NASAA model rules let advisers maintain licenses while out of industry

The state securities regulators organization this week approved two model rules that would allow financial advisers to maintain their licenses when they leave the industry for a certain amount of time to deal with life events.

Both measures advanced by the North American Securities Administrators Association — one that addresses examination requirements for broker-dealer agents and another for investment adviser representatives — enable brokers to return to the industry within five years without retaking licensing exams as long as they complete annual continuing education.

“These rules are designed to provide flexibility for currently registered persons who, due to various reasons, may need to leave and then return to their positions,” NASAA President Melanie Senter Lubin said in a statement. “The requirements in the rule to meet continuing education requirements will help ensure these individuals remain current on regulatory requirements and industry developments.”

The NASAA model rules align with a Finra initiative — the Maintaining Qualifications Program — that the broker-dealer self-regulator recently implemented. Under the program, the grace period was extended from two to five years for resuming broker work without going through the exam process again.

The Financial Industry Regulatory Authority Inc. said it found that two years was not enough time to accommodate people who took a break from their brokerage careers to have children, provide family caregiving or overcome health problems.

State regulators want to offer the same work-life flexibility for their registrants.

“We’re excited about it,” Andrew Hartnett, Iowa deputy administrator for securities and NASAA president-elect, said on the sidelines of NASAA's annual conference in Nashville. “We thought it was important to do something similar” to Finra’s program.

Individual states must adopt the model rules either by legislation or regulation. NASAA is also considering a similar model rule for extending the validity of investment adviser representative exams that aren’t covered by the model rules advanced this week.

[More: State regulators say Finra expungement reform falls short]