Tip for Updating Your Compliance Program: Continuing Education Requirements

As Form ADV season descends upon us, we are reminded that compliance officers face the thankless task each year of reviewing compliance policies and procedures to determine their adequacy and effectiveness, as required by Advisers Act Rule 206(4)-7. This review entails updating the firm's compliance program to reflect changes to relevant regulations and new regulatory guidance, and confirming the program is appropriately followed by the firm.  

We’ve compiled a series of tips to help understand the U.S. Securities and Exchange Commission (SEC) focus areas for 2023. You can read our first tip about the SEC’s focus on hedge clauses here.

Tip #2 - Keep tabs on Continuing Education requirements 

In 2021, Mississippi became the first state to adopt the North American Securities Administrators Association (NASAA) Model Rule on Investment Adviser Representative Consulting Education (the Model Rule). The Model Rule requires investment adviser representatives (IARs) to complete twelve hours of continuing education (CE) annually, including six hours on ethics and professional responsibility and six hours on products and practice. Maryland and Vermont followed suit, and Michigan, Oklahoma, South Carolina, Vermont, Wisconsin and the District of Columbia joined the group in 2022.   

Although a registered investment adviser can be registered with, and subject to, the SEC's jurisdiction, IARs are subject to state regulation. They are generally required to register in the state (or states) where they have a place of business. Firms should determine whether their IARs are subject to these requirements and adopt policies and procedures to address them. 

• Arkansas (1/1/2023 effective date) 
• Kentucky (1/1/2023 effective date) 
• Maryland (1/1/2022 effective date) 
• Michigan (1/1/2023 effective date) 
• Mississippi (1/1/2022 effective date) 
• Oklahoma (1/1/2023 effective date) 
• South Carolina (1/1/2023 effective date) 
• Vermont (1/1/2022 effective date) 
• Washington, D.C. (1/1/2023 effective date) 
• Wisconsin (1/1/2023 effective date) 

Our guidance 

• Review NASAA’s resource page periodically to determine which states have adopted an IAR continuing education requirement   
• Confirm that the IARs in those states where CE credits are mandated are aware of the requirements 
• Identify “approved providers” (also on NASAA’s resource page) offering CE courses 
• Budget for the costs of the CE courses

How we help 

Compliance teams need continuous support and knowledge sharing to stay on top of regulatory initiatives. Our team helps you navigate the evolving regulatory landscape while considering the complexity of your firm’s unique compliance requirements. 

Our advisory services can assist your firm with building and maintaining an effective compliance program that meets the SEC’s regulatory requirements. Contact us to learn more. 

Listen to our 2023 Regulatory Outlook webcast on demand 

We recently hosted a webcast to review the regulatory changes that will likely have implications on compliance programs in 2023, and provide recommendations to prepare for these changes. Our experts discussed rule proposals and adoption, examination and enforcement trends, and regulatory guidance. Watch our webcast for more insights to help you prepare your compliance program for this year’s focus areas. 

Watch now