Heading back to class?

The CE initiative came to light this past summer after the MFDA sent out its annual questionnaire to members, in which dealer firms were asked to provide feedback on the type of in-house training programs they offer to financial advisors. Upon closer inspection, McGuinness says, the varied responses alerted the regulator that it needed to look at the issue of training further.

“[The survey results] gave us some understanding about what training is currently being provided,” she says. “And, after reviewing the responses, we felt that this was an area in which we needed to level the playing field.”

The lack of CE requirements for mutual fund advisors has been an ongoing concern for many industry associations, including the Federation of Mutual Fund Dealers (FMFD) and the Investment Funds Institute of Canada (IFIC), both of which are based in Toronto.

“We believe that advisors should remain current within the industry they are working in,” says Sandra Kegie, executive director with the FMFD. “And, given that there are no CE requirements, it’s impossible to stay current.”

Both the FMFD and IFIC, along with several dealer firms, submitted comments and proposals to the MFDA that suggest that the regulator look into implementing a CE requirement for mutual fund reps.

“This is really rooted in the question of how can we raise the bar for advisors to ensure they’re up to date on a number of areas,” says Joanne De Laurentiis, president and CEO of IFIC. “The important aspect is standardizing and formalizing a program so that we can be assured that advisors are getting the CE credits that are relevant to what they are doing.”

Currently, advisors who hold either an insurance or securities licence are required to complete a certain number of CE credits on a regular basis. In contrast, under MFDA Rule 1.2.1, individuals who complete the Canadian Investment Funds Course are required only to complete a training program within 90 days of registration with a provincial securities commission.

External providers

Dealer firms have the flexibility to offer the 90-day training themselves or they can use external providers – as long as the training is appropriate and applicable to the dealer firm’s operations.

However, once an advisor completes the 90-day training requirement, there are no further educational requirements needed to maintain his or her licence.

If an advisor chooses to leave the mutual fund industry, the course credit will remain valid for up to three years, after which the advisor would have to redo both the course and examination.

“Adopting a CE requirement would probably save everyone a lot of headaches and avoid more regulation,” says Nelson Cheng, CEO of Windsor, Ont.-based Sterling Mutuals Inc., who oversees 165 mutual fund-licensed reps.

Nevertheless, there are many mutual fund advisors who hold dual licences and various industry certifications – such as the certified financial planner (CFP) or the certified life underwriter designations – that require ongoing acquisition of CE credits.

Thus, mutual fund industry groups recommend that some of these requirements be carried over to the MFDA’s model in order to avoid the duplication of courses and lessen the burden of ongoing training on advisors. The courses, though, Kegie says, still need to be approved for content that’s deemed relevant to the activities of a mutual fund advisor.

“It should be a model that integrates with what currently exists,” Kegie adds. “There are registrants who are multi-licensed or have multiple proficiencies, and they already have CE requirements coming at them from other areas in the [financial services sector].”

Voluntary credits

In fact, several dealer firms are implementing voluntary CE credits for their advisors and will be prepared for a movement in this direction, says De Laurentiis: “The industry has already started to embrace this idea on its own, and we are seeing members who already have robust CE credits that they are running internally.”

For example, Winnipeg-based Investors Group Ltd. has one of the largest rosters of mutual fund-licensed reps in Canada, many of whom hold the CFP designation. The firm also offers internal training, which includes courses for CE credits.

“Investors Group has the strongest training and educational platform in the industry, and CE is a part of our culture,” says Todd Asman, Investors Group’s senior vice president of products and financial planning. “We are always willing to work with the regulators on strengthening the industry.”

Under development

The MFDA’s initiative is under development, and nothing is set in stone in terms of what the platform would look like, McGuinness says: “We are definitely looking at what other industries have, what other professions have and what other regulators have.”

Currently, for example, the Alberta Insurance Council has a 15-hour CE requirement that licensed agents and adjusters must complete every year.

And the Investment Industry Regulatory Organization of Canada requires its licensed reps to complete 36 CE credits over a three-year period.

“My concern,” says Mark Kent, president and CEO of Calgary-based Portfolio Strategies Corp., “is that when you give multiple years for a [CE] cycle, you could have a lot of advisors who are left cramming to grab credits in the last month.

“That would defeat the purpose of doing ongoing education,” he adds. “If the markets are in a lot of turmoil, and you are looking at options for your clients today, those CE credits should be relevant to today, not three years from now.”

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