Close Close
Sign In
Newsletters
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards
Podcast Center Video Center Webcasts Resource Center Events
About ThinkAdvisor Contact Us Advertise With Us Asset & Logo Licensing Sitemap Terms of Service Privacy Policy Copyright © 2024 ALM Global, LLC. All Rights Reserved.
ThinkAdvisor
A woman working on a computer

Regulation and Compliance > State Regulation

More States Adopt Advisor CE Requirements

By Thomas D. Giachetti

X
Your article was successfully shared with the contacts you provided.

What You Need to Know

  • The NASAA model rule implements a products and practices component as well as an ethics component.
  • Most jurisdictions require at least 12 CE credits per year, and they must be offered by an authorized provider.
  • All IARs are responsible for ensuring that the authorized provider reports their completion of the applicable CE requirements.

In late 2020, the North American Securities Administrators Association (NASAA) announced the adoption of a model rule pertaining to continuing education (CE) requirements for investment advisor representatives, or IARs. I recently sat down with my colleague Joe Antonakakis to discuss CE requirements.

He explained that the model rule implements a products and practices component as well as an ethics component. As of Aug. 12, 2022, three states have adopted CE rules based on the NASAA model rule that must be followed by the end of 2022: Maryland, Mississippi and Vermont.

In addition, CE rules in Arkansas, Kentucky, Michigan, Oklahoma, Washington D.C., and Wisconsin become effective on Jan. 1, 2023. Nevada and Rhode Island are finishing up rules that, if established in 2022, could also become effective by Jan. 1.

The Requirements

The exact CE requirements may vary from state to state. Most jurisdictions require at least 12 CE credits per year: six credits of IAR regulatory and ethics content, and six credits of IAR products and practice content.

The course must be offered by a provider who is authorized to provide CE courses in the particular jurisdiction.

Applicability

IAR CE requirements are generally applicable to IARs of both SEC- and state-registered investment advisors. NASAA is made up of representatives from each of the 50 states. It has no jurisdiction over SEC investment advisors. Although it is a voluntary organization with no specific jurisdiction, NASAA does have material influence with state securities bureaus.

Given that investment advisor representatives are governed on the state level, if/when states adopt continuing education requirements per NASAA recommendations, all such individuals — regardless of whether they are associated with an SEC or state registered investment advisor — would most likely be required to comply with the state’s continuing education requirements.

Reciprocity

IARs may be required to register in more than one state for various reasons. In most jurisdictions, an IAR who is registered as an IAR in their home state and complies with their home state’s CE requirements will be in compliance with another state’s CE requirements as long as the IAR’s home state’s CE requirements are as stringent as those of the other state.

To determine whether the IAR’s home state requirements are as stringent as another state’s CE requirements, an analysis of the number of CE credits is required, as well as the content breakdown of the credits.

FINRA-Registered BDs, Professional Certification Holders

In most jurisdictions, an IAR who is also registered as an agent of a FINRA member broker-dealer and who complies with FINRA’s CE requirements is considered in compliance with IAR CE requirements, as long as certain conditions are met for the IAR products and practice requirement.

Many states have published guidelines to assist with determining whether an IAR has satisfied the CE requirements. And in most jurisdictions, CE credits completed by an IAR who was awarded and holds a credential that qualifies for an examination waiver (including CFP, ChFC, MSFS, CFA, PFS and CIC) satisfy the IAR CE requirements, provided a few additional conditions are met.

Firms are advised to check with the CE provider to verify whether CE courses for a particular professional designation will also be accepted as IAR CE credits.

Reporting Credits

In most jurisdictions, the onus for reporting the credits to the required state authority is on the authorized provider. Every IAR, however, is responsible for ensuring that the authorized provider reports the IAR’s completion of the applicable CE requirements, and in connection with their firm, to maintain appropriate records of CE completion. We anticipate that other states will implement IAR CE requirements in 2023 and beyond. While many jurisdictions have adopted rules that are substantially similar to the NASAA model rule, exact rules vary on a state-by-state basis. 

Thomas D. Giachetti is chairman of the Investment Management and Securities Practice Group of Stark & Stark. He can be reached at [email protected].

(Image: Adobe Stock)

Thomas D. Giachetti

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.