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The process of registering for and obtaining a financial securities license can be a complex and time-consuming nightmare. In the US, individuals selling investments professionally are required to obtain a securities license from FINRA. This is a multi-step process where securities professionals must pass qualifying exams, in which there are different levels, to demonstrate their competence before they are allowed to engage in certain securities activities. If firms fail to stay ahead, not only is it costly for them to pay for the reopening of exam windows or late filings, but also the loss of time from being unable to capitalize on the activities of their registered representatives.
The real challenge for compliance professionals is that many employees pursuing their qualifications are often at different stages, and multiple business parties can be involved in getting registered securities professionals set up. The information on where each employee is, and the parties involved, in the registration process, is usually stored in spreadsheets, which the compliance team needs to manually complete to ensure they are kept up to date. This is highly inefficient and incredibly tedious
The good news is that the license and registration process can be streamlined with software solutions, preventing potential licensing delays that get in the way of registered representatives from completing their core responsibilities: providing sound advice to clients and generating revenue for the firm. So what best practices can firms deploy to level up their License and Registration process?
STAYING AWARE OF CHANGES TO CONTINUING EDUCATION REQUIREMENTS
FINRA’s amended Continuing Education (CE) rules were implemented on January 1, 2023, and require registered persons to complete the Regulatory Element annually by December 31 for each registration that they hold – bringing the Regulatory Element more in line with the Firm Element of the CE program. Changes were also made to provide eligible individuals who terminate any of their representative registration categories the option of maintaining their qualification by completing annual CE through the Maintaining Qualifications Program (MQP) effective in 2022.
Prior to these changes, everyone was on a different schedule for their CE due dates. This has brought a much more harmonized process to stay on top of and a robust framework to train registered persons more effectively. However, compliance teams will need to ensure that their registered representatives keep in step with the changes well in advance to prevent the rush of chasing individuals or failing to meet the new deadlines.
AUTOMATION OF WORKFLOWS
The FINRA registration process is largely uniform for securities professionals, but some variations may arise in terms of the individuals involved or the timing of certain events. Using spreadsheets to log this information will just introduce inefficiencies and errors that delay the registration process. Therefore, compliance professionals must deploy software solutions with workflow engines that can be configurable to the organization and individuals. Software can also be integrated directly with FINRA’s portal which can auto-populate various stages in the registration process. By doing so, firms will be able to run reports, automate repetitive tasks, and ensure licensing and CE are up-to-date across their organization.
MONITORING EMPLOYEE STATUSES ON A CENTRALIZED PLATFORM
While the changes to the CE rules have brought a more harmonized process for compliance professionals to stay on top of, it's vital that businesses can monitor the status of their employees in one centralized solution to ensure nothing goes amiss. This is because firms will have clear visibility and transparency into the multistep license and registration workflows, making it easier to track requests and tasks efficiently. As a result, firms will be able to reduce risk and generate more accurate revenue projections with greater predictability of registered representatives’ statuses in shorter cycle times.
With compliance teams increasingly being asked to do more with less, keeping track of your firm and your representatives' progress using manual processes just won’t cut it. It already costs money to register your representatives, so why add to it by failing to stay on top of renewals and incurring late fees? Having the right tools available will allow firms to manage their License and Registration workflows with the confidence they need to focus more on revenue-generating opportunities and keep related compliance risks at a minimum.
