Regulation and Compliance State Regulation NASAA

Back to School, Again?

September 26, 2002 at 08:00 PM
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The North American Securities Administrators Association (NASAA) is mulling putting state registered investment advisors under similar continuing education rules as broker/dealer reps and insurance agents.

Marylyn Bowman, with the Kansas Securities Commissioner's office, says that unlike broker/dealer reps and insurance agents, investment advisors aren't required to comply with ongoing CE requirements. Self-regulatory organizations (SROs) impose CE requirements on B/D reps, and since insurance companies are regulated at the state level, the states set CE rules for insurance agents.

Since no SRO exists for investment advisors, Bowman says, it's up to state securities regulators to come up with a CE agenda. That's what Bowman, as chairman of a new NASAA project group, will discuss with other state regulators and advisors during an open meeting at NASAA's 85th annual conference, which will be held from September 29 to October 2 in Philadelphia.

Why is NASAA contemplating such a program now? Patty Struck, administrator of the Wisconsin Division of Securities, says that when the National Securities Markets Improvement Act was passed in 1996, the NASAA had to comply with it by developing a competency exam for all state regulators as well as a common database for all state and federal regulators. The state regulators also agreed at the time, she says, to consider continuing education requirements for investment advisors.

Nancy Lininger with The Consortium in Camarillo, California, a consulting firm providing compliance and marketing services to investment advisors and broker/dealers, says most states now only require advisors to pass the Series 65 exam, with no formal continuing ed requirements thereafter. "Now, obviously, some people are both an IA rep and a registered rep, and they only need to take continuing education as it applies to their registered rep license," Lininger says.

Bowman says since NASAA is in preliminary discussions about a CE standard for investment advisors, it's too early to know which advisors would be affected. However, it could include those advisors with CFP licenses as well as those who are federally registered. Advisors with CFPs are already required to comply with recertification standards. It remains to be seen when NASAA will settle on a formal CE proposal, as NASAA will continue to accept comments after its annual meeting next week.

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