The SEC Division of Examinations has published its 2026 Examination Priorities. (2026-exam-priorities.pdf)  While the Priorities are far reaching, this article looks at the references to older investors, retirement investors and rollovers.

Among those references are:

Recommendations to Older Investors and Investors Saving for Retirement

Investment recommendations for consistency with product disclosures and the clients’ investment objectives, risk tolerance, and financial/personal backgrounds, with emphasis on: (1) recommendations to older investors and those saving for retirement;… [The bolding in this article is mine and not that of the Examination Division.]

Examinations may also focus on recommendations: (1) that move an investment to a substantially similar product; (2) related to opening different account types, such as option, margin, and self-directed IRA accounts; and (3) made to older investors and those saving for retirement or college.

When conducting these reviews, assessments generally will include whether:… (4) controls to confirm that advice or recommendations resulting from automated tools are consistent with regulatory obligations to investors, including retail and older investors.

The Division continues to prioritize examinations of registered investment companies (RICs or funds), including mutual funds and ETFs, due to their importance to retail investors, particularly those saving for retirement.

Comment: The staff’s interest in older investors is likely for obvious reasons, such as the negative impacts of diminished cognitive abilities. For example, unscrupulous or unqualified advisors could recommend high priced or low-quality investments to older investors who lacked the ability to properly evaluate the investments, costs, risks, etc. Also, I assume that the interest is due to the probable inability of older investors to recover from investment losses because they are no longer working.

The ”story” for younger investors—those saving for retirement—is a bit different. While they likely have the ability to bear greater risk of loss, it seems that the exam staff is prioritizing investment recommendations for retirement as a focus area.

The common thread that runs through both “older” and “retirement saving” investors is IRAs—individual retirement accounts and individual retirement annuities. Reading between the lines, the exam staff intends to look at investment recommendations to IRA holders.

Rollover and Account Recommendations

Of course, no discussion of retirement savers would be complete without including rollover recommendations (and the associated account type recommendations).

The Division will continue to examine broker-dealer sales practices, including those related to Regulation Best Interest, and focus on the following areas of interest: (1) recommendations with regard to products and investment strategies (including account and rollover recommendations); (2) conflict identification and mitigation practices, in particular with respect to recommendations of accounts, rollovers, and recommendations involving limited product menus;

Examinations may also focus on dual registrants and encompass reviews of firms’ processes for identifying and mitigating and eliminating conflicts of interest where dual registrants receive compensation or other financial incentives that may create conflicts of interest that must be addressed, account allocation practices (e.g., allocation of investments where an investor has more than one type of account) and account selection practices (e.g., brokerage versus advisory, including when rolling over employer plans to an IRA or transferring an existing brokerage account to an advisory account, as well as recommendations to open wrap fee accounts).

Comment: Both the SEC and the DOL have noted that a rollover may be the single largest financial transaction in the life of an investor. As a result, it deserves special regulatory focus and oversight. In this case, the SEC Examination Division is looking at (i) the quality and cost of the recommendations (taking into the SEC staff position that cost is a key component of any investment recommendation) and (ii) the conflicts of interest associated with rollover and account recommendations (e.g., a fee or commission from a rollover IRA).

What should you make of these examination priorities?

Well, there is the obvious. The SEC—or, more accurately, the Examination Division—is concerned about older investors and workers saving for retirement—which necessarily includes a concern about the quality and cost of rollover recommendations. On top of that, no one should be surprised that the Examination Division is concerned about conflicts of interest, and one of the most significant conflicts is a rollover recommendation. If the recommendation is accepted by the participant, an advisor and the broker-dealer or RIA will make money from the rollover IRA, but if it is not, the money will remain in the plan and will not generate revenue for the advisor, broker-dealer and/or RIA. Those “all-or-nothing” conflicts will undoubtedly be scrutinized by regulators. And they are hard to mitigate. It may be that the only way to mitigate the conflict is to follow a robust process to evaluate information about the investments, services and cost in the plan, and those in a rollover IRA, and reasonably determine which option is in the best interest of the participant. The best guidance on that process can be found in this SEC Staff Bulletin: SEC.gov | Staff Bulletin: Standards of Conduct for Broker-Dealers and Investment Advisers Account Recommendations for Retail Investors

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The views expressed in this article are the views of Fred Reish, and do not necessarily reflect the views of Faegre Drinker.