SEC 2027 Exam Priorities: 9 Areas Investment Advisers Should Prepare For Now

On October 23, 2026, the SEC’s Division of Examinations released its Fiscal Year 2027 Examination Priorities, offering investment advisers an important look at where regulators will be directing their attention in the year ahead.

While many of the priorities build on familiar regulatory themes, this year’s report reinforces an important message: Having compliance policies in place isn’t enough. Firms need to demonstrate that those policies are working in practice.

The SEC is placing particular emphasis on economic conflicts of interest, investment recommendations, compliance program effectiveness, cybersecurity, and emerging technologies. Private fund advisers, newly registered firms, and advisers navigating changes to their business models should pay particular attention.

Below, we break down nine areas highlighted in the SEC’s report and the practical steps investment advisers should consider as they prepare for 2027.

1. Conflicts of Interest: Expect Continued Scrutiny

Conflicts of interest remain front and center in the SEC’s examination priorities. Examiners will focus on how advisers identify, manage, and disclose conflicts that could influence investment advice or place the firm’s interests ahead of its clients.

Areas of particular interest include advisory fees, expense allocations, fee rebates, cash management practices, and other financial arrangements.

What advisers should do: Revisit your firm’s conflicts inventory, Form ADV disclosures, and related compliance procedures. Pay particular attention to fee calculations, compensation arrangements, and whether actual business practices align with what clients have been told.

2. Investment Recommendations and Complex Products Under the Microscope

The SEC intends to closely examine how advisers evaluate and recommend investments, including the consideration of investment characteristics, risks, costs, liquidity, and alignment with client objectives.

Complex, illiquid, and higher-risk investments will receive particular attention, including private credit, alternative investments, business development companies, option-based strategies, and certain exchange-traded products.

What advisers should do: Ensure investment recommendations are supported by documented due diligence and consistent with client objectives, risk tolerances, and contractual investment mandates. For discretionary advisers, documented investment processes and ongoing portfolio monitoring are especially important.

3. Compliance Program Effectiveness: Documentation Is Everything

The SEC continues to look beyond the existence of a compliance manual to evaluate whether a firm’s compliance program is actually effective under Rule 206(4)-7.

Examiners will assess whether policies and procedures reflect the firm’s actual business activities, including marketing, trading, portfolio management, valuation, custody, regulatory filings, and conflicts of interest. The annual compliance review will also remain an important examination focus.

What advisers should do: Make sure your compliance program is more than a collection of written policies. Firms should be able to demonstrate that required reviews and monitoring activities are taking place, deficiencies are being addressed, and annual reviews are appropriately documented.

Just as importantly, your compliance program should evolve alongside your business. New strategies, additional clients, expanded services, and organizational changes may all warrant updates to policies and procedures.

4. Private Funds: Fees, Expenses, and Conflicts Remain in Focus

Private fund advisers continue to face significant regulatory scrutiny. The SEC will focus on investment-related disclosures, allocation practices, leverage and lines of credit, affiliated service providers, and the accuracy of fees and expenses.

Examiners will also evaluate whether advisers maintain appropriate controls addressing risks at both the fund and investment levels.

What advisers should do: Review offering documents, advisory agreements, fee and expense allocation methodologies, and investment allocation practices. Confirm that actual operations are consistent with governing documents and investor disclosures, particularly where conflicts of interest are involved.

5. Cybersecurity and Regulation S-P: Is Your Firm Prepared?

Cybersecurity and the protection of client information remain significant examination priorities.

The SEC will evaluate cybersecurity governance, access controls, incident response procedures, ransomware preparedness, and risks associated with third-party technology providers.

The report also highlights compliance with amended Regulation S-P, including incident response programs, customer notification requirements, and service provider oversight.

What advisers should do: Review cybersecurity and privacy policies, incident response plans, vendor oversight procedures, and employee training. Firms should also confirm that their programs address applicable amended Regulation S-P requirements and accurately reflect how sensitive client information is accessed, maintained, and protected.

6. Artificial Intelligence: Innovation Comes With Regulatory Responsibility

AI and emerging technologies are receiving increased attention from the SEC. The report discusses the use of advanced automated systems in investment research, trading, client communications, compliance monitoring, and other business functions.

Examiners will evaluate whether firms have appropriate oversight of automated investment tools and whether representations to clients accurately reflect how these technologies are used.

The SEC also highlights technology-enabled threats, including sophisticated phishing attempts, deepfake communications, and fraudulent account activity.

