The likelihood of independent adviser exams is declining as the SEC experiences post election changes.

Former SEC Chairwoman Mary Jo White had drafted a regulation to outsource some exams to third parties. However, following Ms. White’s departure, increased Republican resistance and a reorganization of SEC assets, it looks like that plan will fade.

In 2015, the agency’s Office of Compliance Inspections and Examinations (OCIE) added about 70 new adviser examiners. Additionally, in 2016, another 100 examiners moved from the broker-dealer side to the adviser side.  These staffing changes are seeing a dramatic increase in the number of exams advisers are seeing.

OCIE is reporting a 28% increase on adviser exams in the last year.

Still most advisers are not being examined.  In 2016, OCIE examined about 11% of the more than 12,000 registered investment advisers.

Firms can expect this number to rise-although probably not from independent third parties.  The current sense is that the SEC will continue to devote its in-house resources to adviser exams and will continue to strive for greater focus and efficiency.