The 2026 Form ADV filing season brings major compliance changes, including proposed anti-money laundering requirements and enhanced AI disclosure rules. But most advisors are still making the same costly mistakes that trigger SEC enforcement action.
The 2026 Form ADV filing season brings significant changes that will reshape compliance requirements for registered investment advisers and exempt reporting advisers. With proposed anti-money laundering standards, enhanced disclosure requirements, and heightened SEC scrutiny, advisors who start planning now will avoid costly mistakes and regulatory headaches.
The Financial Crimes Enforcement Network (FinCEN) has issued a notice of proposed rulemaking to extend the effective date of the final rule establishing Anti-Money Laundering/Countering the Financing of Terrorism Program and Suspicious Activity Report Filing Requirements for Registered Investment Advisers and Exempt Reporting Advisers (IA AML Rule) from January 1, 2026, until January 1, 2028. This extension would provide advisors additional time to establish anti-money laundering and countering the financing of terrorism frameworks under the Bank Secrecy Act.
When the IA AML Rule takes effect, covered Investment Advisers must comply with the requirements, including updating existing policies, establishing access to FinCEN systems, and developing internal AML policies and procedures. The SEC will oversee and enforce compliance with these AML regulations, making accurate disclosure in Form ADV Parts 1 and 2 vital for avoiding enforcement action.
Investment advisers must implement processes to identify clients or potential clients who are laundering money or funding terrorism, report suspicious activities, and prevent bad actors from accessing sensitive US technologies through investments in American firms.
The IARD system will not accept an ADV filing for an account that lacks proper funding, and high traffic toward filing deadlines frequently causes system delays that can prevent timely submission. Advisors should fund their accounts at least one week before their specific deadline to ensure smooth processing. Investment advisers with a December 31st fiscal year-end must file their annual updating amendment by March 31st.
Fees are based on the adviser's regulatory assets under management (RAUM): firms managing over $100 million pay $225 for annual updates, those between $25-100 million pay $150, smaller advisors pay $40, and exempt reporting advisers pay $150. These fees must be deposited before the system accepts any filing.
The Form ADV annual updating amendment provides an opportunity to assess whether new clients have triggered additional state filing requirements throughout the year. Advisors must fund their IARD accounts to pay associated state filing fees and check the appropriate boxes under Item 2C of Part 1A.
Rather than waiting for the next annual state filing renewal, advisors should make these changes immediately and continue monitoring client onboarding throughout the year. State filing fees vary significantly, and the IARD website provides current fee schedules for each jurisdiction.
During examinations and investigations, the SEC routinely requests documentation confirming information reported in Form ADV. In the month before filing annual updates, advisors should run reports to confirm client numbers, investment types, assets under management, RAUM, and custody arrangements.
When classifying clients, advisors must document the criteria and reports used to arrive at classifications. RAUM calculations require identification of all consulted information sources, calculation methodologies, data sources, and any filtering or interpretation processes applied to raw data.
Inconsistencies between Form ADV Parts 1A, 2A, 2B, and 3 (Form CRS) represent the most frequent deficiency identified during regulatory examinations. These errors are among the easiest for regulators to spot and often signal deeper compliance issues.
Advisors must ensure consistency in client types listed in Item 5.D of Part 1 with Item 7 of Part 2.A, and compensation types in Item 5.E of Part 1 must match Item 5 of Part 2.A. Pay particular attention to relationships and services, fees and costs, conflicts of interest, and disciplinary history across all sections.
In 2019, 43% of fee-related examination issues involved advisors charging fees that did not match their Form ADV disclosures. Most cases involve unintentional oversights where advisors charge clients something different from their disclosed fee schedule without updating their filings.
Advisors should reconcile actual fee-billing practices to Form ADV disclosures and investment management agreements on a semi-annual basis at minimum. Even minor deviations can trigger regulatory scrutiny and enforcement action.
The SEC observes advisers neglecting to disclose potential conflicts of interest, no matter how immaterial they may seem. If there's even the slightest chance an advisor could experience some benefit from anything related to their clients, it must be disclosed in Form ADV.
Recent enforcement cases highlight conflicts related to fee arrangements, affiliated transactions, use of affiliated service providers, allocation of investment opportunities, and calculation of fees and expenses. There's significant downside risk for failing to disclose conflicts, regardless of their perceived materiality.
Both understating AUM to avoid SEC registration and overstating to create false significance are equally problematic. AUM and RAUM calculations must be accurate, defensible, and objectively measurable while remaining current.
Advisors should maintain detailed documentation supporting their AUM calculations and ensure consistency between all regulatory filings. Strategic misstatements can result in severe enforcement action and loss of registration privileges.
The SEC's 2025 Examination Priorities indicate heightened focus on AI policies, procedures, and disclosure at firms using artificial intelligence in any aspect of advisory operations. This includes portfolio management, trading, marketing, and compliance functions.
AI technologies may inappropriately steer clients toward products that benefit the firm rather than align with client investment goals, encourage frequent trading or risky strategies that increase profits at client expense, or expose client information through poor data quality or security breaches.
The 2024 Risk Alert on Marketing Rule compliance identified frequent Form ADV deficiencies, including inaccurate statements about third-party ratings, performance results, hypothetical performance, outdated references to prior solicitation rules, and omitted material terms of referral arrangements.
The SEC has identified significant risks when advisors outsource critical functions to third-party vendors that can compromise fiduciary duties and regulatory compliance. Inadequate vendor oversight creates conflicts because proper investigation and controls can be expensive.
Key outsourcing risks requiring disclosure include vendors lacking adequate competence, capacity, or cybersecurity resources; insufficient controls for regulatory compliance; inadequate oversight of geographically dispersed subcontractors; and inability to ensure orderly termination of vendor relationships.
The SEC frequently requests documentation during examinations to confirm client classifications reported in Form ADV. Advisors must maintain clear criteria for categorizing clients and generate supporting reports that validate these classifications.
Documentation should include the specific methodology used to distinguish between client types, data sources consulted, and any filtering or interpretation processes applied. This documentation becomes critical when regulators question classification decisions during examinations.
Even when advisors make other-than-annual Form ADV amendments throughout the year, Item 2 of Form ADV Part 2A must include all material changes since the last annual update. This requirement ensures clients receive complete disclosure of significant business changes.
Material changes include firm name changes, ownership or legal structure modifications, new investment advisory programs or custodians, fee schedule adjustments, personnel additions or departures, and significant portfolio strategy changes. All changes must be documented and disclosed, regardless of previous interim filings.
The 2026 filing season presents unique challenges with proposed AML requirements, enhanced AI disclosure expectations, and continued SEC focus on consistency and accuracy. Advisors who begin planning now can avoid common pitfalls and ensure compliance with evolving regulatory standards.
Early preparation allows time for policy updates, staff training on new requirements, and thorough documentation of all business practices and calculations. The investment in proper planning significantly outweighs the costs of regulatory scrutiny and potential enforcement action.
