On November 24, 2020, North American Securities Administration Association ("NASAA") members elected to adopt an investment adviser continuing education requirement with the goal of ensuring that advisors receive proper and updated training on the securities business relevant to their duties and obligations. While investment advisers have not had such a requirement in the past, a continuing education requirement for 2022 is fully in effect for Maryland, Mississippi, and Vermont.
Effective 2022, an individual investment adviser representative ("IAR") needs to complete 12 continuing education credits per year in order to maintain their IAR registration in states that have adopted the model rule. This requirement applies to investment adviser representatives of both state and SEC-registered advisory firms.
The purpose of NASAA’s new continuing education rule is to make certain that IARs are knowledgeable of current regulatory requirements and best practices. IARs must comply with the continuing education requirements adopted by the state or securities regulator(s) in which the IAR is registered. Registered investment adviser ("RIA") firms can prepare by implementing procedures to ensure the IARs at their firms are informed of the requirements per each IAR's jurisdiction and that their courses are completed in a timely manner.
The following states have adopted the NASAA CE model rule prior to 2021 and must complete the requirements by December 31, 2022:
- Maryland – Maryland has fully adopted the CE model rule. Completion of 12 credits to maintain registration in Maryland is required by December 31, 2022.
- Mississippi - Mississippi has fully adopted the CE model rule. Completion of 12 credits to maintain registration in Mississippi is required by December 31, 2022.
- Vermont - Vermont has fully adopted the CE model rule. Completion of 12 credits to maintain registration in Vermont is required by December 31, 2022.
Who must fulfill these requirements?
Any investment adviser representative registered in Maryland, Mississippi, or Vermont must comply with each state’s IAR CE Rule. In the event that an IAR is registered in more than one state, the IAR must comply with requirements of each state's securities regulator.
When must IARs comply?
Compliance began at the start of the 2022 calendar year for current IARS in Maryland, Mississippi, and Vermont. Completion of 12 credits to maintain registration is required by December 31, 2022.
States that adopt the NASAA CE model rule in 2022 will take effect January 1, 2023.
How many credits are required each year?
IARs are required to complete twelve credit hours of IAR CE on an annual basis. IARs must complete the
1) IAR Ethics and Professional Responsibility Requirement: An IAR must complete six (6) credits of IAR Regulatory and Ethics Content offered by an Authorized Provider, with at least three (3) hours covering the topic of ethics.
2) IAR Products and Practice Requirement: An IAR representative must complete six (6) credits of IAR Products and Practice Content offered by an Authorized Provider.
Failure to complete the 12 CE credits will result in the IAR being listed as “CE Inactive” and unable to register or renew IAR registration.
In the future, we expect individual states to continue to adopt this model rule as the basis for their own investment adviser continuing education requirement. To stay up-to-date with what states have adopted the CE model rule, subscribe to our blog for quarterly updates. Additionally, we've created an interactive map to reflect what states have adopted the rule and when it is effective in each state. We recommend that the Chief Compliance Officer ("CCO") of all RIA firms review the model rule in detail.
For the full text of the Rule please click here.