After conducting a series of “Initiatives,” in 2021, the SEC’s Division of Examinations published three separate Risk Alerts focusing on perceived deficiencies involving: 1) Advisers Fee Calculations, 2) Advisers Who Provide Electronic Investment Advice, and 3) Advisers Managing Client Accounts Utilizing Wrap Fee Programs. Given the number of deficiencies found in each Initiative, we expect the SEC to devote additional enforcement resources to pursuing actions in these areas. We anticipate that the SEC will scrutinize the economic relationship between advisers and their clients and disclosures regarding conflicts of interests. We also believe the SEC will focus on sources of revenue that advisers, and their affiliated entities, receive in connection with advised accounts.

Reports suggest that the record setting growth of the investment adviser sector should continue well into 2022. Strong growth both in regulatory assets under management and in client numbers should continue to create opportunities for those seeking to acquire or transition advisory businesses to new platforms.