A Canadian Investment Regulatory Organization (CIRO) proposal to overhaul the way financial advisors’ proficiency is established and maintained is generally being well received, although some concerns are still being raised.
The self-regulatory organization is looking to shift to an exam-based model that doesn’t rely on mandatory courses, rather than taking today’s course-based approach. CIRO would also raise the basic education and experience requirements for registered representatives, while mandating certain conduct training and requiring continuing education on topics that CIRO would set annually.
This fundamental shift in the educational model, which the regulator aims to adopt in 2026, is intended to raise proficiency standards and lower licensing costs, among other promised benefits.
A consultation paper outlining the vision, representing one of CIRO’s first major policy initiatives since the organization was launched in 2023, attracted significant feedback and informed proposals that were published in July.
Overall, the feedback on CIRO’s proposals indicates the industry is generally ready to embrace the new vision. In particular, there’s widespread support for testing competence through an exam-based system rather than mandating specific courses.
“We support the shift to an assessment-centric model as it aligns with our goal of raising proficiency standards while lowering costs of entry,” states the Federation of Independent Dealers’ response to the consultation. “We also agree with the elimination of mandatory courses, as this change allows for tailored training solutions.”
The submission from the Financial Planning Association of Canada (FPAC) states an exam-based model “will make the Canadian securities sector more efficient and fairer to its consumers.”
FPAC’s submission also stressed the importance of ratcheting up educational standards. “The competency profile should be rigorous. It should discriminate between those who will likely do the best thing for their clients and those who likely won’t. It should assure a level of knowledge roughly equivalent to the securities-specific knowledge that a graduate of a four-year undergraduate degree in finance would demonstrate.”
Yet, the prospect of tougher educational standards isn’t welcomed by everyone. A number of submissions push back against the idea — particularly the proposal to introduce a requirement that reps have a post-secondary diploma, degree, or four years of relevant experience before they can qualify.
“The proposed baseline education requirement creates a significant barrier to entry into the investment industry,” stated PFSL Investments Canada Ltd.’s submission. “If enacted, it will reduce diversity in the profession and limit access to financial advice for many average Canadians.”
While PFSL’s comment agreed that competency is critical, it stated that “excluding individuals based on a degree or diploma overlooks the potential contributions of skilled candidates who possess relevant talent and passion. This proposal disproportionately favours those with the means to afford higher education, creating inequity in the industry.”
The Federation of Independent Dealers’ comment also argued that the proposed educational requirement presents a potential barrier to entry and that determining whether foreign degrees count could prove challenging. It also noted that many post-secondary degrees aren’t directly relevant to the financial services industry.
The comment from the Investment Funds Institute of Canada (IFIC) expressed concerns about the proposed alternative to a post-secondary degree: a four-year industry experience requirement, increased from the two years that CIRO initially considered. IFIC’s comment argued the tougher requirement could limit the crop of prospective reps.
The consultation also garnered complaints about other proposal details, such as the prospect of automatic suspensions for reps who don’t complete their required mandatory training on time, along with worries about CIRO’s planned timeline for transitioning to the new model.
The submission from the Canadian Bankers Association (CBA) called CIRO’s 2026 deadline for adopting its new model “very ambitious,” given the work still to be done to finalize the new regime. And the Investment Industry Association of Canada’s comment suggested CIRO consider pushing implementation to 2028.
Some industry feedback also called on CIRO to adopt a framework that would enable reps (and others) to more easily maintain qualifications when they undergo temporary career disruptions — whether voluntarily, as when senior industry personnel nearing retirement scale back on work, or involuntarily, as when illness occurs.
Currently, reps who are out of the industry for over 90 days have to re-qualify. The CBA’s submission stated this represents an unwelcome limitation. “It may ultimately act as a barrier to inclusivity and diversity by limiting the flexibility of engagement opportunities in the Canadian industry and perpetuate the current advisor gender gap.”
To address the issue, the Canadian Independent Finance and Innovation Counsel suggested CIRO consider crafting an approach to maintaining qualifications that allows for increased career flexibility — potentially even creating a new registration category to allow veteran reps to put their licences on hold for extended periods without having to retake exams.
This article appears in the October issue of Investment Executive. Subscribe to the print edition, read the digital edition or read the articles online.