Navigating the waters of IAR continuing education compliance

The landscape of continuing education requirements for investment advisor representatives is witnessing a significant shift in 2023. For the first time, noncompliance with these requirements could lead to the loss of licensure for IARs. Here’s some essential guidance, as well as reminders to help advisors navigate these changes and stay compliant.

UNDERSTANDING THE RENEWAL REQUIREMENTS

As we step into this pivotal year, it’s crucial for investment advisars to recognize the consequences of failing to meet their annual continuing education obligations. If an IAR fails to fulfill their CE requirements for two consecutive years, they risk losing their license in the initial week of the new year in all IAR CE states. This rule also applies to states that have set a 2024 effective date for adoption.

Consider an IAR licensed in Maryland and Florida in 2022 who subsequently drops their Maryland license but fails to complete their 2022 CE. Under the new regulations, such an IAR will lose their Florida license in the first week of 2024 unless they complete and submit their pending CE by Dec. 31, 2023.

CONSEQUENCES OF NONCOMPLIANCE

Failure to meet the IAR CE requirement for one year results in the registration status being updated to “Approved – Pending IAR CE” in all IAR CE states. The advisor must then complete the deficient 12 credits plus the current year’s requirement. If this noncompliance extends over two years, the registration will not renew in all IAR CE states, necessitating a catch-up on deficient CE before reapplying for state registration.

Advisors in states such as Mississippi, Vermont and Maryland should be particularly vigilant. These states adopted the CE requirements in 2022, meaning two consecutive years of CE compliance is mandatory by December 2023.

IMPLICATIONS OF DROPPING STATE REGISTRATIONS

Withdrawing from a state that requires IAR CE doesn’t absolve IARs of their CE obligations for that year. The CE requirements persist and can impact future registrations in states with IAR CE mandates.

DECODING IAR REGISTRATION STATUSES

Understanding the different IAR Registration Statuses is vital for compliance:

• IAR CE Not Required (Approved): No IAR CE obligation for the current year.
• IAR CE Required (Approved): An existing IAR CE obligation for the year.
• IAR CE Satisfied (Approved): Current on IAR CE obligations for the year.
• IAR CE Inactive (Approved-Pending IAR CE): Previous year’s IAR CE requirement unmet.
• IAR CE Fail to Renew (Terminated-No IAR CE): Failure to meet IAR CE requirements for two years, leading to administrative termination of IAR registration(s).

STAYING AHEAD OF THE CURVE

As we navigate the evolving landscape of IAR CE compliance, advisors must stay informed and proactive. Understanding and adhering to these requirements is not just about fulfilling a regulatory mandate; it’s about maintaining the integrity and trustworthiness of the advisory profession. Advisors are encouraged to regularly check resources like NASAA’s the website of the North American Securities Administrators Association Inc. for the latest information and to ensure they remain compliant and capable of serving their clients effectively.

Alex Krenke is chief commercial officer at Quest CE, which helps financial service organizations manage their compliance operations.

Related Topics: North American Securities Administrators Association Inc (NASAA)