RIAs dodge an AML curveball, AI moves into daily workflows, and markets signal rotation over recession.
December’s labor split defies clean reads, the trade deficit narrows sharply, and preparation may matter more in 2026 than prediction.
Industry News
Regulators Blink on RIA AML
Facing mounting industry pressure, FinCEN has delayed the RIA Anti-Money Laundering (AML) mandate to 2028, effectively buying time to rethink a framework advisors warned was premature and overly rigid. InvestmentNews
2026 Retirement in 7 Numbers
The New York Times distills mountains of retirement research into seven telling numbers, revealing how trillions in savings coexist with deep gaps in participation and preparedness. New York TimesUngated
WSJ Bets on Prediction Markets
Dow Jones will integrate Polymarket’s real-time prediction market data across The Wall Street Journal, Barron’s, and MarketWatch, mainstreaming crypto-powered betting markets as financial signals alongside traditional financial indicators. Reuters
Macro Moves
Labor Market Muddle: December Data Defies Clear Reading
Mixed December payrolls (50K Establishment Survey, 232K Household Survey) reveal ongoing labor fragility. Manufacturing shed jobs while wages stayed elevated, justifying recent Fed cuts but leaving January outlook uncertain.
Trade Deficit Narrows
The U.S. trade deficit fell nearly 40% in October to about $30 billion as imports plunged to their lowest level in 21 months and exports hit all-time highs.
Manufacturing Stuck in the Muck一but Services Keep Their Luck
ISM manufacturing lingers near 48 in contraction territory while services PMI holds steady in the mid-50s, reflecting the continuing split between struggling factories and resilient service-sector activity.
In Focus
Your RIA 2026 Preview: More Scrutiny, More AI, More Deals
The road ahead for RIAs looks busy. Converging forces, including regulatory, technological, and competitive, are reshaping the landscape in ways that demand attention now, not later:
The SEC wants a word. The Division of Examinations’ 2026 priorities signal continued focus on investment advisers, particularly around fiduciary duty, custody compliance, and recommendations involving complex products like leveraged ETFs and private credit. Cybersecurity gets elevated emphasis, with Regulation S-P amendments requiring tighter data protection controls. Firms that haven’t stress-tested their compliance infrastructure should start.
AI shifts from experiment to daily workflows. After years of pilot programs and cautious adoption, 2026 looks like the year AI stops being optional. Industry observers increasingly expect firms to deploy AI in the day-to-day: process automation, proposal generation, compliance documentation, client communications, and so on. The consensus: To maximize value, stay in the loop to review, refine, and apply judgment so outputs stay accurate, consistent, and aligned with client needs.
The M&A market matures. Deal activity isn’t likely to slow, but it’s getting more strategic. Buyers increasingly evaluate digital marketing capabilities, tech infrastructure, and cultural fit alongside traditional metrics. The premium now goes to firms with scalable client acquisition engines and operational discipline. Meanwhile, large-firm recapitalizations and “mergers of equals” are expected to continue to drive headlines as platforms position for national scale.
Margin pressure breeds operational strength. Rising costs in 2025 forced many firms to get leaner and smarter. That discipline is carrying forward as a competitive advantage. Firms that invested wisely in technology and efficiency, rather than simply spending, are emerging better positioned for growth.
Succession remains the perennial challenge. Aging principals, next-gen expectations for transparent economics, and the rise of internal transactions continue shaping firm valuations. Those without clear leadership pipelines face valuation discounts; those with defined pathways are smoothing transitions on their own terms.
THE BOTTOM LINE: 2026 rewards preparation. Stronger compliance, smarter technology, disciplined operations: The firms that invested early will be the ones setting the pace.
From the Team
“You’re seeing some rotation happening… small caps are outperforming large caps, and earnings expectations remain strong across the board.”
一 Timothy Reilly, President
“Solid start to the year…there have been some startling geopolitical and policy headlines, but the markets seem to be discounting the noise - and cross asset volatility remains subdued.”
一 Craig O’Neill, Chief Executive Officer
“We respect the upside. The economy is not acting like it’s falling into a recession. The market’s rewarding carry and cyclicality but I wouldn’t confuse a strong tape with a low risk environment.”
一 Alexander D. Oxenham, CFA®, Partner & CIO
Drill Down
The Casino’s Closed: 2026 Markets Reward Investors, Not Gamblers
The era of easy money may be fading in 2026, as 40% of S&P companies may be headed for negative returns. With inflation cooling but labor weakening, AI driving cost cuts over revenue growth, and dispersion rising, success demands selectivity over speculation. This means quality income and discipline over gambling now separate winners from losers.
Crisis, Compromise, and the Creation of the Federal Reserve
On December 23, 1913, President Woodrow Wilson signed the Federal Reserve Act, establishing the U.S. central banking system in response to the Panic of 1907. The crisis exposed the risks of relying on ad hoc interventions by private financiers, including J.P. Morgan, to stabilize markets. The resulting framework balanced public oversight with regional autonomy through a twelve-district structure designed to limit financial concentration while providing the liquidity and stability absent from the pre-1913 banking system.
Bottom Line
Markets are entering 2026 with solid momentum.
In our view growth is holding up, inflation pressures are easing, volatility remains contained, and leadership is broadening. While political noise persists, investors are being rewarded for diversification, income, and fundamentals. This looks like a market defined by rotation and opportunity, not recession.
Hilton Capital Management
Understanding the signals that shape markets is key to serving your clients effectively.
Stay informed, stay ahead, and connect with our team to enhance your investment toolkit today.
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