Agency Report to JCAR-Page 2
required by rule 451.4.12.
Under the current rules 451.4.9 and 451.4.12 in Michigan, agents and IARs must have taken and
passed relevant examinations no more than two years before the application for registration is filed
with the administrator, unless the person qualifies for an examination waiver. For both agents and
IARs, if the individual was registered in Michigan or another state with the same examination
requirements within the two years prior to the application, then the individual is not required to
comply with the examination requirements.
Under the current framework, an examination remains valid if the individual is registered with and
employed by or associated with a broker-dealer (for an agent) or an investment adviser (for an IAR),
and then for two years following termination of that employment. If the person re-applies for
registration within two years of terminating prior employment, their examination will be considered
valid; otherwise, they would need to re-take their relevant examinations or qualify for a waiver.
In March 2022, FINRA implemented its Maintaining Qualifications Program (MQP) to extend the
validity of examinations for FINRA registration purposes from two years to five years under certain
circumstances. By enrolling in the MQP and completing relevant continuing education each year, an
agent’s examinations will remain valid for five years without being employed by or associated with a
broker-dealer, rather than two years without MQP participation. Where an agent does not
successfully participate in MQP, their examination validity still expires two years after they terminate
their employment with a broker-dealer.
In September 2022, NASAA promulgated a model rule available for state adoption to extend broker-
dealer agent examination registration validity from two years to five under relevant state laws; a
companion model rule made clear that MQP participation by an agent would not extend IAR
examination validity. In April 2023, NASAA adopted another model rule to extend the validity of
examinations for IARs who enroll in a NASAA-administered program and complete relevant
continuing education.
Just like FINRA’s MQP, the NASAA model rules do not eliminate the two-year validity of relevant
examinations; rather, they provide an option for individuals to extend the validity to five years should
the individual successfully participate in the relevant programs. Adoption of the NASAA model rules
will align agent requirements with parallel FINRA requirements and ensure that IARs and agents are
treated similarly in the examination validity space.
CSCL staff believes that adoption of these NASAA model rules extending examination validity for
agents and IARs who successfully participate is beneficial for members of industry and for investors
alike. Agents and IARs may leave employment with their firms for any number of reasons, including
business reorganizations, career changes, and life events like caring for children or elderly parents, or
pursuing additional education. Doing so for more than two years would require the person to retake
their qualification examinations before re-associating with a broker-dealer or investment adviser to
prove their knowledge of industry requirements. However, if the individual is incentivized to
maintain their knowledge of industry standards, products, practices, and ethics during their
disassociated period through approved and documented continuing education, then the investor
protection concern is reduced, and the burden on the investment professional is minimized as well.
MCL 24.242 and 24.245
