The SEC Is Concerned for Older Investors and Retirement Savers. Here's What You Should Know.

Acknowledging the unique risks faced by aging baby boomers, the U.S. Securities and Exchange Commission (SEC) announced that it would be prioritizing its examinations in 2026 to focus on recommendations made to older investors and retirement savers.

College savings were also a top priority, as were private securities (such as private credit and hedge funds) and the use of artificial intelligence (AI) in the investment management industry.

So, what does this mean for investors and what questions should you be asking your financial adviser?

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Let’s jump into it.

Basic priorities haven't changed

First of all, it's important to understand that nothing has fundamentally changed at the SEC. The commission expects financial advisers to be true fiduciaries, acting in their clients' best interest and managing for the clients' benefit, not their own.

As a practical matter, that means choosing investments that are appropriate for the client's risk tolerance and not those that generate the most in fees or commissions for the adviser.

The focus on older investors, college savers, private securities and AI is simply an acknowledgement of where the SEC sees the most potential for harm.

It's also important to remember that, after so many years of raging bull market conditions, both investors and their advisers are eager to take more risk today than they might have during more sober times.

The fear of missing out – FOMO – is very real and very dangerous, and the SEC wants to make sure that advisers are keeping it under control.

If the SEC examiners see potential landmines, we should take that seriously.

So, with that in mind, what sorts of questions should you be asking your adviser?

Let's go over a few.

Questions to ask your adviser

Am I taking an appropriate amount of risk for a person my age?

This is fundamental. There's an old joke on Wall Street that the stocks take an escalator up … and an elevator down. Stocks fall a lot faster during bear markets than they rise in bull markets.

If you're young and just starting to really save for retirement, that's not really a problem. But if you're retired or close to retirement, taking a major loss can permanently impact your lifestyle.

After the run that stocks – and particularly tech stocks – have taken over the past few years, your portfolio might be really stock heavy right now.

Rebalancing and diversifying into bonds, cash or other assets might make sense.

What is my risk from “exotic” or aggressive ETFs?

Earlier this month, the SEC halted its review of ETFs that offered up to five-times leverage on individual stocks. Yes, you read that right.

ETF providers had requested approval for new ETFs that would have moved $5 for every $1 move in the price of Nvidia (NVDA), Palantir (PLTR) or any other popular traded stock.

Given that it’s not unusual for an individual stock to move 10% or more in a day, particularly around earnings season, that was clearly an accident waiting to happen.

No one wants to see the proverbial widows and orphans losing 50% or more in a single day on a wild speculation.

But while the SEC torpedoed that particular idea, the commission has taken a far more permissive approach in recent years, allowing more speculative assets such as bitcoin to be traded in an ETF wrapper.

And leveraged ETFs offering 2X leveraged exposure to indexes and even individual stocks have become popular trading vehicles.

There's nothing inherently wrong with a "risky" ETF so long as you understand the risks and size the positions appropriately.

No one is going to have their retirement dreams dashed because they decided to roll the dice with a small piece of their portfolio.

But you really don't want to get carried away here.

Do I have exposure to private credit?

Private credits are a financial adviser's dream come true. They offer income that is potentially much higher than what can be safely found in the bond market, but with zero volatility.

That's because, unlike bonds, private credits aren't "marked to market." They aren't publicly traded, so the value doesn't change on your monthly statements.

Be careful here. Just because you don't see the volatility, that doesn’t mean it isn't there, under the hood.

Many of the companies seeking private credit tend to have fragile finances, and we haven't seen how retail private credit products perform during recessions.

In the end, there's nothing new under the sun. Investing has always been an exercise in risk management.

But the SEC's examination priorities for next year give us a good guide for some potential landmines we should be watching for.

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