Investment adviser representatives (“IARs”) must comply with the investment adviser representative continuing education (“IAR CE”) requirements adopted by the state securities regulator(s) in which the investment adviser representative (“IAR”) is registered. The requirement applies to every IAR registered in a state that adopts the NASAA Model Rule on Investment Adviser Representative Continuing Education (Model Rule 2002-411(h)), including IARs associated with state registered investment adviser firms. It also covers IARs for SEC-registered investment adviser firms to the extent that those IARs are registered in a state that has adopted the Model IAR CE Rule.
In the event an IAR is registered in more than one state, the IAR must comply with the requirements of each state securities regulator, which may vary. However, the NASAA Model Rule on Investment Adviser Representative Continuing Education provides that an IAR will be considered in compliance with the CE requirements so long as the IAR’s home state (i.e., where the IAR has its principal office and place of business) has adopted IAR CE requirements that are at least as stringent as the Model Rule and the IAR is in compliance with its home state’s requirements.
In the event that an IAR’s home state securities regulator has not adopted a CE requirement but the IAR is also registered in jurisdictions that have adopted such requirements, then the IAR can maintain compliance by satisfying the CE requirements of at least one state securities regulator that has a CE requirement at least as stringent as the NASAA Model Rule on Investment Adviser Representative Continuing Education.
An investment adviser representative (“IAR”) that registers with a IAR CE jurisdiction for the first time will be required to meet the annual IAR CE requirements of such jurisdiction by the end of the first full calendar year following the year in which they first become registered as an investment adviser representative. Note, however, that this grace period applies to entirely newly registered IARs; IARs with one or more active registrations who merely add a new state registration must comply with the IAR CE requirement for the current year in all states where they are currently registered.
Although the NASAA Model Rule on Investment Adviser Representative Continuing Education places the burden of compliance on the individual investment adviser representative (“IAR”), investment adviser firms and their CCOs should implement proactive policies and procedures designed to train IARs regarding the requirement, track state requirements for each jurisdiction where the investment adviser firm has registered IARs, and ensure timely completion and submission of continuing education (“CE”) credits by the IARs. Failure to do so can result in the firm’s IARs being placed on a “CE Inactive” status, scrutiny and/or intervention by the state regulator(s), and, ultimately, the inability to initiate or renew an IAR’s registration in the necessary jurisdictions. More information will be available later in 2021 regarding the IAR CE program currently in development by NASAA, such as where to find approved courses and how to report CE, which will permit firms to develop and adopt specific policies and procedures regarding IAR CE.
The following states have adopted the Model Rule on Investment Adviser Representative Continuing Education, effective in 2023 (unless indicated otherwise):
To the extent other states adopt an investment adviser representative continuing education rule in 2023, IARs will be required to comply the following full calendar year (i.e., no earlier than January 1, 2024) unless otherwise indicated.
As state securities regulators continue to adopt the IAR CE Model Rule, we will update this FAQ. In addition, NASAA will update its list of member states that are adopting the Model Rule.
The NASAA Model Rule on Investment Adviser Representative Continuing Education requires each investment adviser representative (“IAR”) to complete twelve hours of continuing education (“CE”), of which six are devoted to Products and Practices and six to Ethics and Professional Responsibility. Generally speaking, an IAR cannot receive credit more than once for the same course and must take care to avoid duplicate courses in subsequent years.
No. However, NASAA expects that continuing education (“CE”) providers will offer courses that have been approved to satisfy multiple CE requirements, including those for investment adviser representatives (“IARs”) and certain professional designations. IARs can reduce their compliance burden by seeking out such dually approved courses.
To the extent that FINRA continuing education (“FINRA CE”) is found satisfactory by NASAA, dually registered investment adviser representatives/registered representatives (“IARs/RR”) can count FINRA CE toward the investment adviser representative continuing education (“IAR CE”) “Products and Practice” credits. A dually registered IAR/RR would still need to complete at least six credits of “Ethics and Professional Responsibility” IAR CE approved by NASAA.
If an investment adviser representative (“IAR”) does not fulfill the annual continuing education requirement by the end of the calendar year, the IAR’s registration status on WebCRD will be set to “CE Inactive,” which will be viewable by state securities regulators and by the general public on IAPD and Broker Check. The CE Inactive status will remain until the deficiencies are corrected or action is taken by the applicable state securities regulator(s). If the CE Inactive status persists through the close of the following calendar year, the IAR will be ineligible to renew their registration or to initiate a new IAR registration via WebCRD until the deficiency is corrected.
No, credits earned in excess of the annual continuing education (“CE”) requirement will be recorded on the transcript of an investment adviser representative (“IAR”) but cannot be used to satisfy the CE requirement in subsequent years. In the event an IAR has a CE deficiency from a prior year, any credits earned will be first applied to the prior year deficiency before being used to satisfy a current year’s CE requirement.
No. Only the representative that is licensed in a state that has adopted an IAR CE rule must comply with the requirement. However, the investment adviser firm should ensure it has adopted IAR CE compliance policies and procedures (i) to support its representative’s compliance with the requirement, and (ii) to monitor IAR CE requirements for all representatives as new states continue to adopt the model IAR CE rule.
Yes, the investment adviser representative (“IAR”) must correct any continuing education (“CE”) deficiency prior to re-registering as an IAR or, alternatively, the IAR can retake the Series 65 or Series 66 exam (or satisfy an applicable state securities regulator’s exam waiver).
NASAA anticipates a number of continuing education (“CE”) providers will seek NASAA approval to offer investment adviser representative continuing education (“IAR CE”) courses. Once finalized, information will be made available on www.nasaa.org regarding CE approved vendors and IAR CE courses.
*The information contained in this Frequently Asked Questions webpage is general in nature and intended for educational purposes only and is not intended to be a comprehensive analysis of the securities regulations applicable to registered investment advisers. It is not intended to constitute compliance consulting advice or apply to any particular investment adviser firm’s specific situation. For more information, please see our Disclosures.