IAR conduct and continuing education

NASAA IAR continuing education model rule

For decades, IARs had no formal CE requirement at the state level — then NASAA changed the deal. The IAR Continuing Education model rule was adopted in 2020, went into widespread state-by-state adoption starting in 2022, and as of 2025 is in force in most states. IARs registered in adopting states must complete annual CE to maintain their registration.

The annual requirement — 12 hours, and the split matters:

• 6 hours of Products and Practices — substantive product and practice content relevant to an IAR's work: investment products, securities markets, planning techniques, suitability, advisory practice management
• 6 hours of Ethics and Professional Responsibility — a separate, non-substitutable category; the split must be 6 and 6 (e.g., 8 products + 4 ethics does not satisfy the requirement, even though it totals 12)

Approved providers and content:

• Content must come from a NASAA-approved provider. NASAA maintains an approved-provider list and approves specific course offerings.
• Self-study, classroom, and online instruction all qualify if from an approved provider
• The IAR is responsible for tracking and reporting CE completion; the firm typically assists with documentation

Miss the deadline, lose the status: if the IAR does not complete the annual CE requirement by year-end, the state administrator typically moves the IAR's registration to "CE inactive" until the deficiency is cured. Extended noncompliance can escalate to suspension or revocation under the administrator's general disciplinary authority.

Why this matters: the NASAA CE rule is a significant change from the prior regime, under which IARs faced no formal CE requirement at the state level (FINRA had separate CE for BD agents, but not for IARs at most firms). The rule finally aligns IAR CE with the standards already in place for BD agents.

EVEP — Exam Validity Extension Program

Careers pause — parental leave, a startup detour, a sabbatical — and the Exam Validity Extension Program (EVEP) exists for exactly that. EVEP is NASAA's program for maintaining an IAR's qualifying-exam credit during a career break. FINRA runs a separate program — the Maintaining Qualifications Program (MQP) — for FINRA qualifications such as the Series 7. The two are distinct and are not interchangeable.

How the program works:

• An IAR who terminates association with a firm has 2 years to re-associate before the exam qualification normally lapses (the default rule)
• By enrolling in EVEP, the IAR can extend the exam qualification for up to 5 years (5 years total from the termination date, not 5 years on top of the 2)
• During the EVEP period, the individual must complete annual CE hours equivalent to the active-registration requirement (12 hours, with the same 6+6 products/ethics allocation under the NASAA rule)
• CE completion during EVEP must be documented through approved providers; failure to complete CE in any EVEP year terminates the extension and the exam qualification lapses

Watch the boundary of what EVEP protects:

• The IAR's qualifying-exam credit — the Series 65, or the Series 65 (IAR) component of a combined Series 66. (The Series 63 / the Series 63 component of a Series 66 is preserved through the parallel Agent EVEP; the Series 7 is maintained under FINRA's separate MQP.)
• EVEP does NOT preserve active registration status — the IAR is still terminated and cannot conduct advisory business until re-associating with a registered firm
• EVEP does NOT preserve insurance licenses, exam-waiver designations, or other professional credentials — those have their own continuity rules

The pattern the Series 63 uses: a question describes an IAR leaving the industry who wants to keep their Series 66 valid for a future return. The answer is enrollment in EVEP with annual CE completion, valid for up to 5 years. Without EVEP, the qualifying exam lapses after 2 years — and the exam credit, not the registration, is what's being saved.

IAR conduct standards and the fiduciary duty

The individual carries the firm's standard. An IAR is held to the same fiduciary standard that applies to the IA firm itself — the highest in the financial-services industry — and it means placing the client's interests ahead of the firm's and the IAR's own, without exception.

Core fiduciary obligations imposed on the IAR:

• Duty of loyalty — act in the client's best interest, avoid undisclosed conflicts, disclose all material conflicts in writing, and obtain client consent before transactions or relationships involving a conflict
• Duty of care — provide advice with the diligence, prudence, and expertise that a reasonable professional would apply, including reasonable investigation of recommendations, ongoing monitoring of advisory accounts, and timely correction of errors
• Suitability — reasonable basis suitability (the recommendation is appropriate for some clients) and customer-specific suitability (the recommendation is appropriate for THIS client given their objectives, risk tolerance, time horizon, tax situation, and financial profile)
• Best execution — when the IAR or firm directs the placement of client trades, the trades must be placed to achieve the best reasonably available execution under prevailing market conditions

Prohibited practices specifically applicable to IARs — several will look familiar from the ethics module, because the same conduct lines apply here:

• Selling away from the firm — conducting advisory or securities business outside the IAR's affiliated firm without firm approval
• Sharing in client profits or losses — prohibited without firm and client consent (limited exceptions for proportional joint accounts)
• Borrowing from or lending to clients — prohibited unless the client is a financial institution in the business of lending
• Recommending without reasonable basis — "no recommendation without investigation"
• Failing to disclose material conflicts of interest in writing before the conflicted transaction or relationship
• Failing to update Form U4 within 30 days of a material change

Supervision of IARs

No IAR works unsupervised. Every IAR operates under the supervision of their affiliated investment adviser firm, and the firm's supervisory personnel — typically the chief compliance officer and supervising principals — bear primary responsibility for the IAR's conduct and the integrity of advisory operations.

The firm's supervisory obligations:

• Written supervisory procedures (WSPs) — the firm must establish and maintain WSPs reasonably designed to detect and prevent violations of securities laws and firm rules
• Pre-trade and post-trade review — supervisory review of advisory recommendations, suitability, and execution
• Communication review — review of IAR client communications (emails, marketing materials, presentations) for accuracy and compliance
• Annual compliance review — firms must annually review the adequacy and effectiveness of compliance policies and procedures (SEC Rule 206(4)-7 for federal covered firms; comparable state rules)
• Books and records — the firm must maintain records of advisory activity for at least 5 years (federal covered) or as specified by state rule

And supervision is a two-way street — the IAR's side of the bargain:

• Cooperate with all firm supervisory and compliance activities
• Provide truthful and complete information to compliance personnel
• Report material events, potential violations, and complaints promptly
• Adhere to firm policies regarding outside business activities, gifts and entertainment, personal trading, and confidentiality
• Complete required annual compliance training and certifications