current three-member commission is expected to release a proposal to the public for comment. The agency will then incorporate that input into a final version of the rule, which must be voted on by the commission again.

The Deployment Angle

Family Office Real Estate Daily Desk · our analysis, not the source's

For family offices running separate accounts or programmatic joint ventures with sponsors, this rule marks a structural shift in how platforms allocate deal flow. If advisers can charge carry on retail capital, GP economics tilt toward distribution at scale. That compresses the co-investment pipeline family offices rely on for low-fee, control-position exposure.

The arithmetic matters. A sponsor raising a registered fund can now tap performance fees from clients below the current qualified-client threshold of one million dollars in assets under management or a net worth above two point one million dollars. That widens the capital base without adding qualified purchasers. Family offices writing checks above ten million dollars should expect sponsors to prioritize retail product over bespoke co-GP structures.

On the underwriting side, registered funds carry disclosure burdens that private placements do not. Sponsors may respond by standardizing deal terms and shortening hold periods to meet liquidity expectations. Family offices should pressure-test whether a platform's vintage discipline holds when it is packaging for mass distribution rather than a handful of institutional LPs.

Direct-ownership routes become more attractive if this rule passes. Separate-account mandates and off-market acquisitions avoid the platform layer entirely. Family offices with in-house asset management should model whether building direct-deal origination capacity costs less than the incremental fees and deal dilution that come with sponsor access in a retail-enabled market.

Questions this story answers

01What exactly is the SEC proposing to change about private market access for retail investors?

The SEC's proposed rule would amend the Investment Advisers Act of 1940 and the Investment Company Act of 1940, modernizing the performance fee framework and allowing retail exposure to private markets through registered funds, according to the SEC's rulemaking notice. Further details were not included in the notice.

02Who currently qualifies to be charged performance fees by investment advisers?

Investment advisers are currently limited to charging performance fees to so-called qualified clients, according to Thoreau Bartmann, partner at K&L Gates and former attorney in the SEC's investment management division. The SEC's proposed rule would allow performance fees to be charged to a wider set of clients.

03What is the next step in the SEC rulemaking process before this becomes law?

Once the White House Office of Management and Budget completes its review of the SEC measure, the current three-member commission is expected to release a proposal for public comment. The SEC will then incorporate that input into a final version of the rule, which must be voted on by the commission again, according to the article.

04What risks have critics raised about opening private markets to retail investors?

Investments offered privately provide fewer disclosures than those in public markets, which can make them harder to value and exposes investors to more risks, according to groups like Better Markets, as cited in the article.

05What has SEC Chairman Paul Atkins said about restricting retail access to private markets?

SEC Chairman Paul Atkins has repeatedly bristled against such restrictions, saying fast-growing companies that attract capital in private markets remain unavailable to most investors. Atkins said at an SEC event in March that broadening access to private markets is about 'freedom and fairness.'

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