On October 23, 2026, the SEC’s Division of Examinations (the “Division”) announced its exam priorities for fiscal year 2027. These SEC exam priorities are announced each year to help promote and improve compliance and protect investors. The exam priorities also indicate what specific areas SEC examiners may be focusing on during upcoming examinations this year and cover not only investment advisors but also broker-dealers and transfer agents.
Exam Priorities for Investment Advisors
The adherence of SEC-registered investment advisors to their fiduciary duty, particularly with regard to retail and senior investors, continues to be a priority for the Division. The Division will look at whether investment advisors are providing full and fair disclosure, conducting adequate due diligence on investments and products recommended to clients, adopting and evaluating whether their policies and procedures are adequate and being implemented effectively, and assessing whether valuation methodologies are reasonable. The Division mentioned, for example, that it will assess whether investment advisors are taking into account factors such as client profiles, investment objectives and risk tolerance when providing investment advice.
The Division also stated that it would give priority to investment advisors that are recommending investment products that are illiquid, difficult to trade, and/or have unusual features. These types of investments include alternative investment products (e.g. loans provided by private funds, investments in private companies through SPVs) and complex investments with higher risk, such as ETFs based on less liquid underlying assets, inverse or single-stock ETFs, and option-based funds.
With regard to advisors to private funds, the Division will look at their disclosures of risks and whether their compliance programs are set up to address both investment-level and fund-level risks. The Division cited, as examples, disclosures concerning the allocation of investments, the use of debt and lines of credit at the fund-level, the use of affiliated service providers, and whether advisors’ fee and expense calculations at the fund and investments levels are accurate.
The Division also mentioned that it will closely look at the use by advisors of certain third-party service providers to access the accounts of their clients where controls may be inadequate to protect the assets and information of clients. Similarly, the Division mentioned the use of proxy advisory firms and whether advisors are adequately evaluating the firms’ proxy recommendations and any potential biases and conflicts of interest on their part.
Please click on the link below to access the full report issued by the Division.
https://www.sec.gov/files/2027-exam-priorities.pdf
Hayley Nelson is the President and Principal Consultant of NCA Compliance, Inc., a compliance consulting firm providing a wide range of customized compliance solutions for investment advisors. Ms. Nelson previously worked for the Securities and Exchange Commission and a large investment manager in New York.
