What’s the Deal with NASAA’s IAR CE Model Rule?

By now, you’ve likely heard about NASAA’s newly adopted model rule which requires investment advisor representatives (IARs) in adopting jurisdictions to complete continuing education courses on an annual basis. Since only three jurisdictions (Maryland, Mississippi, and Vermont) have adopted the IAR CE model rule for the 2022 calendar year, it’s easy for unaffected IARs to look past its requirements. However, three additional states (Michigan, Nevada, and Wisconsin) are already in the process of adopting the model rule, and we suspect that several others will jump on board throughout the year.

So, what does this mean for the general IAR population? It means the new CE requirements could fall on their plate as early as January 1, 2023. In this article, we’ll answer some of the basic questions regarding NASAA’s model rule and explain how affected IARs and RIAs can prepare for potential adoption in their jurisdictions.

What is the IAR CE model rule and why was it created?

To put it simply, the new model rule, which officially went into effect on January 1, 2022, requires IARs in adopting jurisdictions to complete a specified number of continuing education courses on an annual basis. While broker-dealer agents and other financial professionals are subject to CE requirements, IARs had not fallen under that same standard prior to the adoption of the model rule. Given that IARs play an important role in their clients’ financial lives, state regulators and the securities industry were supportive of implementing a CE program.

What are the requirements?

IARs in jurisdictions that have adopted the model rule must complete 12 CE credits each year to maintain their IAR registration. A “credit” is a unit that has been designated by NASAA to be at least 50 minutes of educational instruction. The 12 credits must include six credits of Products and Practices and six credits of Ethics and Professional Responsibility. It’s worth noting that if an IAR completes more than 12 credits in a year, the credits will not carry over to the next year.

What happens if an IAR doesn’t complete their CE on time?

If the annual deadline passes and the 12-credit requirement hasn’t been met, there are several things an IAR should be aware of. First off, if an IAR wishes to stay registered, the annual registration renewal fee still needs to be paid on time. Second, if the fee is paid but the CE requirements aren’t met, CRD will set the IAR’s CE status to “CE Inactive,” which will be listed in BrokerCheck and the Investment Adviser Public Disclosure (IAPD). The inactive status will remain until the IAR completes the remainder of the credit requirements from the previous year.

How do IARs complete their CE requirements?

Under the model rule, IARs are required to take NASAA-approved CE courses from approved course providers – hey, that’s us! As an accredited provider, we offer a complete IAR CE-specific course catalog. The complete catalog includes six courses that fall into the Products and Practices requirement, as well as three courses that fall into the Ethics and Professional Responsibility requirement.

To review our complete IAR CE course catalog, click here. To learn more about how Quest CE can help IARs meet their annual requirements, click here. If you’re looking for more than the basics, check out NASAA’s complete FAQs webpage.