Back in November 2020, the North American Securities Administrators Association (NASAA) voted to create a model rule which allows NASAA members to implement continuing education (CE) credit requirements for investment adviser representatives (IAR) in their jurisdictions. This new rule was released in 2022, and a number of states are already implementing the requirements.
While these changes only impact IARs who are registered in the participating states, it’s likely more states will adopt the IAR CE rule in the coming years. As of now, here’s who may be impacted and what IARs must do to maintain their registration.
What states have adopted the IAR continuing education requirement?
Currently 12 states have either implemented an IAR CE requirement or plan to do so in the new year.
If you are registered in Maryland, Mississippi or Vermont, you are required to complete 12 CE credits by Dec. 31, 2022, in order to maintain your registration.
According to NASAA, the following states have finalized their requirements and will require 12 CE credits:
- Arkansas (1/1/2023 effective date)
- Colorado (1/1/2024 effective date)
- Kentucky (1/1/2023 effective date)
- Maryland (1/1/2022 effective date)
- Michigan (1/1/2023 effective date)
- Mississippi (1/1/2022 effective date)
- Oklahoma (1/1/2023 effective date)
- Oregon (1/1/2023 effective date)
- South Carolina (1/1/2023 effective date)
- Vermont (1/1/2022 effective date)
- Washington, D.C. (1/1/2023 effective date)
- Wisconsin (1/1/2023 effective date)
In addition, Nevada and Rhode Island have indicated their intent to implement this requirement but have not yet finalized their plans. IARs within those states should keep a close eye on these ongoing changes, as they will likely go into effect in 2023.
This is an evolving list of IAR CE rules by state, which means more states could be added before the year is over. The NASAA website has a running list of states that have adopted the IAR CE requirement that can be viewed here.
How does the IAR CE requirement impact you?
If you are registered in any state which currently has or plans to implement the IAR CE rule soon, then you must comply to maintain your registration. And if you are registered in multiple states, then you still must comply if even only one of those states has adopted a version of the NASAA model rule.
To remain in compliance with this ruling, you must complete 12 credit hours annually in two categories:
- Six hours of Ethics and Professional Responsibility training from an authorized provider.
- Six hours of Products and Practice training from an authorized provider.
You are free to choose courses which pique your interest, but you should check to ensure each course is approved and meets the IAR CE requirement before enrolling.
What happens if an IAR does not meet (or exceeds) the credit requirement?
Advisers are free to exceed the 12 credits per year requirement, but additional credits will not “rollover” or count toward the next year’s requirement.
If an IAR fails to meet the state’s 12 CE credit requirement for the current year, it is possible to make up missed credits the following year. For example, if you only received seven CE credits in 2022, any CE credits you receive in 2023 will go toward making up 2022’s missing CE credits, until the requirement has been met. Then, anything additional will begin going toward 2023’s requirement. However, IARs should be aware that suspension of registration is possible during the period when the individual is short of the requisite credits.
How will IAR CE requirements fit into your schedule?
IARs already have busy schedules, which makes it challenging for some to commit to ongoing education.
Attending a 50-minute NASAA-approved course earns the attendee one CE credit, which means it’s possible to fulfill your state’s IAR CE requirement by dedicating as little as 50 minutes per month toward training. Spreading your CE obligation out over a 12-month period will certainly put less strain on your schedule than attempting to earn all 12 credits at the end of the year — especially with the holidays and end-of-year planning taking up the majority of your time.
Even if your state does not yet require these CE credits, it may be helpful to get into the habit of obtaining them anyway, especially if there’s no added cost to you.
Where to find continuing education opportunities for IARs
To meet your state’s requirements, you must complete or attend an approved IAR CE course or self-guided study. Our IAR Continuing Education Program offers on-demand courses for your team to peruse and complete at their convenience. Every course qualifies for credit and is crafted by experienced professionals.
Get in touch with our team to get your firm onboarded and ready to address all compliance training needs for this year and years to come.
RIA in a Box LLC is not a law firm, investment advisory firm, or CPA firm. RIA in a Box LLC does not provide legal advice or opinions to any party or client. You should always consult your relevant regulatory authorities or legal counsel if applicable.