As the year draws to a close, it’s crucial for Investment Adviser Representatives (IARs) and Investment Advisers (IAs) to be acutely aware of the Investment Adviser Representative Continuing Education (IAR CE) requirements and the consequences of non-compliance. This blog post aims to highlight key points on what needs to be considered as we approach year-end, focusing on CE compliance, potential administrative terminations, and strategies for addressing these challenges.
Understanding the Risks of Non-Compliance with IAR CE Requirements
Potential Administrative Termination for IARs
Two-Year Backlog Risk: IARs who are behind on their IAR CE for two years face the risk of administrative termination in adopting states come January 2024.
Minimum 2022 CE Requirement: To avoid termination, IARs must complete at least their 2022 IAR CE requirements by the year-end.
Consequences of Administrative Termination
Reapplication Necessity: Terminated IARs must make up missed IAR CE, reapply for registration in affected states and pay associated re-registration fees.
No Refund Policy: Renewal fees for 2024 will not be refunded even if termination occurs in January.
Key Points for IAs and IARs to Mitigate Negative Consequences of Non-Compliance
For Investment Advisers (IAs)
Discontinuing Services: IAs must ensure terminated IARs do not engage in advisory services if not appropriately registered.
Client Service Continuity Plan: IAs need a plan to service clients of terminated IARs until appropriate registrations have been restored.
For Investment Adviser Representatives (IARs)
Avoiding Last-Minute CE Completion: Finalizing IAR CE late in December risks not getting credits rostered in time. Complete required IAR CE well in advance of year-end.
Understanding State-Specific Impacts: Only registrations in adopting states will be administratively terminated if the IAR is deficient for 2 years of IAR CE.
Misconceptions about CE Requirements: Being registered in an adopting state triggers CE requirements, which continue throughout an IAR’s career, even when the IAR no longer holds registrations in adopting states.
Keeping Up-to-Date with State Adoptions
Current State Adoption List
Already Implemented: MD, MS, VT (since January 2022).
Implementing in 2023: AR, DC, KY, MI, OK, OR, SC, WI.
Scheduled for 2024: CA*, CO, FL, HI**, NV, ND, TN.
Planned for 2025: VI***.
*California is close to finalizing adoption, bringing the total of the US IAR population subject to IAR CE across adopted states to over 43%.
**Hawaii has completed rulemaking, but the adopting order has not yet been released.
***The US Virgin Islands will implement January 2025.
Conclusion
This critical period demands proactive measures from both IAs and IARs to ensure compliance with IAR CE requirements and avoid the repercussions of administrative terminations. Keeping abreast of state adoption is essential for navigating these complexities effectively. By taking these considerations into account, IARs and IAs can position themselves for a compliant and successful 2024. To learn more about RegEd’s IAR CE Training, visit here.
RegEd recently hosted an open forum discussion with NASAA’s Natasha Hurt, Senior Manager of Regulatory Services, where she answered attendee questions surrounding IAR CE. A recording of the webinar can be found here.
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 visit www.reged.com.