Post-Acquisition, RIAs Better Ensure Compliance, SEC Hints

Meet the new boss. Same as the old boss? 

Big-ticket deals and record-breaking merger and acquisition activity in the registered investment advisor industry get all the headlines. Beneath the surface, thousands of advisors now work at firms they didn’t work for just a year ago. The change of employer can bring new management philosophies, compensation plans, product lineups and service areas. That can create new conflicts of interest and raise regulatory scrutiny, potentially jeopardizing the combined firm’s effort to boost scale and profitability.

“It’s not just speculation,” said Steve Brown, managing director at compliance software provider StarCompliance. “The SEC’s 2027 exam priorities name recently merged and acquired advisors as a specific focus area for the coming year. Firms must demonstrate that their compliance controls are not only documented but actively implemented and maintained.”

Advisors on the Move 

There were 77 transactions between July and September and a total of 244 deals inked through the end of the third quarter, per DeVoe & Company. That’s on pace to set another annual record for 2026, and the deal volume has apparently caught the attention of federal regulators.

In its latest exam priorities, the SEC said it will focus on compliance practices when advisors have “undergone certain changes.” This includes: 

• When advisors “have changed their business models or have started advising different types of clients, providing advice regarding new asset classes or providing new services.” 
• When advisors “that have grown through mergers, acquisitions or other means, or are operating from multiple geographically dispersed branch offices.”

When firms are selected for review, the SEC will assess “whether the advisor has adapted its compliance program” as well as “whether it has identified and made any necessary changes to address new conflicts of interest.” 

“What this says to me is that compliance needs a seat at the table during the due-diligence process and during the integration,” Brown said. “It’s also critical to make sure that policies that are spelled out are actually being applied.” 

Compliance for Growth. While most firms take their regulatory responsibilities seriously, there can still be tension between executives charged with business development and those responsible for compliance. 

“Being a good compliance officer isn’t about saying ‘no’ to everything,” Brown said. “It’s about protecting the business. It’s about getting out of your ivory tower, spending time with the business and understanding what you’re trying to accomplish.”