Continuing Education (CE) requirements are common to many professions, but historically there was no minimum CE requirement for individual Investment Advisers (IARs) at advisory firms. While certain credential holders (such as CFP and CFA credential holders) have CE requirements to hold their credential, her IAR, without such credential, historically did not have an ongoing CE requirement. This means that IAR can take your career for years, even decades, without having to update or extend the knowledge you had when you first enrolled. To address this issue, in 2020, the North American Association of Securities Administrators (NASAA) released a Model Rule creating the first-ever CE requirements for the IAR. In 2022, the first state to adopt the new model regulations will implement his IAR CE requirements, and by 2024, at least 15 states will begin to require his IAR CE.
In this post, Senior Financial Planning Geek Ben-Henry Moreland explains how IAR can determine if a CE needs to be completed, and if so, what to do about it. As states adopt the model rules, more and more IARs will be subject to the new CE requirements.
At a high level, all IARs registered in states requiring a CE must complete a total of 12 CE credits each year, consisting of 6 credits in Ethics and Professional Responsibility and 6 credits in Products and Practices. However, the caveat is that NASAA approval is required for the content to count towards his IAR CE requirements. The only exception is CE content that falls under FINRA’s Regulatory Elements CE requirements for broker-dealer registered representatives and may also be used for IAR CE (where IAR is also the registered representative), even if not specifically approved by NASAA. On the other hand, other credential holders who have their own CE requirements, such as CFP certificates and CHFC designees, can apply CE credits to their designations towards IAR CE requirements if the content is NASAA approved. it’s not NASAA approved).
There are other considerations that IAR should be aware of. In particular, those registering as her IAR for the first time, changing company or state registrations, or temporarily unregistering (such as leaving work to raise children). It is also important to note that for IARs who are late for the CE requirement, IARs who have not completed the required 12 credits may renew their registration and work with clients the following year, but if they do not catch up the following year, they will not be able to renew their IAR registration in states with IAR CE requirements.
Looking ahead, it will be worth watching how various states apply NASAA’s IAR CE model rules to their own investment advisory regulations. Because the states that have already adopted the IAR CE requirements follow the model rules almost as is (the requirements are relatively easy for IARs operating across state borders to understand), it seems inevitable that we will see more individual nuances as more states adopt the rules. Ultimately, however, IAR CE, although a new requirement whose implementation will take time to work through, is a positive development that will raise the bar for an industry that has hitherto lacked basic requirements for individuals giving investment advice to regularly update and extend their knowledge.
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