Form ADV 2026: Key Updates and Filing Best Practices
The SEC's latest Form ADV amendments introduce significant new disclosure requirements for 2026, including enhanced reporting on AI usage, cybersecurity incidents, and ESG investment practices. Here's what investment advisers need to know for their annual update filings.
Key Form ADV Changes for 2026
The SEC has finalized several amendments to Form ADV that take effect with 2026 annual amendment filings. These changes reflect the agency's focus on technology governance, cyber risk, and sustainable investing practices.
AI and Technology Disclosures
New Item 5.L requires advisers to disclose the use of AI, machine learning, or algorithmic tools in investment decision-making, client communications, or compliance processes.
Cybersecurity Incident Reporting
Enhanced Item 17 questions require disclosure of significant cybersecurity incidents within the past 24 months, including breach scope and remediation steps.
ESG Investment Practices
New Schedule F requires detailed disclosure of ESG integration methodologies, including data sources, scoring criteria, and engagement practices.
Part 1A: Updated Reporting Requirements
Item 5: Technology and AI Usage
The new Item 5.L requires detailed disclosure about:
- Whether the adviser uses AI or algorithmic tools for investment recommendations
- The role of human oversight in AI-assisted decision-making
- Use of AI in client-facing communications (chatbots, automated responses)
- Third-party AI tools and vendor relationships
Item 17: Cybersecurity Disclosures
Enhanced cybersecurity questions now require:
- Disclosure of any significant cybersecurity incidents in the past 24 months
- Description of incident response and notification procedures
- Information about cybersecurity insurance coverage
- Third-party security audit or certification status
Filing Deadline Reminder
Annual updating amendments for fiscal year-end December 31 are due within 90 days — by March 31, 2026. Mark your calendar and begin preparation now.
Part 2A Brochure Updates
The SEC has provided guidance on how Part 2A disclosures should be updated to reflect the new requirements:
Item 6: Performance-Based Fees (AI Considerations)
If AI or algorithmic tools contribute to performance results that trigger performance-based fees, disclose:
- How algorithmic performance is measured and attributed
- Potential conflicts arising from AI-driven fee calculations
- Client ability to request human review of AI decisions
Item 8: Methods of Analysis (AI Disclosure)
Advisers using AI must now clearly disclose in Item 8:
- The types of AI tools used and their purpose
- Limitations of AI-driven analysis
- Human oversight mechanisms
- How clients can opt out of AI-driven recommendations if applicable
Schedule F: ESG Disclosures
The new Schedule F applies to advisers who incorporate ESG factors and requires disclosure of:
- Specific ESG criteria used in investment selection
- Data sources and third-party ESG rating providers
- Whether ESG is used as a primary or secondary consideration
- Proxy voting policies related to ESG matters
- Shareholder engagement practices on ESG issues
Best Practices for 2026 Filings
Start Early
Begin gathering information for new disclosure items at least 60 days before your filing deadline.
Inventory AI Tools
Create a comprehensive list of all AI and algorithmic tools used across your organization.
Review Cybersecurity Logs
Assess whether any incidents meet the reporting threshold for Item 17 disclosures.
Document ESG Processes
Ensure your ESG methodology is clearly documented and ready for Schedule F disclosure.
Need Help With Your Filing?
NextReg provides comprehensive Form ADV preparation and review services. Our experts can help ensure your 2026 filing meets all new requirements.
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