Investment adviser representatives play an important role in the financial lives of millions of Americans, yet unlike most financial services professionals they are not independently required to meet a continuing education requirement to maintain their licenses to work with investors.
State securities regulators are considering closing this investor protection gap by consulting with industry to develop a responsive and relevant continuing education program to help investment adviser representatives more safely and competently serve their clients.
NASAA and its members are in the early phases of this initiative and are conducting a nationwide stakeholder survey to determine the next phase of this important project, which could ultimately result in the adoption of a NASAA Model Rule regarding continuing education for investment adviser representatives (IAR-CE).
This type of regulatory initiative benefits greatly from extensive internal and external input. Your responses would inform any decision to move forward. Should a decision be made to move forward, the input gathered from internal and external stakeholders would help shape the method, format and content for the continuing education requirement.
Survey Results Summary
When was the survey conducted?
The survey was conducted between February and April 2018.
Continued engagement with stakeholders is critical to this initiative, so if there is something you’d like to share regarding IAR-CE please contact NASAA at firstname.lastname@example.org.
- The survey generated useable data from approximately 1,200 respondents.
- About 1,000 respondents indicated they were registered as an IAR;
- About 100 respondents were staff of state securities regulators; and
- About 100 respondents indicated they were either compliance consultants or compliance officers (though not registered as IARs).
IAR-CE Survey Results: Current CE Requirements
- 56 percent of respondents already are subject to CE.
- The majority indicated CE requirement was due to a CFP designation and/or FINRA registration.
- 61 percent of respondents already are subject to CE if state regulator responses are excluded.
IAR-CE Survey Results: Does Industry Think IAR CE Is Important and Needed?
- 50 percent indicated IAR CE was important or very important.
- 75 percent indicated IAR CE was at least somewhat important.
- Nearly 40 percent said IAR CE was needed or critically needed.
- Almost 70 percent said IAR CE was at least somewhat needed in their jurisdiction.
IAR-CE Survey Results: Does Industry Support an IAR-CE Program?
- 35 percent indicated they would support or strongly support IAR-CE.
- 72 percent said that they would at least somewhat support the creation of an IAR-CE program.
Frequently Asked Questions
What is IAR-CE and what is NASAA doing now?
IAR-CE would be a continuing education requirement that investment adviser representatives would have to satisfy in order to maintain their state registrations. An internal survey of NASAA’s membership identified strong support for such a requirement along with significant regulatory need. However, NASAA is now conducting a nationwide survey of relevant stakeholders to get their input and views on a potential IAR-CE requirement.
What are the benefits of IAR-CE?
Investment Adviser Representative Continuing Education will create a direct incentive and opportunity for investment adviser representatives to stay current with industry and regulatory developments. This in turn will contribute to the quality of advice and professionalism that investment adviser representatives provide to their clients – all of which will provide the investing public more protection and better service.
How could an IAR-CE requirement be implemented?
The vast majority of NASAA member jurisdictions (46) already have either the expressed or implied statutory authority to require continuing education for investment adviser representatives. NASAA will work with remaining individual jurisdictions to assist with adoption, should a program be implemented. It is important to remember that any IAR-CE model adopted by NASAA would need to be approved and implemented in a state before it would become effective.
Who could this affect?
All state-registered investment adviser representatives would be required to meet the continuing education requirement, either through the state’s continuing education program or through a combination of professional designation continuing education and the state program.
- Of the more than 340,000 state-registered investment adviser representatives, fewer than 20 percent are not receiving any form of continuing education; the remaining representatives hold professional designations or other registrations that already require continuing education. These investment adviser representatives were tested for knowledge before they received a license, but there is no current mechanism to ensure that the knowledge level is maintained.
How could an investment adviser representative meet the continuing education requirement?
While no formal program design or requirements have been implemented or even proposed, as a general matter, under the contemplated IAR-CE program, investment adviser representatives could meet a portion of the necessary continuing education requirement in a number of ways.
For example, an investment adviser representative that is not otherwise subject to continuing education requirements could be required to complete a certain number of practice-focused continuing education hours and a certain number of regulatory/compliance-focused continuing education hours on a periodic basis. An investment adviser representative who is also an agent of a broker-dealer could be able to use his or her required FINRA continuing education to satisfy a portion of any potential IAR-CE requirement. Additionally, investment adviser representatives who maintain professional designations that require continuing education to maintain the designation, could rely on the continuing education they complete to maintain the designation for at least a portion of any IAR-CE requirement.
How often could an investment adviser representative need to receive continuing education?
The current thinking is that if implemented, all state-registered investment adviser representatives could be required to complete a continuing education requirement on a periodic basis, such as fulfilling a certain number of hours each year or two. However, no decision has been made as to the frequency or the number of hours an IAR-CE requirement could contain. NASAA and its members will review and analyze the survey responses before proposing an IAR-CE requirement.
What could IAR-CE cost?
NASAA and its members are mindful of the costs of compliance. While no determination has been made about cost, we will strive to keep costs as low as possible recognizing that many investment adviser representatives are sole practitioners and may have other continuing education requirements already in place. Many of these other continuing education requirements could satisfy a portion of the IAR-CE requirement to minimize costs. Fewer than 20 percent of all investment adviser representatives currently receive no continuing education from other related occupations or designations.
What are the next steps?
This type of regulatory initiative benefits greatly from extensive internal and external input. NASAA currently is in the process of gathering input from investment adviser professionals to determine how best to tailor a continuing education program to their needs. This information would inform any decision to move forward. Should a decision be made to move forward, the input gathered from internal and external stakeholders would help shape the method, format and content for the continuing education requirement.
- Implementation of any continuing education framework would likely follow the adoption of a NASAA model rule, which would be subject to internal NASAA and public comment periods. The NASAA model rule would require adoption by individual jurisdictions.
- At this early stage in the process there is no timeline for implementation of a continuing education requirement for investment adviser representatives.