RIA Compliance and Practice Management Blog

NASAA Conducting Survey to Continue to Seek IAR Continuing Education Feedback

Posted by RIA in a Box

Sep 14, 2020 10:30:00 AM

IAR Continuing Education RequirementsIn February 2020, the North American Securities Administrators Association (“NASAA”) proposed a new rule that would require firms to implement an investment advisor representative continuing education (“IAR CE”) program for their investment adviser representatives. Although the period for Public Comments ended in March, NASAA continues to seek feedback and data to drive their decision. Thus, NASAA’s IAR CE Committee is conducting a nationwide survey to inquire about the desired content for these programs. This survey is anonymous and will be accepting responses until September 21st, 2020.

10 Steps to Prepare for a Reguatory Exam

In February’s proposal, the IAR CE committee outlined a requirement of 12 hours of continuing education every Reporting Period – 6 hours of CE covering IAR Ethics and Professional Responsibility and another 6 focused on IAR Products and Practice. Agents of a Broker-Dealer, whom FINRA already requires to perform CE, who are dually-registered as an IAR may be deemed already in compliance with NASAA’s IAR Products and Practice CE Requirement.

NASAA’s CE Committee is seeking more granular feedback regarding the Continuing Education content. Specifically, they are gauging the interest level in 12 content categories:

  1. Suitability Documentation: Content will focus on how IARs properly assess client personal and financial needs by documenting their investment objectives, priorities, goals, knowledge, experience and risk tolerance prior to making investment recommendations.
  2. Record Keeping: Content will include requirements for proper record keeping. Including but not limited to, financial statements, annual report filings, net worth requirements, bond requirements, etc.
  3. Contract Review: Content will focus on properly maintained and executed client contracts prior to providing advisory services. Including but not limited to, terms of the contracts, fees, compensation, and other required disclosures.
  4. Conflicts of Interest: Content will focus on how IARs should disclose and report any conflicts of interest, such as dual registrations, outside business activities, and financial industry affiliations.
  5. Account Opening Documents: The content will focus on maintaining proper client account documentation.
  6. Trade Authorization: Content will focus on IARs properly adhering to the authorized trading authority provided to them by their clients and complying with requirements.
  7. Invoicing: Content will focus on client invoicing and the steps needed to ensure client fees are accurately calculated.
  8. Performance Reports: Content will focus on compliant IAR performance reporting and advertising.
  9. Advertising: Content will cover all forms of advertising by IARs and compliance in this area.
  10. Fraudulent Practices: Content will focus on prohibited and fraudulent practices.
  11. Custody: Content will focus on custody of client’s funds. For example, pooled investment vehicles, deduction of fees, trustee of trust, etc.
  12. Fiduciary Responsibility: Content will focus on the IAR's fiduciary duties to it's clients.

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We will continue to update everyone on the latest developments on this new rule and its proposed content.Be sure to check back soon as we continue to provide updates on relevant RIA regulatory compliance focus areas.


Topics: RIA Operations, RIA Compliance, RIA Technology

RIA in a Box LLC is not a law firm, investment advisory firm, or CPA firm. RIA in a Box LLC does not provide legal advice or opinions to any party or client. You should always consult your relevant regulatory authorities or legal counsel if applicable.

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