The SEC Division of Examinations released its Fiscal Year 2027 Examination Priorities on October 23, 2026. For wealth managers and private fund advisers, there are few surprises, though the SEC does provide deeper insight into areas previously included. In addition, part of the roadmap for the 2027 Examination Priorities was already laid out in two risk alerts published earlier this year: the June 9, 2026 alert on economic conflicts of interest and the September 14, 2026 alert on annual compliance reviews.
While most priorities carry over from FY 2026, including fiduciary duty, compliance program effectiveness, dual registrants, never-examined advisers, cybersecurity, and Regulations S-P and S-ID, what has changed is the level of detail in several areas, which are discussed further below.
In addition to releasing the exam priorities, earlier in the same month, the SEC published "The SEC Exam Handbook: A Practical Guide on Process and Engagement", which provides a roadmap of the regulatory examination process used by the SEC nationwide. This guide walks through each stage of an exam. Any adviser preparing for an exam should read it alongside the priorities.
Economic conflicts are now named.
One area that has been expanded in the 2027 Examination Priorities is regarding economic conflicts of interest. Conflicts of interest are at the heart of fiduciary duty, and the FY 2027 priorities follow where some of the deepest conflicts exist: indirect and often under-disclosed compensation. Last year's priorities spoke generally about how financial conflicts affect impartial advice. This year, through a combination of the exam priorities and the June risk alert, the SEC details focus areas that include:
- Fee rebates
- Fee and expense calculations
- Cash management
- Quid pro quo arrangements
- Deposits and withdrawals
- Disclosures related to certain investments and allocations
- Use of debt and fund-level lines of credit
- Use of affiliated service providers
- Accuracy of fee and expense calculations at both the fund and investment level
- Written policies and procedures with the required administrative, technical, and physical safeguards
- A functioning incident response program, including customer notification procedures
- Service provider oversight, including commitments to notify the firm within 72 hours of a breach
- Attention to operational and technology risk as part of safeguarding customer information
The priorities footnote the June 2026 risk alert, which described undisclosed or misleading conflicts, practices inconsistent with advisory agreements, and compliance programs that did not address conflicts.
Cash management deserves particular attention. Sweep programs and cash allocations are easily overlooked because they tend to be treated as operational, but they can present economic conflicts that warrant detailed review.
Wealth managers and retail clients.
Retail clients remain at the center of fiduciary review, with emphasis on older investors and those saving for retirement. Examiners will look at whether advisers have made full and fair disclosure of all material facts and conducted reasonable due diligence on recommended products in light of the client’s financial circumstances.
Advisers must ensure they have documentation supporting the products and strategies they recommend to clients, and these recommendations must be consistent with client profiles, objectives, risk tolerance, and mandates. Factors that must be considered include liquidity, risk and potential reward, volatility, projected performance across market conditions, time horizon, and costs, including exit costs.
Complex, leveraged, and illiquid products; valuation.
The priorities arrive against the backdrop of the retailization of private markets, less than a month after the SEC proposed amendments to broaden retail access to private market strategies. As semi-liquid private credit and interval fund products move into client portfolios, the adviser recommending them is responsible for ensuring that the clients understand the limited access features of these investments, as well as the redemption limits, and exit costs.
The SEC will prioritize advisers that recommend products that are difficult to trade, have unusual features, and are illiquid. The list expands this year to include loans provided by private funds or BDCs, private company investments through special purpose vehicles, ETFs based on less liquid assets, option-based funds, inverse ETFs, single-stock ETFs, and zero-days-to-expiration options. Advisers recommending these should be able to show the due diligence and suitability analysis behind each recommendation.
In addition, examiners will assess the reasonableness of advisers' valuation processes and methodologies including how the firm arrived at a value, how often it is challenged, and what happens to it when market conditions deteriorate.
Advisers to private funds.
