IAA Applauds SEC’s Final Rule Modernizing Small Adviser Definition
November 4, 2026
Contact: IAA VP of Communications & Marketing Janay Rickwalder
The Investment Adviser Association applauds the Securities and Exchange Commission for adopting a final rule that modernizes the SEC’s outdated definition of a small investment adviser, marking a major victory for smaller advisers and a significant achievement in the IAA’s longstanding advocacy for more appropriately tailored regulation.
“For years, the IAA has made modernizing the SEC’s outdated small adviser definition a central advocacy priority, and we are thrilled to see the Commission take this important step,” said Karen Barr, President & CEO of the IAA. “We applaud the SEC for recognizing that smaller advisers face distinct regulatory challenges and for taking meaningful action to ensure that the SEC takes these challenges into consideration in its rulemaking. This is a tremendous win for smaller advisers and the clients they serve.”
The final rule raises the threshold for an investment adviser to qualify as a small entity for purposes of the SEC’s cost-benefit analysis from $25 million to $1 billion in regulatory assets under management. It also eliminates the outdated $5 million total-assets test, provides for periodic inflation adjustments, and makes several other changes supported by the IAA.
Under the Regulatory Flexibility Act (RFA), the SEC must assess the potential impact of its rules on small advisers and consider less burdensome regulatory alternatives. However, the SEC’s definition of a small adviser had not been updated since 1998 and effectively excluded nearly all SEC-registered advisers from the impact analysis. The new definition will help ensure that the SEC more fully considers the impact of its regulations on smaller firms.
The IAA has long advocated for updating the definition and for regulatory approaches that recognize the disproportionate impact of one-size-fits-all rules on smaller advisers while maintaining strong investor protections.
“Smaller advisers play a vital role in serving investors, but they often lack the resources and economies of scale of larger firms,” Barr added. “This rule won’t automatically reduce their regulatory obligations, but it will help ensure that their voices and the real-world impact of new regulations are considered when the SEC writes its rules. We are especially pleased that the Commission has adopted the recommendations we have championed for so long. We look forward to building on this progress and continuing to advocate for tailored, effective regulation that works for advisers of all sizes.”
About the Investment Adviser Association
The Investment Adviser Association is the leading organization dedicated to advancing the interests of fiduciary investment advisers. For nearly 90 years, the IAA has advocated for advisers before Congress and regulators, promoted best practices, and provided education and resources to help advisers serve their clients, the capital markets, and the U.S. economy.