What advisers should do: Establish appropriate AI governance, oversight, and testing procedures. Employees should understand permitted uses, confidentiality restrictions, and the importance of human oversight.

Even firms using AI primarily for administrative, research, or compliance-related tasks should evaluate whether existing policies adequately address the associated risks.

7. Third-Party Service Providers: Outsourcing Doesn’t Eliminate Responsibility

As advisers increasingly rely on outside service providers, the SEC continues to focus on the risks associated with outsourcing business functions and granting third parties access to client accounts or confidential information.

The report also identifies external investment-related services, including proxy advisory firms, as areas of interest.

What advisers should do: Evaluate vendor due diligence, access permissions, contractual responsibilities, oversight arrangements, and ongoing monitoring procedures. Remember that outsourcing a function does not eliminate the adviser’s regulatory responsibilities.

8. Newly Registered Advisers and Changing Business Models

Newly registered advisers, particularly firms that have never been examined, remain a priority for the SEC.

The Division will also focus on firms experiencing meaningful changes to their business models, client types, investment strategies, services, or organizational structures.

Examples include expanding into separately managed accounts, introducing new asset classes, acquiring other businesses, or operating through multiple office locations.

What advisers should do: Treat business changes as compliance triggers. When your firm introduces a new strategy, expands its services, or changes its organizational structure, assess whether compliance policies, regulatory disclosures, supervisory controls, and conflicts management procedures need to be updated.

9. Registered Investment Companies and Dual Registrants

Advisers and sub-advisers to mutual funds and ETFs should pay attention to examination priorities involving fund fees and expenses, portfolio management, valuation, disclosures, and consistency between investment strategies and marketing materials.

The SEC will also examine registered funds holding complex or illiquid investments and those utilizing leverage or other higher-risk strategies.

For firms operating as both investment advisers and broker-dealers, additional scrutiny will focus on Regulation Best Interest, account recommendations, compensation-related conflicts, and account selection practices.

What advisers should do: Review fund disclosures, valuation practices, marketing materials, and investment strategies for consistency. Dual registrants should also evaluate account recommendation and selection processes, particularly where different products or account structures involve different compensation arrangements.

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Your 2027 Compliance Checklist: Five Steps to Take Now

The SEC’s examination priorities do not create new regulatory requirements. They do, however, provide a valuable roadmap for identifying areas of heightened regulatory attention.

Rather than waiting for an examination notice, investment advisers should use this report as an opportunity to proactively evaluate their compliance programs.

We recommend starting with these five steps:

1. Reassess conflicts of interest. Confirm that your disclosures, conflicts inventory, and compliance procedures accurately reflect current business practices.
2. Test your compliance program. Evaluate ongoing monitoring activities, annual review documentation, and remediation of identified deficiencies.
3. Revisit investment due diligence. Review procedures for complex, illiquid, and alternative investments, including portfolio monitoring and documentation.
4. Evaluate cybersecurity and vendor oversight. Assess incident response procedures, privacy controls, third-party risks, and applicable amended Regulation S-P requirements.
5. Account for business changes. Confirm that new strategies, services, clients, and organizational changes are reflected in your policies, procedures, and regulatory filings.

Final Thoughts: Don’t Wait for an SEC Examination to Find the Gaps

The SEC’s 2027 examination priorities reinforce a principle that should guide every investment adviser’s compliance program: Effective compliance is demonstrated through action, not just documentation.

Firms should be prepared to show that policies are implemented, conflicts are appropriately managed, compliance activities are consistently performed, and identified weaknesses are addressed.

Not every examination will cover every priority, but these areas provide a useful framework for assessing your firm’s regulatory risk and identifying opportunities to strengthen your compliance program before examiners come knocking.

Is your compliance program ready for 2027?

FiSolve works with investment advisers, private fund managers, and other financial services firms to build, manage, and strengthen their compliance programs. Whether you need help with an annual compliance review, targeted testing, regulatory filings, cybersecurity oversight, or ongoing CCO support, our team can help you stay ahead of regulatory expectations.

Contact FiSolve at Info@FiSolve.com to discuss your firm’s compliance needs and how we can help you prepare for the year ahead.

Source: U.S. Securities and Exchange Commission, Division of Examinations, Fiscal Year 2027 Examination Priorities, published October 23, 2026. Read the SEC report.

Article written by Libby Liebig, Senior Compliance Adviser