The North American Securities Administrators Association (“NASAA”) recently adopted a new rule that will require Investment Advisor Representatives (“IARs”) to complete 12 credit hours of Continuing Education annually, 6 for IAR Ethics and Professional Responsibility Requirements and 6 for IAR Products and Practice Requirements. This will be the first time IARs have been subject to Continuing Education and as NASAA president Lisa A. Hopkins states, is intended to “promote heightened regulatory compliance while also helping investment adviser representatives better serve their clients by remaining knowledgeable of current regulatory requirements and best practices.”

Continuing Education Standards

The Continuing Education courses will need to meet a few criteria to be compliant with NASAA standards. These criteria require that the continuing education content:

  1. Focuses on compliance, regulatory, ethical, and sales practices standards.
  2. Is derived from state and federal investment advisory statutes, rules and regulations, securities industry rules and regulations, and accepted standards and practices in the financial services industry.
  3. Requires that its participants demonstrate proficiency in the subject matter of the educational materials.

Rule USA 2001 412

For IARs who previously fell under Rule USA 2001 412(e)-1(d) sub rules (1)(A), their Continuing Education credits will be valid if the following requirements are met:

  1. The investment adviser representative completes the credits of continuing education as a condition of maintaining the credential for the relevant Reporting Period.
  2. Credits of continuing education completed during the relevant Reporting Period by the investment adviser representative are mandatory to maintain the credential.
  3. Continuing education content provided by the credentialing organization during the relevant Reporting Period is Approved IAR Continuing Education Content.

What should you do as an IAR?

After completing your 12 credit hours of CE, you need to confirm with the Authorized Provider, the person providing the CE, that they have reported your completion to NASAA. As the IAR, you do not report your completion yourself, but it is your responsibility to make sure the Authorized Provider does. If an IAR fails to complete the required Continuing Education by the end of the reporting period, they will be marked as “CE Inactive” until they do. An investment adviser who is Continuing Education inactive at the close of the next calendar year is not eligible for investment adviser representative registration or renewal of an investment adviser representative registration. Keep in mind any additional credit hours completed for the Continuing Education over the required 12 will not be eligible for the next reporting period, though NASAA is reviewing this and the policy may change at a future date.

You should also check with your Home State’s CE requirements to make sure they meet the minimum standards required by NASAA. If this is the case, as long as you stay compliant with your Home States CE requirements, then you will be compliant with NASAA’s.

MasterCompliance provides expert consulting, outsourcing, and implementation tools in planning and budgeting your firm’s compliance responsibilities. If there are any areas where you would like to explore additional assistance or services, please Contact Us.