For private fund advisers, this year’s exam priorities focus in particular on disclosure, leverage, affiliates, and fees. Examiners will assess whether investment-related risk disclosures are consistent with fiduciary standards, and whether policies and controls address fund-level and investment-level risks. These may include:
Private fund advisers must pay attention to whether expenses tied to particular portfolio investments are appropriately calculated, allocated, and disclosed. Concerns about fees, expenses, liquidity, valuation, and disclosure become more acute when private fund strategies reach retail investors.
Compliance programs and the annual review.
Risk alerts are fair warning, and the SEC’s September risk alert described annual reviews that were late or skipped, inconsistent with the firm's own procedures, misaligned with actual practices, undocumented, or never acted on. The SEC’s focus on compliance programs in the 2027 exam priorities, paired with that alert, emphasizes program effectiveness as a focus area for the SEC and advisers should expect no tolerance for late, superficial, or undocumented reviews. A review that finds nothing and changes nothing is itself a red flag.
The annual review is also where firms document business changes, assess controls, and track corrective action. Firms should be prepared to explain their decisions and show how they addressed weaknesses identified through internal testing, incidents, or prior exams.
Change as a risk factor.
The Division's continued focus on advisers undergoing M&A or adding new client types or services shows these areas of change are not a fleeting concern. New this year, the priorities also call out advisers operating from geographically dispersed branch offices. Firms in these categories should evaluate how each change affects their compliance program, risk assessment, and conflicts, document that analysis, and reflect it in their next annual compliance review.
Reg S-P, cybersecurity and Reg S-ID.
These are the first exam priorities released since every SEC-registered adviser passed its amended Reg S-P compliance date. FY 2026 focused on preparation for the amendments; FY 2027 moves to testing them. Examiners will expect:
Service providers are not themselves subject to Reg S-P. The compliance obligation is on the investment adviser to oversee its vendors through due diligence and monitoring. Firms should be closing the gap now with any vendors that have not agreed to breach notification terms.
Cybersecurity carries over the same control areas as last year, which include governance, data loss prevention, access controls, account management, and incident response and recovery. This year the SEC also adds risks from increased reliance on third-party service providers and shared technologies.
Reg S-ID. Examiners will continue to focus on identification of red flags during account takeovers and fraudulent transfers, and on whether Identity Theft Prevention Programs adopted by firms are being updated for emerging risks such as SI and stolen credentials. Wire and distribution verification procedures should account for the possibility that the client on the phone may not be the client.
Super intelligence: a new name, the same focus.
"Super intelligence" (SI) makes its debut in these exam priorities, where FY 2026 said "artificial intelligence” (AI). The change reflects the September 29, 2026 executive order directing federal agencies to adopt the term. It is not a new rule or a new technology category, and the SEC's focus is unchanged. The 2027 priorities do note use of SI in research, drafting, client communications, portfolio management, and compliance surveillance, and the SEC specifically names SI-generated phishing and deepfake voice and video used for social engineering that advisers should be monitoring.
SI and cybersecurity monitoring cannot stop at the firm's approved vendors, because SI often arrives embedded in third-party software. Ongoing review of third-party applications should be on every CCO's radar. So should personal SI accounts used for business purposes, which raise both recordkeeping and Reg S-P confidentiality concerns.
What advisers should do now.
While the topics covered by the exam priorities will impact advisers in different ways based on their business model and the types of clients they advise, all CCOs should consider taking the following steps in support of the firm’s adopted compliance program:
- Read the June and September 2026 risk alerts alongside the 2027 exam priorities and the new Exam Handbook.
- Confirm the annual review is timely, follows the firm's own procedures, is documented, and leads to corrective action.
- If the firm has gone through M&A, added client types or services, or opened dispersed branches, update the compliance program and risk assessment to match.
- Run a Reg S-P incident response tabletop, confirm breach notification commitments from service providers, and inventory third parties with access to client accounts.
- Inventory SI use, including tools embedded in third-party software and personal accounts, and confirm disclosures about it are accurate.
The SEC examination priorities are not an exhaustive list, and the SEC may adjust its focus during the year. But for wealth managers and private fund advisers, the FY 2027 document and this year's risk alerts together provide a roadmap for compliance in the coming year.
