Continuing education (CE) helps planners stay abreast of the latest changes in industry rules and regulations and provides instruction on new products and planning techniques. However, the majority of licensed or credentialed financial professionals have a negative reaction, when they are required to complete their continuing education coursework.
In this article we'll examine four continuing education requirements for financial professionals, with the first two being mandated by FINRA: the regulatory element, the firm element, state-approved education for insurance professionals and, finally, CE for professional designations. As you'll see, there are ways to streamline the process, so that when your continuing education deadline rolls around, you won't find yourself buried under a pile of rules and regulations.
More Designations, More Credits
The frustration that can surround CE credits is often a result of the fact that each license or designation comes with its own separate continuing education requirement. For example, a stockbroker who is also a Certified Financial Planner® (CFP®) must fulfill a variety of CE requirements, such as:
- Financial Industry Regulatory Authority (FINRA) approved regulatory element for the Series 6 or series 7 license
- FINRA-approved firm element for the Series 6 or 7 license
- State-approved CE for all insurance licenses, such as life and health
- CFP® board-approved CE coursework for the CFP® designation
The FINRA-approved regulatory element is divided into three subsections:
1. Series 6 licensees
2. Series 7 licensees
3. Those who supervise securities licensees.
All licensees have 120 days to complete this portion of their continuing education requirements, after they have been licensed for two years. These requirements will then come due every three years for as long as the licensee maintains his or her FINRA registration. The regulatory element covers essential rules and regulations, compliance, sales and communication issues, as well as supervisory topics for registered principals. (To learn about the initial testing requirements to get your license, check out Breaking Down Financial Securities Licenses.)
Firm element CE applies to a financial professional considered by the FINRA to be a "covered person." Covered persons include anyone involved in the sales or trading of securities in virtually any capacity. Firm element training is created either by the company or obtained from outside sources, then implemented at the broker-dealer level on an annual basis. This education focuses on important changes within the industry from one year to the next. It tends to be more relevant for planners, because this type of training covers practical topics such as new product training or the latest financial planning strategies that may generate new business for planners. (For more on the regulatory and firm elements, see the education section of the FINRA website.)
State-Approved CE for Insurance Licensees
There are no uniform federal requirements for insurance continuing education and each state has its own separate CE program that agents and brokers must satisfy, in order to maintain licensure in that state. For example, the state of Kansas requires life insurance agents to complete 11 hours of continuing education every two years, plus one hour of ethics training. Missouri requires 16 hours of CE, with one hour devoted to ethics.
Each state has a minimum number of required hours of CE that must be met periodically by all licensees. It is the responsibility of the licensee to know what the CE requirements are in all states where he or she intends to do insurance business.
Continuing Education for Professional Designations
Financial planners who have earned professional credentials such as the CFP®, Chartered Life Underwriter (CLU) or Chartered Financial Consultant (ChFC) designations, will have additional continuing education requirements that go beyond what is needed to maintain their licensure. For example, Certified Financial Planner® practitioners must complete at least 30 hours of continuing education every two years. Two hours of this coursework must be in ethics training, while the remaining 28 hours can be derived from any financial educational topic or coursework that has been approved by the CFP® Board of Standards. (For more information on education for CFP® practitioners, refer to The Basics of CFP Designation Maintenance.)
All other professional designations, in addition to those listed above, have separate continuing education requirements as well, such as the CPA, Enrolled Agent (EA), Life Underwriter Training Council Fellow (LUTCF) and Registered Health Underwriter (RHU). (To help decode this myriad of acronyms, see The Alphabet Soup Of Financial Certifications.)
Finish Fast Online
Fortunately, continuing education requirements are now much easier to complete, than they were in the past. The internet has effectively streamlined what was once a cumbersome bureaucratic process. There are a number of excellent providers of approved CE material online, such as WebCE.com and RegEd. These sites allow you to select and pay for a relevant course and complete the final exam online, quickly and easily. The hours are then often reported directly to the required states or designation boards.
Several Birds, One Stone
It is important to note that many hours of coursework can be credited toward more than one license or designation. For example, a great deal of the coursework approved by the CFP® Board of Standards for continuing education also counts toward fulfilling insurance or securities CE requirements. These hours may also count for other designations, such as the CLU or ChFC. However, it's important to note that the same course will probably be credited a different number of hours by different institutions.
For example, consider a CFP® practitioner with a life insurance license, who takes a course on life insurance from an online provider. The licensee will discover that while his or her resident state may grant a particular course six hours of CE credit, the CFP® Board of Standards may only consider the course to be worth four and a half hours of credit, toward fulfilling its CE requirements. To maximize the efficiency of your coursework, it is therefore important to know how many hours of credit each institution will allow for a given course.
The Bottom Line
Although the compliance department of any broker-dealer will be very proactive in ensuring that all CE requirements related to licensure are met, independent agents and brokers must assume this responsibility themselves. Online completion of CE requirements and careful coordination between all required licenses and designations can make the CE process faster and more convenient.