Regulatory Round-Up August 2026

Staying Ahead of SEC Expectations: Key Compliance Updates for RIAs

As regulatory expectations continue to evolve, the SEC remains focused on one central question: Can your firm demonstrate that its compliance program is working?

This month's Regulatory Round-Up highlights four areas every RIA should review, from compliance program testing and best execution to business continuity planning and new qualified client thresholds for firms charging performance-based fees.

1. Compliance Program Testing: Moving Beyond the Annual Checklist

Annual reviews have long been required under Rule 206(4)-7, but today's SEC examinations are looking for much more than evidence that a review occurred. Examiners want to see that firms are actively identifying risks, testing controls, documenting findings, and making meaningful improvements.

Areas receiving heightened scrutiny include:

• Marketing Rule compliance
• Fiduciary obligations and conflict management
• Custody controls
• Cybersecurity and Regulation S-P preparedness
• Vendor oversight
• Valuation practices

What You Should Do

Rather than treating compliance testing as a once-a-year exercise, build a risk-based testing program that includes:

• Regular testing of high-risk processes
• Transaction sampling and walkthroughs
• Gap analyses comparing practice to policy
• Clear documentation of findings and remediation

Takeaway: Your policies are only as strong as your ability to demonstrate they're working.

2. Best Execution Remains a Fiduciary Priority

Best execution continues to be a significant examination priority for RIAs.

While many advisers associate best execution with commission costs, the SEC evaluates whether firms are seeking the most favorable overall outcome for clients - including execution quality, market impact, responsiveness, financial stability of broker-dealers, and overall value.

Common examination deficiencies include:

• Failure to perform documented broker reviews
• Using a single broker without evaluation
• Weak directed brokerage procedures
• Inadequate documentation supporting broker selection

Recommended Actions

• Review your Best Execution Policy.
• Conduct and document broker evaluations annually.
• Verify Form ADV disclosures remain accurate.
• Train investment and compliance personnel on current expectations.

Takeaway: Best execution isn't a one-time decision—it's an ongoing fiduciary obligation.

3. Business Continuity Planning: Is Your Firm Ready?

Although the SEC doesn't prescribe a standalone Business Continuity Plan (BCP) rule for RIAs, operational resiliency remains a key examination focus.

Your BCP should demonstrate that your firm can continue serving clients during events such as:

• Cyberattacks
• Natural disasters
• Power outages
• Loss of key personnel
• Vendor disruptions

The SEC also expects firms to regularly test these plans—not simply maintain them.

Key Review Areas

• Backup and recovery procedures
• Cyber incident response integration
• Key-person succession planning
• Vendor contingency planning
• Client communication procedures
• Books and records accessibility

Takeaway: A business continuity plan should be a living document that evolves with your firm's operations and risk profile.

4. Qualified Client Thresholds Increase Effective June 29, 2026

For advisers managing private funds or charging performance-based fees, new inflation-adjusted Qualified Client thresholds became effective June 29, 2026.

The updated thresholds are:

• Assets Under Management: $1.4 million (previously $1.1 million)
• Net Worth: $2.7 million (previously $2.2 million)

Existing advisory agreements are generally grandfathered, but new investors and advisory relationships entered after the effective date must satisfy the updated requirements.

Firms Should Consider

• Updating subscription documents
• Revising advisory agreements
• Reviewing pending investor closings
• Updating compliance manuals and training materials

Takeaway: Even routine inflation adjustments require careful document reviews to ensure ongoing compliance.

Final Thoughts

This month's updates reinforce a consistent theme across recent SEC examinations: regulators are increasingly focused on how firms demonstrate compliance—not simply whether policies exist.

Whether it's testing compliance controls, documenting best execution reviews, strengthening business continuity planning, or updating client qualification procedures, firms that proactively review and refine their processes will be better positioned during examinations and better equipped to protect their clients.

How True West Can Help

True West partners with RIAs to build practical, exam-ready compliance programs that go beyond documentation. From annual compliance testing and best execution reviews to business continuity planning and regulatory updates, our team helps firms strengthen their compliance framework while allowing advisors to remain focused on serving clients.

If you have questions about how these updates impact your firm, reach out to your True West consultant. We're here to help you navigate the regulatory landscape with confidence.