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NASAA Proposes Investment Adviser Representative Continuing Education Rule

Posted by RIA in a Box

Mar 4, 2020 4:47:57 PM

NASAA continuing education requirement for RIA firmsOn February 13, 2020, the North American Securities Administrators Association ("NASAA") released a new rule proposal that includes a requirement to implement an investment adviser representative continuing education ("IAR CE") program for investment adviser representatives. In particular, the new proposed IAR CE program would require investment adviser representatives complete 12 total hours of CE with 6 hours centered around Products and Practice with the other 6 hours focused on Ethics and Professional Responsibility. According to NASAA, "The overall goal of the program is to ensure that investment adviser representatives receive continuing education on the securities business relevant to their duties and obligations."  Public Comments on the proposed continuing education program are being accepted through March 30, 2020.

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Unlike other financial service professionals, investment adviser representatives are currently not subject to continuing education requirements to maintain their licenses with regulators. According to a survey completed in mid-2017, NASAA Members "indicated strong support for an IAR CE requirement." 

According the proposed program and model rule, the IAR CE framework keeps the following goals in mind:

  • Be efficient and valuable for regulators to ensure continued competency by IARs - not simply a 'check the box' compliance exercise; 
  • Be effective and valuable for IARs to maintain and grow their knowledge base - and not simply a 'check the box' compliance exercise;
  • Maximize flexibility in CE content available;
  • Minimize duplicative CE requirements to the extent practicable;
  • Minimize compliance burdens by leveraging existing systems and technology;
  • Minimize costs to individuals completing IAR CE; and 
  • Promote uniformity among regulators and jurisdictions adopting IAR CE

Proposed General IAR CE Requirements

According to the announcement:

NASAA is proposing an annual IAR CE requirement under which IARs would be required to complete 12 total hours of CE—6 hours focused on Products and Practice and 6 hours focused on Ethics and Professional Responsibility. The Products and Practice component is designed to ensure ongoing knowledge and competency related to investment products, strategies, standards, and compliance practices relevant to the investment advisory industry. The Ethics and Professional Responsibility component is designed to ensure ongoing knowledge and competency related to an IAR’s duties and obligations to his or her clients, including, but not limited to, issues related to the fiduciary duty owed to each client.

Approving IAR CE Providers and Course and Content

According to the proposed IAR CE framework, NASAA would define a set of criteria through which eligible IAR CE course/content providers and their content/coursework would be evaluated. Any company or individual interested in offering IAR CE content will be required to submit an application, other relevant materials (including a fee) to NASSA for review. This step will need to be repeated for each individual course/CE content. All courses/content must be approved by NASAA "prior to offering said course/content for IAR CE credit," according to the proposed program. Course providers will also be responsible for reporting and tracking of IAR CE hours. 

Be sure to check back soon as we continue to further analyze and follow the latest developments of this new proposed rule.

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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.

Topics: RIA Operations, RIA Compliance

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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