North American Securities Administrators Association members have voted to adopt a model rule requiring investment advisor representatives to take 12 hours of continuing education annually. The model represents the first state educational requirement for IARs.
The new rule, which was adopted Monday, mandates broker-dealers to implement continuing education programs for its IARs. It has two content requirements: A products and practices component and an ethics component. It is intended to be compatible with other continuing education programs, NASAA said in a news release.
The requirement “will help promote heightened regulatory compliance while also helping investment adviser representatives better serve their clients by remaining knowledgeable of current regulatory requirements and best practices.” NASAA president Lisa A. Hopkins said.
The model rule “represents the culmination of years of work by state securities regulators and industry to develop a relevant and responsive continuing education program,” added Hopkins, who is also the West Virginia Senior Deputy Securities Commissioner.
Advisor reps play an important role in the financial lives of millions of Americans by providing advice on important financial decisions such as retirement planning. But unlike other financial service professions, IARs are not subject to a continuing education requirement to maintain their licenses with state regulators.
The new model rule will help close that gap, said NASAA, an organization which represents state securities regulators.
IARs who are registered as an agent of a Financial Industry Regulatory Authority member broker-dealer and who comply with Finra’s continuing education requirements are considered to be in compliance if their CE program:
• Focuses on compliance, regulatory, ethical and sales practices standards.
• Is derived from state and federal investment advisory statutes, rules and regulations, securities industry rules and regulations, and accepted standards and practices in the financial services industry.
• Requires its participants to demonstrate proficiency in the subject matter of the educational materials.
The model rule is the result of several years of work by NASAA’s Investment Adviser Representative Continuing Education Committee, which conducted outreach efforts and solicited comments from the securities industry in developing the model rule, NASAA said.
It will be up to each state regulator to adopt the new CE requirements in order for them to be effective in their respective jurisdictions.