Updated January 5, 2023 11:00 am CDT
Investment adviser representatives (IARs) are required to complete 12 credit hours of continuing education (CE) each year. This IAR CE program was adopted by the North American Securities Administrators Association (NASAA) in 2020, and states, in turn, are in the process of adopting NASAA’s model rule.
NASAA’s fundamental mission is to protect consumers who purchase securities or investment advice. Continuing education requirements help accomplish that mission by ensuring that licensed professionals remain engaged with the industry. Almost all financial industry professional designations and licenses require some form of CE to maintain.
Prior to adopting the model rule, NASAA surveyed its U.S. members, including state securities administrators in all 50 states and Washington D.C., and they received strong support for implementing a CE program for IARs. According to NASAA, its members indicated that an IAR CE program could improve the quality of advice given, increase professionalism, and reduce the number of compliance deficiencies discovered by regulators during annual examinations.
In response, NASAA developed a Model Rule on Investment Adviser Representative Continuing Education. This model rule was released in November 2020, and compliance began with the 2022 calendar year for states that have adopted the rule.
IARs must complete 12 CE credit hours each year. Specifically, IARs must meet the following requirements:
Under NASAA, a credit is designated to be at least 50 minutes of educational instruction.
These hours must be completed by taking a NASAA-approved course with an authorized provider. The course provider will report completed hours to FINRA, but it is the IAR’s responsibility to ensure the reporting occurs.
IARs must complete continuing education requirements each reporting period. The reporting period is a 12-month period as determined by NASAA. An IAR’s initial reporting period in a state starts on the first day of the full reporting period after the individual is registered with the state. For example, the initial reporting period for an IAR who registers in November would begin January 1 of the following year.
No. IARs who complete more than 12 CE credit hours may not carry those hours forward to the next reporting period.
An IAR who does not complete the CE requirement by the end of their reporting period will renew as CE Inactive at the close of the calendar year. The IAR will remain CE Inactive until they complete and report all the required CE credits.
An IAR who is CE Inactive at the close of the next calendar year is not eligible for IAR registration or renewal of an IAR registration.
If an IAR is registered as an agent of a FINRA member broker-dealer and is complying with FINRA’s continuing education requirements, they will only need to fulfill a portion of the NASAA CE requirements.
Completion of FINRA CE requirements will fulfill the 6-hour IAR Products and Practice requirement. The agent will still be required to complete the 6-hour IAR Regulatory and Ethics Content.
If an IAR is registering after a period of being unregistered, they must complete CE for all reporting periods that occurred between the time that they became unregistered and when they become registered again. This requirement will not apply if the IAR takes and passes the required exam, or receives an exam waiver in connection with the application for registration.
No. States are in the process of adopting the requirements.
The following jurisdictions implemented the model rule as written on 1/1/2022:
The following jurisdictions implemented the model rule as written effective 1/1/2023:
The following jurisdictions have pending legislation to adopt the model rule as written:
IARs are required to meet the CE requirements of all the states they are registered in.
If an IAR’s home state has adopted the model rule, or has CE requirements that are at least as stringent as the model rule, once the IAR has completed those requirements, they will be considered compliant in the other states where they are registered.
If an IAR’s home state has not adopted the model rule, or has CE requirements that are not as stringent as the model rule, then the IAR needs to be in compliance with the requirements of at least one state that has adopted the model rule. The IAR will then be considered to be in compliance with the CE requirements of the other states.
Questions regarding state-specific requirements should be directed to that jurisdiction's securities regulator.
The IAR CE program ensures that IARs remain knowledgeable in industry developments and in current regulatory requirements. States are continuing to adopt NASAA’s model rule, and A.D. Banker will keep you up-to-date with any updates or changes along the way.
If you are not yet registered as an IAR, A.D. Banker can also help you start that process. To become registered as an IAR, a candidate must pass either the Series 65 exam, or the Series 66 if they hold a Series 7 license.
A.D. Banker offers a Series 65 exam prep course that will successfully prepare you to pass your licensing exam on your first attempt.
Topics: Securities, Series 65, Series 66