How Many Qualified Clients Are There in America?

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I estimate that 8,666,220 United States households, or 6.60% of all households, were qualified clients in 2023. Nearly half (~44.6%) of all accredited investor households were also qualified client households.

Further, qualified client households controlled about $91.2 trillion in wealth. Per the 2022 SCF, that translates to 65.5% of all private household wealth in the United States and 83.2% of accredited investor wealth.

Our estimates come from the 2022 Federal Reserve Survey of Consumer Finances, and 25% of survey results came in 2023. This is the newest data until 2026.

What is a qualified client?

Qualified clients are a special class of investors defined by the Investment Advisors Act of 1940. The most common criteria to qualify is to exceed $2.2 million in net worth (last changed in 2021) – not including equity in your primary residence.

Most importantly, qualified clients can be charged performance-based fees.

Qualified Client Criteria (and Inflation Adjustment)

Rule 205-3 of the 1940 Investment Advisors Act sets out the criteria to be a qualified client. While this post estimates generic qualified client households – based on the net worth threshold – there are a few other ways to qualify that are adviser or fund dependent:

  • You have a net worth (including held jointly with a spouse) exceeding $2,000,000*
    • You can not count equity in your primary home in your net worth calculation – just assets minus all liabilities, ex-home. If you are underwater – that is, owe more on your house than it is worth – you need to subtract the difference.
  • (or) You will have $1,000,000* invested with the advisor after you invest
  • (or) You are an executive, partner, or similar of the adviser
  • (or) You are otherwise an employee of the adviser

In the tool, the methodology is identical to my methodology for determining accredited investors – except with $2.2 million net worth ex-primary home equity as the cutoff. That's $2.2 as of the last SCF, not $2.0 million – see the note.

* The SEC periodically adjusts these values for inflation. You needed $2.2 million in net worth to be a qualified client as of late summer 2021

Performance Fees

Performance fees come in various forms. Carry or carried interest is a common example of a performance fee in Venture Capital, Angel, Hedge Funds, and PE Funds – often known as promote in Real Estate Funds. 

While fee structures differ, a widespread arrangement is known as "2-and-20". Here, a fund will charge a 2% annual fee on assets under management and a 20% carry or promote over a certain threshold, benchmark, or hurdle. For example, that performance fee may be charged as a percentage of the total return over the returns of an index, interest rate benchmark, or returns after all original capital is returned.

Seriously, though, the arrangements are incredibly varied, unique, and creative. While 2-and-20 is the most common arrangement, funds have all sorts of different hurdles, and some have multiple tiers of payouts (in real estate syndication, this is usually known as a waterfall). Enumerating all of the forms is beyond the scope of the article – all I can say is make sure you model out potential timing, returns, and scenarios and know what might happen before you invest.

Qualified Clients and Accredited Investors

While being an accredited investor opens up many investment opportunities, you'll need to be a qualified client before you can join many funds. Since carried interest is common in various private investment funds, hitting the net worth threshold to be a qualified client is where a bigger universe of private investment options opens. Other funds push it a step further, requiring you to be a qualified purchaser which frees them to raise investment money from more than 100 investors without triggering increased disclosure requirements.

I compare the three investor qualifications here.

Interested in net worth? See all our net worth or investing posts, or zoom into some of the most popular:



PK started DQYDJ in 2009 to research and discuss finance and investing and help answer financial questions. He's expanded DQYDJ to build visualizations, calculators, and interactive tools.

PK lives in New Hampshire with his wife, kids, and dog.

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