SEC Outlines 2026 Examination Focus for Investment Advisers and Firms

On November 17, 2025, the U.S. Securities and Exchange Commission (SEC) announced its examination priorities for 2026. The SEC’s Division of Examinations outlined key areas of focus for investment advisers, broker-dealers, and investment companies, reflecting a commitment to transparent compliance rather than enforcement-driven regulation. This initiative aims to enhance protections for retail investors while ensuring that firms adhere to established standards.

Core Compliance Issues Take Center Stage

The SEC’s priorities underscore a return to fundamental compliance themes, as emphasized by Chairman Gary Gensler. The focus will largely center on fiduciary duties, conflicts of interest, and adherence to Regulation Best Interest. Investment advisers will be evaluated on their duty of care and loyalty, especially in relation to the advice they provide to retail investors, retirees, and older customers. The SEC plans to scrutinize the nature of investment products being offered, particularly those deemed complex, such as alternative investments and leveraged Exchange-Traded Funds (ETFs), which often carry higher costs.

Broker-dealers will also be under examination in four key areas: product and investment strategy recommendations, conflict identification and mitigation, processes for reviewing alternatives, and compliance with the Care Obligation. Like investment advisers, broker-dealers will face heightened scrutiny concerning recommendations for complex or alternative products.

Regulatory Changes and Emerging Technologies

The SEC has identified Regulation S-P as a significant risk area, particularly in light of recent amendments. The Division will assess firms’ policies and internal controls, oversight of third-party vendors, and governance practices. Firms will be expected to demonstrate progress in establishing incident response programs to protect customer information from unauthorized access.

Artificial intelligence (AI) remains a focal point for the SEC, with an emphasis on how firms deploy emerging technologies, including automated investment tools and trading algorithms. The Division will review firms’ AI-related disclosures for accuracy and ensure that adequate monitoring policies are in place.

In a notable shift, the examination priorities for 2026 do not explicitly mention digital assets or cryptocurrencies as risk areas. This aligns with the SEC’s recent approach to fostering innovation in the cryptocurrency space, although firms engaged in these activities may still be subject to inquiries related to their crypto operations.

Private funds will also feature prominently in the SEC’s examination agenda, particularly with regard to newly launched funds and those managed by advisers without prior experience in this area. The Division will examine recommendations related to private fund products and those investing in illiquid assets.

The SEC’s Division of Examinations emphasized the importance of robust compliance programs among advisers. Six critical areas of compliance will be evaluated, including marketing practices, valuation, trading and portfolio management, and the accuracy of disclosures. The SEC will determine whether these policies are effectively enforced and whether disclosures adequately address conflicts related to fees and compensation.

Continued Focus on Registered Investment Companies

With a strong commitment to protecting retail investors, the SEC will prioritize examinations of Registered Investment Companies (RICs), including mutual funds and ETFs. Areas of scrutiny will include fund fees, accuracy of portfolio management disclosures, and practices concerning newly registered RICs. Additionally, the Division will review RICs involved in mergers or transactions, as well as those employing complex strategies or significant holdings in illiquid investments.

The SEC’s examination priorities for 2026 reflect a concerted effort to bolster investor protections and ensure compliance across the financial landscape. As firms prepare for the upcoming year, adherence to these guidelines will be crucial in maintaining trust and integrity within the markets.