IIROC representatives can expect significant changes when their next continuing education (CE) cycle begins.
That’s because the SRO is currently reviewing its CE program in phases that co-ordinate with the plain language rule rewrite project.
“We are actively engaged in pre-implementation stages of our rule-making process, including CSA review,” confirms an IIROC spokesperson. “IIROC continues to target January 1, 2018, for implementation of the new continuing education rules.”
Proposed changes include:
- moving to a two-year CE cycle from the current three-year one, with subsequent changes in credit hours per cycle (10 compliance credit hours, down from the previous 12; 20 professional development credit hours, down from 30);
- permission to repeat ethics courses in two cycles; and
- greater flexibility in course choice, beyond what’s directly relevant to a registrant’s role.
Along with approving more courses, IIROC says it will consider extending CE and training to other regulated platforms, such as financial planning or insurance. Rob Kirwin, CEO and founder of regtech provider VigilantCS, is supportive.
In a comment letter, he says, “Given the changing nature of the [advisory] role of an IIROC registrant, one increasingly focused on portfolio recommendation and less on stand-alone security selection, a broader understanding of a client’s financial situation would seem to contribute to better client outcomes.”
In an interview, Kirwin said building well-rounded advisors is important as the industry changes.
“There should be more attention placed on the professionalism of the advisor,” he says, especially as advisors compete with online platforms. “You can’t automate great advice—especially from a behavioural point of view.”
Ken Kivenko, president of Kenmar Associates, says in a comment letter that “wealth management today is much more than securities.” He cites the need for knowledge in privacy, information security, taxation and estate planning. “Courses should be broad enough to cover the full spectrum of wealth management promoted by dealer marketing literature,” he says.
But Kivenko cautions that CE must be meaningful and produce results, as opposed to being a box-checking exercise.
That means more training in such things as complex products, client risk profiling and assessing suitability, he says.
Speaking generally, Larry Swartz, CFA, lawyer and educator, notes that CE can become a record-keeping exercise because there’s a chance of audit. When CE is rote, it’s not helpful, he says. Significantly, surveys indicate CE promotes trust between the public and professionals, he says, so assessing how CE serves the public is a worthy endeavor.
From his teaching experience, Swartz says some experienced professionals are less engaged with CE and view it as a tax. Disengagement means “the public—the supposed end target of continuing education—doesn’t get a benefit.”
Building on the baseline
To create meaningful CE within professions, “there ought to be minimum standards, and those ought to be maintained,” says Swartz, such as those for licensing.
IIROC’s proposal says CE “is meant to build on and enhance baseline proficiencies,” as well as be relevant, timely and ongoing.
In a comment letter, Oliver Publishing suggests IIROC make its baseline proficiencies explicit so educators can create appropriate training. This would also reduce the regulatory burden of evaluating unsuitable courses, says the publisher.
On extending CE to other platforms, Smarten Up Institute (SUI) says in a comment letter that not all education requirements are equal. “As an example, insurance qualifications in many respects are the lowest rung on the spectrum of licenses, with no formality and very little oversight. The fact we are now equating CE equivalency between IIROC and insurance is a downgrade in proficiency status.”
Like Swartz, Oliver Publishing suggests professional development courses should serve the public’s interests—a criterion required by other regulators in other industries, with courses rejected if they relate to sales, marketing, computer skills or proprietary software. Kivenko suggests IIROC create an investor advisory committee to receive the public’s input on rule changes.
IIROC’s focus on ethics courses is appreciated. “Trust is the foundation for giving financial advice,” says Kivenko in his comment letter. “There should be more CE credits for anything that is related to ethics, code of conduct, risk analysis and asset allocation.”
Likewise, CE “should emphasize ethics more than anything else,” says Swartz. He supports the option to repeat a course, saying it provides opportunity for ethics deliberation outside the routine workday.
In contrast, SUI says in its comment letter that the go-ahead to repeat ethics courses creates the perception “that IIROC is not serious about how absolutely critical ethics is in this industry.”
In its comment letter, IIAC supports the measure, so long as course material “is updated and refreshed in each cycle.”
Fallout for firms
With a potentially reduced cycle and increase in education providers, firms face a greater workload. And the introduction of CE for MFDA advisors (see our upcoming December “Compliance Roundup” column) and forthcoming regulation for Ontario financial planners mean more professionals must soon be tracked. “For a bank, it’s thousands of individuals,” says Kirwin. Many firms track CE manually with spreadsheets, he says, but that will become increasingly difficult.
Further: “The implications of not getting this right are becoming more significant,” he says, referring to the consequences of CE non-compliance. IIROC proposes replacing the current monthly fee ($500 per month for up to six months) with a one-time fee of $2,500 for dealer members, along with an automatic suspension of approved persons. Currently, there’s a six-month grace period before suspension.
Kirwin expects automated tracking will save costs in the long run, as it facilitates the application of CE courses across various licensing bodies and designations, and allows for customized reporting of advisors’ professional development.
In the works
Additional proposals include removing the three-year CE grace period for new IIROC registrants, unless they’re approved within a cycle’s last six months. IIAC’s comment letter says removing that grace period will be onerous for advisors.
In subsequent phases of its review, IIROC will look at expanding CE requirements to other approval categories, such as institutional registrants.
(Institutional representatives and traders are exempt from professional development CE requirements. Institutional supervisors have no CE requirements.)
As the implementation date approaches, IIROC says it will provide stakeholders with more information.