As of January 1, 2022, NASAA (North American Securities Administrators Association) has applied a new Investment Advisor Representative (IAR) CE Model Rule. This rule has been in the works since 2014. After years of research and planning, it passed in November 2020.
The CE Model Rule impacts those in the financial industry, as a certain number of education credits are now required annually. Read on for a general overview of the new rule, who it affects, what happens if IARs cannot complete the credits, and more.
What Is the IAR CE?
Established by NASAA, IARs must acquire 12 Continuing Education credits yearly to keep their registration.
Why Is IAR Continuing Education Important?
This new IAR CE model rule was primarily established and implemented to help level the playing field in the financial industry. Previously, only non-IAR roles like insurance and broker-dealer agents, had a continuing education system. There was no way to ensure each IAR was up-to-date in their knowledge and skills.
This new rule intends to create well-informed IARs who can use their current knowledge on products and ethics-related topics to better advise clients.
Who Is Included in the IAR CE Model?
These requirements apply only to those IARs within jurisdictions that have implemented the IAR CE model rule. However, the continuing education requirements apply to all state-registered and federally-covered IARs.
The jurisdiction applies to all areas where the IAR is registered, e.g., the representative may live in a state that has not adopted the model rule. However, if they are registered in a state which now adheres to the rule, the representative must achieve the required credits annually.
Which States Does the Investment Advisor Rule Affect?
Currently, these IAR rules apply to a few states, mainly in the Northeast and South. Some states in the Midwest and South are implementing the online IAR CE education requirements beginning in 2023. Two states (Nevada and Rhode Island) are pending adoption and have yet to announce an implementation date. The following states have put the IAR requirements into effect:
These states will be requiring IARs to have continuing education learning in 2023:
- South Carolina
These states will be requiring IARs to have continuing education learning in 2024:
- North Dakota
Investment Advisor CE Requirements
Each year, the expectation is that investment advisors will earn a total of 12 credits. This translates to about an hour of instruction per credit. Each IAR is responsible for keeping track of and reporting their credits to the FINRA Central Registration Depository (CRD).
The rule does not stipulate which courses are required, instead letting each IAR select their courses. That said, the course breakdown must be comprised of 50% ethics-related lessons and 50% products and skills training. In short, six credits must apply to each education genre for an IAR to maintain their registration.
What If I Miss the IAR Deadline?
Each year, credits must be completed by December 31. When a registered investment advisor does not complete the lessons, they may still renew their registration. However the label “Inactive CE” will be listed on the Investment Adviser Public Disclosure (IAPD) and FINRA’s BrokerCheck website. IARs can become active once more upon completing the missed credits from the prior year.
Where Can I Take IAR-Approved Courses?
To follow these regulations, an IAR must take courses approved by NASAA from an approved company. These lessons are not limited to a specific state or area. Rather, they can be offered in any state in which the company and lessons are NASAA-approved.
Securities Training Corporation (STC) is proud to be an approved provider of IAR CE for state-registered and federally covered reps. If you’re an IAR registered within one of the states that have adopted the CE rule or soon will, contact us for more information. Additionally, you can find information about online courses here. STC has a proven track record of more than 50 years of assisting professionals who want to take their careers to the next level. Whether you need educational materials or help with courses, STC is here to guide you in your professional journey.