The Securities and Exchange Commission recently gave notice of its plan to raise certain dollar thresholds that would need to be met before investment advisers can charge their clients performance fees.

The plan would satisfy a requirement of the Dodd-Frank Act.

Currently, Rule 205-3 under the Investment Advisers Act allows an adviser to charge its clients performance fees in certain circumstances, which include:

1. The client has at least $750,000 under management with the adviser.
2. The adviser reasonably believes the client has a net worth of more than $1.5 million.

Section 418 of the Dodd-Frank Act requires the SEC to issue an order to adjust the dollar thresholds for inflation by July 21, 2011, and every five years thereafter. As a result, the SEC issued last week's notice that it intends to issue an order to revise the dollar amount tests to $1 million for assets under management and $2 million for net worth.