Investment adviser representative continuing education requirements are critically important. Please read this alert carefully, as investment adviser representative registration may be at risk if you do not follow the instructions. Failure to complete the requirements may lead to representative deregistration in certain jurisdictions.
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 Adviser Representatives (IARs). The rule implements a products and practices component as well as an ethics component. Since our last alert, California and Hawaii have adopted IAR CE requirements for 2024. As of January 3, 2024, eighteen jurisdictions have adopted CE rules based on the NASAA’s model rule that must be followed by the end of 2024: Arkansas, California, Colorado, Florida, Hawaii, Kentucky, Maryland, Michigan, Mississippi, Nevada, North Dakota, Oklahoma, Oregon, South Carolina, Tennessee, Vermont, Washington D.C., and Wisconsin. Additionally, the U.S. Virgin Islands have adopted CE rules which will become effective on January 1, 2025. Other states are finalizing rules that, if finalized in 2024, could also become effective on January 1, 2025. The continuing education requirements in Maryland, Mississippi, and Vermont were also effective in 2022, and the requirements in Arkansas, Kentucky, Michigan, Oklahoma, Oregon, South Carolina, Washington D.C., and Wisconsin were effective in 2023. Please Note: if you did not complete IAR CE requirements in Maryland, Mississippi, or Vermont by December 31, 2022, you were required to complete the requirements for both 2022 and 2023. If investment adviser representatives in these states did not complete the continuing education requirements by the end of 2023, the representative risks deregistration in the state.
Requirements
The exact CE requirements may vary on a state-by-state basis. Most jurisdictions require at least twelve 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 applicable to IARs of both SEC and state registered Investment Advisers. NASAA is comprised of representatives from each of the 50 states. It does not have any jurisdiction over SEC investment advisors. Although a voluntary organization with no specific jurisdiction, NASAA does have material influence with state securities bureaus. Given that investment adviser 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 adviser) would most likely be required to comply with the state’s continuing education requirements.
Reciprocity
IARs are often required to register in more than one state for various reasons. In most jurisdictions, an IAR who is registered as an IAR in his or her 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 the other state’s CE requirements. 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 required as well as the content breakdown of the credits.
Continuing Education for FINRA-Registered Broker Dealers and Professional Certification Holders
In most jurisdictions, an investment adviser representative who is also registered as an agent of a FINRA member broker-dealer and who complies with FINRA’s CE requirements is considered to be in compliance with IAR CE requirements, as long as certain conditions are met for the IAR Products and Practice Requirement. Numerous states have published guidelines to assist with determining whether an IAR has satisfied the CE requirements. Additionally, in most jurisdictions, CE credits completed by an IAR who was awarded and currently 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. A list of NASAA-approved CE providers can be found here.
Throughout the year, Stark & Stark will hold in-person and hybrid in-person/virtual conferences that may qualify for IAR CE credits.
Reporting Credits
In most jurisdictions, the onus for reporting the credits to the required state authority is on the Authorized Provider. However, every IAR 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 additional states will implement IAR CE requirements in 2024 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. The Investment Management & Securities Group at Stark & Stark is here to ensure you are prepared to comply with CE requirements and to answer any state-specific CE questions you may have.
