2026 SEC Examination Priorities for Investment Advisers

The 2026 examination priorities, released on November 17, is an annual publication highlighting which regulatory areas the Division expects to focus on in the upcoming fiscal year. Though not exhaustive, the examination priorities provide insight into the Division’s processes and its perspective on the most pressing risks to investors and the US capital markets. Although the Division’s priorities span multiple registrant types, this alert focuses on priorities most relevant to SEC-registered investment advisers. In accordance with previous years, the Division will prioritize examinations of recently registered advisers and those who have never been examined before.

Below, we break down the priorities most likely to affect investment advisers.

Adherence to Fiduciary Standards of Conduct

The Division will consider whether advisers are meeting their duties of care and loyalty by assessing the quality of investment advice and disclosures provided to clients, including with respect to (1) advisers’ conflicts of interest; (2) how advisers have considered factors like cost, the product’s or strategy’s objectives and characteristics, liquidity, risks and potential benefits, volatility, expected performance across market and economic conditions, time horizon, and exit costs; and (3) whether advisers have been seeking best execution in order to maximize client value.

For these purposes, the Division will focus on alternative investments, complex investments, and higher cost products, as well as recommendations to older and retirement-focused investors, recommendations of products sensitive to market volatility, and advisers (1) to both private funds and separately managed accounts or newly registered funds, (2) to newly launched private funds, and (3) that have not previously advised private funds. The Division will also pay particular attention to advisers who are dually registered as broker-dealers, advisers utilizing third parties to access client assets and data, and advisers who have merged with other advisory practices.

Effectiveness of Advisers’ Compliance Programs

The Division will evaluate whether advisers’ compliance programs are comprehensive, well-implemented, and enforced. Core areas of compliance under consideration include marketing, disclosures (including fee-related conflicts) and filings, valuation, trading, portfolio management, and custody. We believe advisers should expect continuing scrutiny of marketing rule compliance, including substantiation of material claims, use of hypothetical performance, testimonials or endorsements, third‑party ratings, and related books and records.

Information Security and Operational Resiliency

The Division recognizes the ongoing risks associated with cybersecurity. This year, they are highlighting policies and procedures pertaining to governance practices, data loss prevention, access controls, account management, and responses to and recovery from cyber-related incidents. The Division will also pay particular attention to the identification and mitigation of risks associated with artificial intelligence.

The Division will also assess compliance with Regulations S-ID and S-P, as applicable. For advisers subject to Regulation S-ID, the Division will focus on the advisers’ written Identity Theft Prevention Program and whether those programs are reasonably designed to identify and detect red flags, particularly during customer account takeovers and fraudulent transfers, and include firm training on identity theft prevention.

In anticipation of the applicable compliance dates for amendments to Regulation S-P, the Division will question advisers about their progress in preparing adequate incident response programs. Once the applicable compliance dates have passed, the Division will check that advisers have developed and implemented programs to create safeguards for the protection of customer information.

Emerging Financial Technology

The examination priorities noted the risks associated with the use of automated technology in investment decisions. The Division will therefore consider whether advisers’ use of such technology results in (1) representations which are fair and accurate, (2) operations and controls which are consistent with disclosures made to investors, (3) investment decisions which are in line with investors’ investment profiles, and (4) controls which ensure that investment advice is consistent with regulatory obligations to investors, including retail and older investors.

Considering these priorities can help set investment advisers up for success in the event of an examination. “Examinations are an important component to accomplishing the agency’s mission,” said SEC Chairman Paul S. Atkins, “but they should not be a ‘gotcha’ exercise.” Chairman Atkins further noted that the examination priorities should enable firms to prepare to have a constructive dialogue with SEC examiners.

Advisers should confirm that they have developed and implemented a written incident response program reasonably designed to detect, respond to, and recover from unauthorized access to or use of customer information by their applicable Regulation S‑P compliance deadline (December 3, 2025, for larger advisers and June 3, 2026, for smaller advisers). Programs should include procedures for timely notification to affected individuals where required. As previously noted, the Division has indicated that it will prioritize testing for compliance with these new requirements during examinations following the applicable compliance dates.

If you have questions about the 2026 examination priorities and how they might affect your investment advisory business, contact Jon Jurva, Vanessa Meeks, or another member of the ArentFox Schiff Corporate & Securities group.

Additional research and writing from Clea Braendel, a law clerk in ArentFox Schiff’s Chicago office.