Deadline Approaching – State IAR Continuing Education Program Compliance

In November 2020, the NASAA membership voted to adopt a model rule to establish a continuing education (CE) program for investment advisor representatives (IARs) in each state adopting the model rule. In 2021 Maryland, Mississippi and Vermont adopted the regulation with implementation in 2022.

To date, in 2022 the following states have adopted the regulation for implementation in 2023:

• Arkansas
• Kentucky
• Michigan
• Oklahoma
• South Carolina
• Washington, D.C.
• Wisconsin

The following are the major components of the model rule:

• The IAR CE program applies to all IARs of both state- and federal-covered investment advisors registered in the jurisdiction.
• IARs are required annually to complete 12 credits, with credit being sessions of at least 50 minutes, with six credits each in programs with Products and Practices and Ethics and Professional Responsibility components.
• All providers for the CE program must be approved by Prometric, on behalf of NASAA.  Approved vendors are available at Approved IAR CE Providers – NASAA   
• Course completion reporting to FINRA is a shared responsibility of the instructor, the course provider and the IAR. The instructor is responsible for taking attendance and recording course completion for each participant as well as the number of CE credits to be awarded. The instructor then communicates that information to the course provider or directly to FINRA, as manager of NASAA’s CE reporting database. IARs can monitor and report their IAR CE through FINRA’s FinPro system.
• In certain circumstances NASAA will accept the securities industry CE Regulatory Element as an equivalent of the Products and Practices module, so long as the FINRA CE content continues to meet certain baseline criteria as determined by NASAA. Additionally, credits from CE courses taken to maintain professional designations can apply to the IAR CE program so long as the provider and course have been approved through Prometric for IAR CE purposes.
• If an IAR does not complete the CE requirement by the annual deadline, the IAR will pay the registration renewal fee and CRD will set his or her IAR CE status to “CE Inactive,” which will then appear in the Investment Adviser Public Disclosure (IAPD) and in BrokerCheck. The IAR can continue to do business. However, if the CE requirement is not completed by the end of year, the IAR will be unable to renew his or her registration. An IAR that is CE Inactive will hold that status in all states where the CE rule is effective, following adoption of the model rule. In states which have not adopted the rule, the CE inactive status will have no impact on the registration of the IARs registered with that state.

Individuals and their firms should become familiar with the regulations enacted by states in which the IAR is registered, as not all states adopt the model rule in its original form. Oyster Consulting takes a proactive approach to supporting your Compliance Department and your Chief Compliance Officer. Our team of former CCOs and regulators have the knowledge, experience, and resources to help you prioritize, address and respond to risk.