The Securities and Exchange Commission's two top examination priorities over the next fiscal year will be ensuring advisors and broker-dealers put their clients’ interests first and eliminate or fully disclose conflicts of interests, the regulator announced today.

The agency said this is the first time it is publishing its priorities at the beginning of its fiscal year, a move it says will “better inform investors and registrants of the key risks, trends, and examination topics that we plan to focus on in the upcoming year.” The regulator also noted it will have a greater presence of examiners in the field this year.

“Continuing to make our examination priorities public increases transparency into the examination program and encourages firms to focus their compliance and surveillance efforts on areas of potentially heightened risk to retail investors,” Division of Examinations’ Director Richard R. Best said in a statement.

The top SEC exam priority is that advisors “must, at all times, serve the best interest of its clients and not subordinate its clients’ interest to its own,” the agency said.

The Enforcement Division will focus on the advice and recommendations that advisors give involving “complex, high cost and illiquid products, including variable annuities and non-traded real estate investment trusts (REITs), and unconventional strategies, including those that purport to address rising interest rates,” the SEC said.

Advice and recommendations provided to older investors and those saving for retirement will also be a priority, the agency warned.

Examiners will be sifting through the processes advisors use to determine if a reguistered representative’s investment advice is in a client’s best interest, the SEC said.

The agency said it will look to see if and how reps make initial and ongoing suitability determinations, seek best execution, evaluate costs and risks and identify and address conflicts of interest.

Advisors need to be particularly mindful of their compensation, revenue or other benefits, the agency said. “Revenue sharing, markups, or other incentivizing revenue arrangements need to be considered when securities advice is provided,” the SEC said.

Exams will focus on the economic incentives and conflicts of interest associated with advisors that are dually registered as broker-dealers “with a particular eye to investment advice that recommends selling or holding on to particular mutual fund asset classes, when lower cost options are available,” the agency warned.

Enforcement will also continue to focus on the practices of advisors to private funds and prioritize specific portfolio management risks “especially private funds experiencing poor performance, significant withdrawals and valuation issues and private funds with more leverage and illiquid assets,” the SEC said.

Examiners will also be looking at private fund advisors’ calculation and allocation of fund fees and expenses, including valuation of illiquid assets, adequacy of disclosures, and the practices advisors use to offset fees and expenses.

The SEC, which has an exam staff of 1,100 spread nationwide, will continue to give examination priority to firms that have not been examined in a number of years, the agency said.