Wachovia Securities was all set to pull the plug and suspend a financial advisor’s license last year. The FA’s bad behavior?
Putting off taking continuing education courses that the Financial Industry Regulatory Authority (FINRA) requires of all advisors.
“We were serious,” says Wachovia’s Jim Miller, manager-advanced financial advisor training. “He was late. We told him: ‘As of such-and-such date, we will no longer be paying you.’ We called our Compliance Registration: ‘If you don’t hear from us by Thursday, suspend this license.’ But we didn’t have to go through with it. He complied.”
Wachovia, by all means, isn’t the only brokerage that takes a tough stance on continuing ed because in 1995 the NASD — predecessor to FINRA — and the Securities and Exchange Commission mandated a two-pronged CE program for all FAs. The regulatory element requires completion of a computer-based training program at specified intervals at special testing centers. The firm element calls for brokerages to create and implement annual training programs to keep FAs up to speed on industry issues and products.
“There are advisors who view this as a real educational opportunity; others view it as a big pain in the neck — if not a noose,” says Stan Selbst, vice president of SmartPros, an accredited education and training company for financial professionals based in Hawthorne, New York.
Regardless of advisor attitude, CE is a fact of life — and a major one, what with the proliferation of new products; myriad, ever-increasing compliance issues; and clients’ needs for more complex, sophisticated investments and advice.
In addition to the regulatory-required CE, there are numerous optional courses and programs — many providing CE credit — that FAs can take to help expand their body of knowledge and hence, their practices.
Available, too, are training programs that zero in on practical skills — such as sales and marketing — which typically do not confer CE credit.
“The better educated a broker is, the better he can service his clients, not only on the specifics of products and services but also on suitability and life-event issues,” says Miller, based in Richmond, Va. “Through training, we can raise the level of both knowledge and service.”
Moreover, continuing education goes hand in glove with being a true professional. “There is an underlying assumption built around ethical behavior and the need for ongoing education in, for example, medicine or academia. That,” notes Selbst, “has [now] been formalized in the securities industry.”
Indeed, advisors increasingly realize CE’s benefits and are seeking out additional training. “They’re looking to grow their practices and supply services in multiple areas. For instance, there’s greater interest in investment management-based courses,” says Patrick Daxon, director of the Financial Planning Group at Raymond James and manager of the Raymond James Institute of Finance, in St. Petersburg, Fla.
Further, more financial advisors than ever are sallying forth to earn professional designations, notably that of certified financial planner (CFP), along with certified investment management analyst (CIMA), both of which require continuing ed. For the CFP, it’s 30 hours for each renewal cycle.
“More and more advisors are realizing that they need to either specialize in, for example, wealth management or retirement planning, or to understand the financial planning process. But they need specialized training to get to that next level,” says Dirk Pantone, vice president-business development at the College for Financial Planning, in Denver.
The College provides training courses to obtain the CFP and continuing education programs to help maintain it. To counter what Pantone calls “the commoditization” of CE credits (“You can go online and get them for as little as $10!”), the College has designed an Advanced Special Development series of CFP CE courses. First out is one on retirement health-care issues; upcoming are tax planning for retirement assets, and retirement cash flow.
Be aware that certain designations, such as those promoted as providing expertise in financial planning for seniors and that require little or no training, have come under federal scrutiny: Some “certified” advisors have led clients into unsuitable investments.
This year, brokerages, in designing their annual firm element programs — both classroom and/or online — are again stressing compliance and ethics issues, as well as such focused areas as retirement planning.
Wachovia, for instance, has CE courses on elder concerns — like income distribution in retirement, investments for seniors, spotting elder abuse — and annuity products. “We want to beef up our knowledge” of fixed and variable annuities, and structured investments, notes Miller. As part of its Enterprise Training, the firm is also presenting programs on privacy, anti-money laundering and ethics.
“Compliance is one of the biggest [issues] on virtually everybody’s mind because [non-]compliance gets you bounced out of the industry,” says Selbst of SmartPros, whose numerous CE courses include those on anti-money laundering and ethical issues, as well as on hedge funds.
The Certified Financial Planner Board of Standards, in Washington, D.C., is “constantly changing” training topics based on financial planner input, says Carol Lee Roberts, managing director-examinations and education. Right now, it has an increased number of courses relating to distribution planning and benefits packages. “As the regulatory climate and tax law change, the education and examination change to reflect that.”