Moving over from the sell side to the buy side may not be as easy as expected, as regulators spell out the sort of specific experience they expect a person to have to qualify for registration at a portfolio manager.
The Canadian Securities Administrators (CSA) Thursday published a staff notice spelling out the sort of industry experience it has accepted when considering applications for registration as advising representatives (ARs) or associate advising reps (AARs) at a portfolio manager.
The notice indicates that since its registration reforms, the various members of the CSA have reviewed over 2,500 applications for registration in these categories. It goes on to summarize the decisions it has made in various cases, in an effort to provide guidance to others considering applying for registration in these categories.
It notes, for example, that experience at an investment dealer may not qualify an applicant for AR registration. Some registered reps sell almost exclusively portfolio solutions, it says, and don’t do analysis on specific securities; and, in these instances, the reps have generally been granted registration as an AAR, not as an AR.
Similarly, the CSA has approved applicants as AARs that had experience providing general financial planning advice, but not specific research on individual securities. Other registered reps that offer a much broader range of products involving significant security-specific research and analysis of their own, have been registered as ARs, it reports.
“We have found that the degree of specific advice and securities analysis, if any, performed by the individuals can vary extensively among firms and individuals and whether the individual has been approved as an AR, AAR or not approved at all is very case-specific,” it notes.
Mutual fund sales experience is unlikely to qualify applicant as an AAR or an AR, it says. “We have not generally registered individuals whose experience has been limited to mutual fund sales as ARs or AARs because they were not able to demonstrate sufficient experience analysing individual securities or managing investments on a discretionary basis,” it says.
The notice also indicates that experience gained as an AAR may not qualify an individual for registration as an AR. It says that client relationship management experience is unlikely to qualify for AR registration, even when performed by AARs, as this role “may not provide sufficient experience performing securities research and analysis to qualify an individual for registration as an AR.”
Additionally, it says that corporate finance experience may not qualify an applicant for AR registration, and that experienced investment bankers have been denied registration as ARs. “We have declined to register a number of individuals who have corporate finance experience as ARs and instead registered them as AARs,” it says, noting that in those cases, the applicants’ experience did not demonstrate an ability in, and understanding of, portfolio analysis or portfolio securities selection, or experience managing investments on a discretionary basis.
For more information:
CSA Staff Notice 31-332: Relevant investment management experience for advising representatives and associate advising representatives of portfolio managers