In November 2020, the North American Securities Administrators Association (“NASAA”) introduced the Continuing Education Model Rule to help firms and practitioners in the investment advisory space better serve their clients and maintain regulatory compliance.
NASAA, which is tasked with promoting excellence in the securities industry, has expanded to 19 member states who have pledged to protect investors and promote integrity in the business by facilitating ongoing education for investment adviser representatives (“IARs”). Nine jurisdictions, including California, will adopt the NASAA Continuing Education Model Rule in 2024 and 2025.
The following jurisdictions have implemented the NASAA Continuing Education Model Rule.
| Maryland | 2022 | Michigan | 2023 |
| Mississippi | 2022 | Oregon | 2023 |
| Vermont | 2022 | South Carolina | 2023 |
| Arkansas | 2023 | Washington D.C. | 2023 |
| Kentucky | 2023 | Wisconsin | 2023 |
Nine other jurisdictions will implement the NASAA Continuing Education Model Rule in the coming years.
| California | 2024 | North Dakota | 2024 |
| Colorado | 2024 | Oklahoma | 2024 |
| Florida | 2024 | Tennessee | 2024 |
| Hawaii | 2024 | U.S. Virgin Islands | 2025 |
| Nevada | 2024 |
Who is required to Complete the CE requirement?
All IARs registered in member states who have adopted the NASAA Model Rule are required to satisfy the annual continuing education (“CE”) requirement. IARs must complete the CE requirements in the jurisdictions in which they are registered (rather than where their employer or business is headquartered).
What Courses and Classes Satisfy the IAR CE Requirement?
The model rule provides universal parameters for NASAA members to execute continuing education requirements for Investment Adviser Representatives (IARs) in their jurisdictions. IARs are required to complete 12 credits of approved course work each year with approved course work in two distinct areas:
- Products and Practices: This focus area promotes the IAR’s ongoing advancement of product knowledge and expertise in services offered.
- Ethics and Professional Responsibility: This area emphasizes ongoing competency in an IAR’s fiduciary duty to their clients and other regulatory obligations.
IARs must complete six credits in Products and Practices, and six credits in Ethics and Professional Responsibility to meet their CE requirement.
NASAA maintains a list of approved CE providers that IARs may use to satisfy this requirement, which can be accessed here.
IARs Registered in Multiple Jurisdictions and Dual Registrants
IARs registered in more than one jurisdiction are not obligated to complete CE requirements separately for all jurisdictions in which they are registered. If the CE requirements for one jurisdiction meets the minimum requirements of the other, the IAR can satisfy the annual CE requirement of all jurisdictions with the mandatory 12 credits (six in Products and Practices, and six in Ethics and Professional Responsibility).
For IARs who also are registered representatives at a broker-dealer, it is possible to apply FINRA CE requirements to the Products and Practices section of their IAR CE credits if the credits meet the minimum criteria set by NASAA.
What happens if an IAR does not complete their CE requirements?
An IAR registered in a jurisdiction who has adopted the NASAA Model Rule must complete the 12 credits by the 12-month reporting period. If the IAR fails to complete this requirement, they will be marked as ‘CE Inactive’ until this requirement is satisfied.
If the requirement is not satisfied by the end of calendar year, the IAR will not be eligible for their IAR registration or renewal across all jurisdictions who have implemented the NASAA Model Rule.
Why is the IAR Continuing Education Requirement Important for Regulatory Compliance?
This mandate on continuing education for IARs is an instrumental tool in not only ensuring practitioners provide up-to-date and knowledgeable services and products to their clients, but also that they remain aware of the ever-evolving regulatory changes essential to maintaining compliance.
Through continuing education, agencies and practitioners are better equipped to protect investors’ best interests and provide advisory services that support clients’ goals and mitigate risks.
The regulatory attorneys at Jacko Law Group work with investment advisers, broker-dealers, advisers to private funds, investment companies and others in the financial industry to help them meet their regulatory requirements.
For questions regarding the CE requirements set by NASAA, or any other regulatory compliance matters, please contact us at (619) 298-2880 to speak to a member of our team. You can also schedule a call HERE.
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