SEC Oversight in 2025: Exam Priorities and Political Realities

When the SEC’s Division of Examinations released its 2025 examination priorities in October 2024, the U.S. elections were about two weeks away. As we begin the new year, President Trump’s appointees are in the midst of the Senate confirmation process, including Paul Atkins, his pick for SEC Chair (replacing the recently departed Biden appointee, Gary Gensler). All indications are that Atkins. a conservative lawyer and Republican member of the SEC during the George W. Bush administration, will likely be confirmed.

What does Trump 2.0 mean to the wealth management industry? Watchers are closely monitoring how Trump’s well-known aversion to heavy-handed regulatory oversight will play out over the next four years. Will it be a reversal of the Biden years’ stringent enforcement or a shift in focus to a laxer approach?

Nothing is certain – so firms and financial advisors must consider the published 2025 exam priorities and ensure they are prepared. This is not merely about compliance with rules, it’s about protecting clients, avoiding reputational risk and delivering on the high fiduciary standards our industry abides by.

What best practices and resources can wealth management firms and financial advisors put in place to optimize compliance with 2025 exam priorities (including conflicts of interest, cybersecurity, AI and more) for both themselves and the third-party vendors they engage? I sought perspectives from three industry veterans on this topic:

• Rick Kuhlman, Senior Vice President and Chief Legal Officer, Cambridge Investment Research, Inc., an internally controlled and operated financial solutions firm focused on serving independent financial professionals and their clients
• Sid Yenamandra, Founder & CEO, Surge Ventures, a SaaS venture studio targeting the financial services and wealth management industries
• Stacy Sizemore, Chief Compliance Officer, tru Independence, a Portland, OR-based enterprise delivering independence optimized to established RIAs and breakaway advisors seeking to grow their businesses

Here’s what they had to say:

Rick Kuhlman

If approved by the Senate, Paul Atkins – a former SEC commissioner with knowledge of the inner workings of the agency and an influential voice on financial policy – will be the next SEC chair. I expect him to hit the ground running and be a positive influence on the agency during his tenure. 

And while there is certain to be a change in emphasis and hopefully less “regulation by enforcement,†the SEC is a large institution that cannot be turned on a dime. That’s why I don’t think the new leadership will have a material impact on the SEC’s announced 2025 priorities. There were no huge surprises in that list, so I think the new administration will keep those priorities as a roadmap, tweak them as necessary, and then take a fresh look at next year. 

Regardless of who’s in the White House, the wealth management and financial services industries are rapidly evolving. In times of significant change, regulators tend to rise above politics and figure out how best to respond and adapt – and there is a lot to address.

Issues around artificial intelligence and its application to asset management and portfolio construction need to be addressed and guardrails put in place. Privacy and cybersecurity rules need to be better defined and less open to interpretation. As crypto markets mature and become more mainstream, sensible regulations will need to follow. We’re looking at these areas and more.

Our goal at Cambridge is to support our financial professionals by employing a common-sense compliance approach that helps them prepare for current regulatory priorities, anticipate what comes next, and position their clients and practices for long-term success. 

Sid Yenamandra

Like the rest of the world, the SEC is trying to get its arms around AI and determine the risks and opportunities of the emerging technology. The SEC’s mandate is to protect the investing public, so when it comes to AI in the wealth management industry, they want to see what policies, procedures and guardrails are being used to ensure AI is a benefit to investors. 

According to the published priorities for AI this year, the agency exams will look at a firm’s AI capabilities and usage for accuracy. They want to prevent what is known as “AI-washing,†where firms try to jump on the bandwagon, using AI as a buzzword to gain a marketing advantage. The SEC will be on the lookout for firms exaggerating how they implement AI and/or the value clients will receive from its use.

In addition, examiners will assess whether firms have implemented adequate policies and procedures to monitor and/or supervise their use of AI. This will include AI tasks related to fraud prevention and detection, back-office operations, anti-money laundering (AML) and trading functions. Reviews will also consider firm integration of regulatory technology to automate internal processes and optimize efficiencies. In addition, the Division will examine how registrants protect against loss or misuse of client records and information that may occur from the use of third-party AI models and tools.

To do AI right, wealth management firms need to partner with experienced vendors with tools that will pass SEC scrutiny. Creating an integrated AI strategy is not something most of these firms have the in-house resources, talent and expertise to pull off on their own. At Surge Ventures, we have companies, including RegVerse and Kovair, that provide AI-enabled tools that automate manual processes, streamline workflows and protect client data. AI and generative learning is at the core of our offerings, it’s not just hype. With tools like ours, firms can go into an SEC exam with confidence.

Stacy Sizemore

Each year, I wait on the edge of my seat for the SEC’s Examination Priorities. This is an important and informative tool that augments other industry information and compliance alerts that I utilize for compliance planning for the year. 

Leveraging the SEC’s annual examination priorities can really help sharpen your compliance efforts, but we have to keep in mind that the priorities are not an all-inclusive look into what the SEC is reviewing in their exams – these are the highlights. 

I suggest delving deep into your entire compliance program and using the priorities to make an even deeper dive into the items mentioned. My best practices are to use the priorities to update our annual risk matrix, compliance manual, training plan for advisors and other applicable items. I review those items that are included year after year, such as conflicts of interest and cybersecurity, and then look at newer items, such as AI or third-party vendor oversight, to see where we have gaps or where we need to make our policies more robust. We also need assurance that our vendors align with regulatory requirements. 

Having a heads-up from the SEC helps compliance in implementing a comprehensive program and assists further by letting us know what key areas we should give special attention to. 

It’s important to develop and maintain compliance programs that effectively identify, monitor, and mitigate regulatory risk. On an ongoing basis, I recommend reviewing and updating the programs to adapt to evolving regulatory expectations.