A qualified client is an investor that is exempt from the provision of the Investment Advisers Act of 1940. This act prohibits private investment funds from charging performance-based fees. A "qualified client" meets at least one of the following parameters:
- An individual with at least $1 million in assets under management with the advisor immediately after entering into an investment advisory contract with the advisor.
- An individual with a net worth of $2.1 million or more, either individually or jointly with a spouse, immediately before entering into an advisory contract, not including the value of their primary residence. This is significantly more than the minimum required for accredited investors.
- An individual who matches the definition of a qualified purchaser at the time an advisory contract is enacted — including ownership of at least $5 million in investments.
- An individual with the position of executive officer, director, trustee, general partner, a person serving in a similar role, or the advisor.
- An employee of the advisor who is involved in the investment activities, and has been so for at least one year.