Broker-dealers must maintain a continuing education program for its registered population to comply with FINRA requirements and to enable the firm’s representatives to build their knowledge of the industry, compliance requirements and the products they sell.
There are two parts to the continuing education program. The Regulatory Element requires all registered individuals to complete a training program, on a prescribed basis, focusing on compliance, regulatory, ethical and sales practice standards. And, the Firm Element requires the firm to specifically evaluate the training needs of its registered population and develop a written training plan and continuing education program that addresses those needs on an annual basis. The firm is required to evaluate their training needs by conducting a formal Needs Analysis, and, based on the results on the needs analysis, develop a detailed, Written Training Plan.
Specifically, FINRA indicates “…in planning, developing and implementing the Firm Element, each broker-dealer must consider its size, structure, scope of business and regulatory concerns. Each broker-dealer must administer its Firm Element Continuing Education Program in accordance with its annual Needs Analysis and Written Training Plan, and must maintain records documenting the content of the program and completion of the program.”
The development, execution, tracking and analysis of the formal Needs Analysis and development of a responsive Firm Element Written Training Plan requires broker-dealers to expend significant time and resources, which can divert focus from other core compliance activities.