On November 18, 2025, the SEC Division of Examinations announced its 2026 examination priorities. Each year, the Division releases its annual examination priorities to (1) inform investment advisers, broker-dealers, and investors of the Division’s upcoming points of emphasis and (2) provide a roadmap for firms to effectively direct their compliance attention.
Regarding investment advisers, the Division’s examination priorities are:
1. Adherence to Fiduciary Standards of Conduct. The Division expressed continued focus on advisers’ compliance with their duties of care and duties of loyalty, especially relating to servicing retail investors. The Division plans to examine investment advice and connected disclosures given to clients to ensure they comply with their fiduciary obligations, including:
(1) the impact of advisers’ financial conflicts of interest on providing impartial advice;
(2) advisers’ consideration of the various factors associated with their investment advice, such as generally the cost, investment product’s strategy’s investment objectives, characteristics (including any special or unusual features), liquidity, risks and potential benefits, volatility, likely performance in a variety of market economic conditions, time horizon, and cost of exit; and
(3) advisers seeking best execution with the goal of maximizing value of their clients under the particular circumstances occurring at the time of the transaction. Moreover, the Division will focus on:
• Investment products with the following strategies or characteristics: (1) alternative investments (e.g., private credit and private funds with investment lock-up for extended periods); (2) complex investments (e.g., exchange traded funds (ETF) wrappers on less liquid underlying strategies, option-based ETFs, and leveraged and/or inverse ETFs); and (3) products that have higher costs associated with investing (e.g., high commissions and higher investment expenses than similar products/investments).
• Investment recommendations for consistency with product disclosures and the clients’ investment objectives, risk tolerance, and financial/personal backgrounds, with emphasis on: (1) recommendations to older investors and those saving for retirement; (2) advisers to private funds that are also advising separately managed accounts and/or newly registered funds (e.g., reviewing for favoritism in investment allocations and interfund transfers); (3) advisers to newly launched private funds; (4) recommendations of certain products that may be particularly sensitive to market volatility; and (5) advisers that have not previously advised private funds (e.g., reviewing for regulatory awareness, liquidity, valuation, fees, disclosures, and differential treatment of investors, including use of side letters).
The Division also plans to focus on specific kinds of advisers, advisory services, or business practices that might cause more risks and potential or actual conflicts of interest. The Commission provided the following examples:
• advisers that are dually registered as broker-dealers, particularly where such advisers have advisory representatives who are also dually licensed as registered representatives and receive compensation or other financial incentives that may create conflicts of interest that must be addressed (e.g., account recommendations and allocations);
• advisers utilizing third parties to access clients’ accounts, where controls may be insufficient to protect client assets and data; and
• advisers that have merged or consolidated with, or been acquired by, existing advisory practices, which may result in accompanying operational and/or compliance complexities or new conflicts of interest.
2. Effectiveness of Advisers’ Compliance Programs. The SEC described evaluating advisers’ compliance programs as a “fundamental part of the examination process.” Compliance program examinations will usually include assessing how the programs handle marketing, valuation, trading, portfolio management, disclosure and filings, and custody, and the programs’ effectiveness in each area.
The SEC also expressed a focus on whether the advisers’ policies and procedures address compliance with the Investment Advisers Act of 1940 and the rules thereunder, and whether the policies and procedures are reasonably designed to address conflicts of interest and ensure that adviser interests remain subordinate to client interests. The Commission specified that examinations may focus on: “(1) whether the policies and procedures are implemented and enforced; and (2) whether disclosures address fee-related conflicts, with a focus on conflicts that arise from account and product compensations structures.”
The SEC also warned of varying focus areas depending on an adviser’s specific circumstances, such as late or inaccurate filings on Schedules 13D and 13G, Form 13F, Forms 3, 4, and 5, or Form N-PX, changes in business models, or the offering of new types of assets, clients, or services.
3. Never-Examined Advisers and Recently Registered Advisers. The Division reiterated its focus on examining advisers that have never been examined, especially recently registered advisers.
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