Several states have adopted and implemented investment adviser representative continuing education (IAR CE) requirements, while many other states continue to join them in implementing these new requirements. Once implemented, Investment adviser representatives have until the compliance date to meet IAR CE requirements if they conduct advisory business in a state that has adopted the North American Securities Administrators Association (NASAA)’s Investment Adviser Representative Continuing Education Model Rule.
As an approved IAR CE provider, RegEd answers some of the most common questions that IARs and firms have about these first-time requirements. To see a map of adopted states, visit here.
Implementing IAR CE Requirements
Why did NASAA create an IAR CE model rule?
NASAA designed its framework for IAR CE to assist regulators in ensuring continued competency and to help IARs maintain and grow their knowledge base. Approved by NASAA members in November 2020, the model rule closes a gap in required CE for IARs.
Who must comply with the rule?
The IAR CE requirements only apply in states that have adopted NASAA’s model rule. If a state implements IAR CE requirements, IARs of state-registered and federally covered investment advisers that do business in that state must comply. Typically, state-registered IAs have less than $100 million in assets under management (AUM) while federally covered advisers have more than that amount.
Will all states adopt the rule and have the same requirements?
NASAA has adopted many model rules and acts. However, not all states adopt every NASAA model and states that do adopt a NASAA model may deviate from the model language. States sometimes implement stricter regulations, for example.
What states have implemented NASAA’s IAR CE model rule?
The following states adopted the IAR CE model rule with an implementation date of Jan. 1, 2024:
- Colorado
- Florida
- Nevada
- North Dakota
- Tennessee
The following states adopted the IAR CE model rule with an implementation date of Jan. 1, 2023:
- Michigan
- Wisconsin
- Oklahoma
- Kentucky
- District of Columbia
- Arkansas
- South Carolina
- Oregon
The following states adopted the IAR CE model rule with an implementation date of Jan. 1, 2022:
- Mississippi
- Maryland
- Vermont
What states plan to adopt continuing education requirements?
Several additional states have begun the rulemaking process. The following states have proposed and are pending adoption of IAR CE requirements:
- Rhode Island
- Hawaii
- California
When might more states require IAR CE?
If any additional states adopt the NASAA model rule for IAR CE in 2022, the requirements would take effect on Jan. 1, 2023. Similarly, any states that adopt the rule in 2023 would do so with a compliance date as of Jan. 1, 2024, in keeping with the provision that the requirements would take effect on Jan. 1 of the year following the rule’s adoption.
Fulfilling IAR CE Requirements
What does NASAA’s IAR CE model rule require?
Investment adviser representatives must complete:
- Six credits annually in Products and Practices
- Six credits annually in Ethics and Professional Responsibility
How do investment adviser representatives earn IAR CE credits?
Courses must be delivered by a CE provider approved by NASAA and IARs must receive a passing score.
An exam score of 70% is required for courses that are approved for one of the five (5) professional designations that waive the Series 65 examination. The 70% passage rate is allowed for the following designations: Certified Financial Planner (CFP); Chartered Financial Consultant (ChFC); Personal Financial Specialist (PFS); Chartered Financial Analyst (CF); and Chartered Investment Counselor (CIC). ).
An exam score of 100% is required for courses that are NOT approved for designation credit.
Do IARs need to report their credits?
No. CE providers report credits for investment adviser representatives. However, each IAR is obligated to ensure that their CE credits are reported.
What happens if an IAR does not meet the CE requirements?
If an investment adviser representative does not satisfy the required CE credits by the end of a reporting period, they will renew as “CE Inactive” at the close of the calendar year and remain as such until they fulfill all required IAR CE credits. According to NASAA’s model rule, an investment adviser representative who is CE inactive at the close of the next calendar year is not eligible for IAR registration or renewal of an IAR registration.
IAR CE Requirements Resident vs Non-Resident
At this time, all states that have adopted an IAR CE requirement have adopted consistent with the NASAA IAR CE Model. Therefore, an IAR who has satisfied the requirement of any state that has adopted (whether it’s the IAR’s resident state or a nonresident state) will be considered to be in compliance with other states that have adopted the IAR CE requirement.
Meeting multiple CE requirements
What provisions have been made for dually registered investment advisers and registered representatives?
At this time, NASAA permits the FINRA Regulatory Element CE requirement taken by representatives of dual registrants to satisfy the Products & Practices component of the IAR CE requirement. NASAA will continue to monitor the FINRA CE content to ensure it meets certain baseline criteria to allow it to continue to satisfy the Products & Practices component.
Can IAR CE credits be used for professional designations?
An investment adviser representative can apply IAR CE credit toward professional designations if NASAA has approved the CE provider for designation credits as well. So, an investment adviser could apply the credit from one class toward IAR CE as well as a designation such as certified financial planner (CFP), thereby earning dual credit. The adviser may even be able to earn triple credit by applying the credit from the same course to Firm Element training if they use a properly approved CE provider.
Providing IAR CE
What is the process for becoming an approved IAR CE course provider?
Prometric approves IAR CE providers on behalf of NASAA based on criteria such as:
- Ability to meet the learning objectives and goals of IAR CE;
- Quality of the instructors and materials;
- Qualifications of the instructors;
- Experience in delivering educational content, such as training or CE;
- Prior customer/student evaluations;
- Timeliness of content;
- Ability to track and report course/content completion; and
- Prior experience in the financial services industry.
Prospective providers can visit NASAA’s website for more information on its IAR CE program.
Can firms provide IAR CE?
Yes. Firms can provide IAR CE if they are approved by Prometric as a Continuing Education Provider.
What would a firm have to do to provide IAR CE on its own?
Firms are subject to the same tracking and reporting requirements as other IAR CE providers, like confirming that investment adviser representatives do not successfully complete a course more than once in five years and reporting all credits earned to regulators.
What should I look for in an IAR CE provider?
Key capabilities and benefits to look for in an IAR CE solution include:
- Guided course selection so investment adviser representatives can quickly and easily select the correct courses to complete their CE requirement
- Extensive catalog of courses to meet the IAR CE requirement
- Courses that also offer professional designation credit
- Simple integration with a firm’s Firm Element program that allows an IAR to earn dual credits
For more information on RegEd’s IAR CE Solution, visit https://www.reged.com/iar-ce/.
About RegEd
RegEd is the market-leading provider of RegTech enterprise solutions with relationships with more than 200 enterprise clients, including 80% of the top 25 financial services firms.
Established in 2000 by former regulators, the company is recognized for continuous regulatory technology innovation with solutions hallmarked by workflow-directed processes, data integration, regulatory intelligence, automated validations, business process automation, and compliance dashboards. The aggregate drives the highest levels of operational efficiency and enables our clients to cost-effectively comply with regulations and continuously mitigate risk.
Trusted by the nation’s top financial services firms, RegEd’s proven, holistic approach to RegTech meets firms where they are on the compliance and risk management continuum, scaling as their needs evolve and amplifying the value proposition delivered to clients. For more information, please schedule a consultation.