For the full treatment of this topic, we've written a complete Guide to Private Market Individual Investor Classifications, covering accredited and non-accredited investors, qualified clients, and qualified purchasers. This chapter summarizes what advisors need for allocation decisions.
Accredited investor
The accredited investor standard is the broadest gateway to private offerings. Under SEC Rule 501(a), an individual qualifies with $1 million in net worth excluding the primary residence, or income of $200,000 individually ($300,000 jointly) in each of the prior two years, with a reasonable expectation of the same in the current year.14 Accredited status unlocks most Regulation D private offerings, including many evergreen BDCs and feeder vehicles.
Qualified client
The qualified client standard answers a different question: not what a client may buy, but how an adviser may charge. Under Investment Advisers Act Rule 205-3, an adviser may charge performance-based fees, including carried interest, only to qualified clients. The SEC adjusts these thresholds for inflation, and by final order issued April 28, 2026, effective June 29, 2026, the thresholds rise to $1.4 million in assets under management with the adviser (from $1.1 million) or $2.7 million in net worth (from $2.2 million).15 Advisors recommending funds that charge incentive fees should confirm client status under the thresholds in effect at the time of investment.
Qualified purchaser
The highest tier is the qualified purchaser: generally, an individual or family entity holds $5 million or more in investments. Funds relying on Section 3(c)(7) of the Investment Company Act must have qualified purchaser status, which includes many large institutional private funds. For most advisory clients, 3(c)(7) funds are the least accessible corner of the market, which is precisely why registered and evergreen structures have become the primary on-ramp for the wealth channel.
Why the tiers matter for practice
Eligibility mapping is a first-order fiduciary task, not paperwork. The tiers determine which vehicles each client can access, which fee structures an adviser may apply, and how an allocation program should be designed across a client base with mixed eligibility. The broader democratization theme of this guide runs through this chapter as well: evergreen and registered structures increasingly reach accredited investors, and in some registered formats, investors beyond the accredited standard, which is exactly how private markets are expanding into advisory portfolios.