3 MIN READ
“Knowledge is Power, Power provides Information; Information leads to Education, Education breeds Wisdom; Wisdom is Liberation. People are not liberated because of lack of knowledge.”― Israelmore Ayivor
I love learning and growing my brain, don’t you? I also love when I can immediately apply what I’ve learned, especially when I get the opportunity to do so in a professional setting. It may have been quite a while since you sat through a college course or studied to pass a Series exam. For some financial advisors, it may have been decades—because until recently, financial advisors who did not hold a professional designation were not required to complete any continuing education.
At first glance, continuing education can seem like a burden (I completely understand). It costs money, takes time, and requires resources that you may not feel like you have available. Put yourself in a prospect’s (or client’s) shoes – wouldn’t you be happy to know your financial advisor is focused on ensuring they are staying up to date with their professional knowledge? I sure would.
The goal of the North American Securities Administrators Association (NASAA) is to streamline securities rules and regulations across the many different jurisdictions. From time-to-time, NASAA releases Model Rules that their member firms have the option to adopt. Those jurisdictions that have elected to adopt NASAA’s model rule regarding Investment Adviser Representative (IAR) continuing education aim to empower IARs by gaining professional knowledge and competency in relevant subject areas in order to provide better service to their clients.
Jurisdictions that have adopted (or are planning to adopt) IAR CE requirements
(Information current as of March 21, 2023)
Every IAR of both state-registered and SEC-registered firms registered in a jurisdiction that adopts the model rule is required to complete 12 CE credits during each reporting period. Contact your state regulator if you have specific questions regarding their requirements.
- Ethics & Professional Responsibility (6 credits, with at least 3 hours covering the topic of Ethics) – Education focuses on fiduciary duties and other obligations.
- Products & Practice (6 credits) – Education focuses on investment products, strategies, standards, and compliance practices.
- Completed credits in excess of the 12 required credits do not carry over to the following year.
While the model rule dictates the areas of focus an IAR must complete the CE in, it does not prescribe the exact courses that must be completed. The courses simply must be offered by an Authorized Provider. Credits from CE courses completed to maintain professional designations may count toward the IAR CE requirement as long as the provider and course are on NASAA’s list of Authorized Providers. We are so proud to say that our very own Michael Kitces’ Nerds Eye View made the list!
Every course consists of an assessment (at least 10 questions) and a satisfaction survey. Once an IAR completes a CE course, the Authorized Provider reports the completion date and credits directly to FINRA. A reporting fee of $3 per credit is charged to the firm that the IAR is registered with when the provider reports course completion.
IARs can monitor their CE status throughout the reporting period using FINRA’s FinPro system. If an IAR fails to complete their CE requirement by December 31 of the current year, any CE courses completed in the following year will be applied to the previous year’s deficient credits until CE for the previous year has been satisfied.
Feel free to join our Compliance Consultants in Office Hours on Tuesdays and Wednesdays at Noon Mountain Time if you have questions about how these IAR CE requirements apply to you.
NASAA also has a comprehensive set of FAQs for IARs on this topic.
*1 credit = 50 minutes of educational instruction
**Reporting period = CE credits must be reported by the end of each calendar year. Newly registered IARs will be required to meet the annual IAR CE requirement by the end of the first full calendar year following the year in which they first became registered.
About the Author
Shelby Brown joined XY Planning Network as a Compliance Consultant in May 2019. Prior to joining XYPN Shelby gained extensive experience filing initial registration applications for State- and SEC-Registered investment advisors of all sizes as well as assisting in the design and development of a compliance program that can be immediately implemented.
Shelby’s Investment Advisor Certified Compliance ProfessionalÒ (IACCPÒ) designation, earned in 2016 through National Regulatory Services (NRS), certifies that she is equipped with the knowledge and tools necessary to implement and manage a successful compliance program at any investment advisory firm.
Growing up in Lake Tahoe, Nevada has instilled a love of the outdoors in Shelby. You can find her on the golf course, at the beach, or in a campsite in the summer and snowshoeing, crafting, or soaking up a good book by the fire in the winter. Home is where the heart is, but Shelby and her husband also love to travel and take photographs to display around their home. They are always planning their next adventure!