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Make FINRA Exams Stick Longer: Life Industry Commenter

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What You Need to Know

  • FINRA put out a request for comment on diversity and inclusion in April.
  • Some insurance group commenters are asking for new age- and gender-related efforts.
  • Some commenters say the diversity project has nothing to do with protecting investors.

One way to support women in the U.S. broker-dealer industry could be to conduct licensing renewal exams every five years, rather than every two years.

Diane Boyle and Maeghan Gale, staffers at the National Association of Insurance and Financial Advisors (NAIFA), offered that suggestion in a comment letter sent to the Financial Industry Regulatory Authority.

FINRA put out a request for comments about diversity, equity and inclusion efforts in March, and it issued a Diversity and Inclusion report in June.

One FINRA question was, “What, if any, FINRA rules or market practices have a disparate impact on individuals in the broker-dealer industry (on the basis of national origin, language, age, gender, race, color, ethnicity, socioeconomic status, religion or spiritual practice, disability, sexual orientation, gender identity, family structure or veteran status) or discourage participation in the broker-dealer industry?”

The NAIFA commenters said requiring FINRA license holders to take a major licensing exam every two years is burdensome.

“There are many reasons that a registered person might want to retain their exams/licenses for longer than two years, including working mothers who wish to take time off to care for children,” the NAIFA commenters said. “A longer period, such as five years, would more easily allow mothers to return to [the] workforce as their children reach school age.”

Rebecca Parrish, an individual in the financial services industry, also asked FINRA to let registered persons go longer between exams.

“Many other professions allow for licensing to be held as long as continuing education is current,” Parrish said.

The NAIFA commenters also talked about FINRA rules that require would-be registered persons to get financial services companies to act as sponsors.

“Only firms with more robust resources may be in the position to hire candidates without the necessary licenses,” the NAIFA commenters said. “This added obstacle likely results in less diverse hiring, especially within organizations lacking diversity themselves. Expanded offerings of FINRA exams without sponsorship requirements has far reaching potential benefits for firms and candidates alike.”


The NAIFA commenters and those from other life and annuity organizations also asked FINRA to consider letting registered persons take exams and use marketing materials written in languages other than English.

Clifford Kirsch and Eric Arnold wrote, on behalf of the Committee of Annuity Insurers, that FINRA will give candidates who speak English as a second language extra time to complete qualification exams.

“However, FINRA does not administer qualification exams in languages other than English,” the Committee of Annuity Insurers reps wrote. “The committee believes that by administering qualification examinations in English only, FINRA has created a barrier to entry into the broker-dealer industry for individuals who do not speak English as their primary language and have limited ability to read, speak, write or understand English.”

Reducing the language barrier is important, because many investors speak languages other than English, and they need financial professionals who speak their own languages, the reps said.

Other Comments

Here are other comments from life and annuity groups and other commenters:

1. Stop focusing on diversity, equity and inclusion.

Some anonymous commenters criticized the FINRA request for comments about diversity efforts.

“This is an absurd request for comment and has nothing to do with FINRA’s goal of investor protection,” one commenter wrote. “This is political virtue signaling by an unelected bureaucratic organization.”

2. Offer proctored producer licensing exams online.

Representatives from the American Council of Life Insurers and the Insured Retirement Institute gave the recommendation for access to online licensing exams in a joint letter.

“While these initiatives benefit all applicants regardless of background, they are particularly important for rural, minority and other disadvantaged communities,” the ACLI and IRI reps said.

3. Adjust background reporting and complaint reporting rules.

The NAIFA commenters called for FINRA to consider changing the guidelines for would-be candidates with non-violent drug-related offenses and possibly to change the disclosure rules for offenses not involving fraud or violations of fiduciary responsibility rules.

Corie Pauling, a TIAA representative, asked FINRA  to look into whether registered representatives from underrepresented groups are subject to a disproportionate number of complaints.

If registered reps from underrepresented groups are the targets of more unsubstantiated complaints than other reps, then FINRA could handle that by requiring substantiation before it puts complaints in the BrokerCheck system, Pauling said.

4. Update guidelines for expressing gender identity.

Pauling, the TIAA rep, said FINRA should find ways to accommodate the needs of people who are transgender or who prefer not be classified as either a male or a female.

FINRA should look, for example, to see whether it creates roadblocks in registration, licensing or data publication processes that make it difficult for financial professionals to change their gender identity, Pauling wrote.

“FINRA should be mindful of how its testing sites accommodate people who identify as non-binary or transgender, including by ensuring that non-gendered bathrooms are available,” Pauling added.

5. Consider the needs of people with disabilities.

William Goren, a FINRA arbitrator, wrote to say that he is deaf but manages to function with help from lip reading and hearing aids.

“FINRA has been absolutely absolutely phenomenal with respect to accommodating my disability,” Goren said.

But Goren said he would like to see FINRA make a point of including people with disabilities in any diversity efforts, and to encourage the SEC to include people with disabilities in any efforts to mandate diversity in company boardrooms.

(Image: Igor Negovelov/AdobeStock)


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