CE Council Releases Top Firm Element FAQs In a recently released document, the CE Council shared a list of twenty-one frequently asked Firm Element questions and corresponding answers. The document is designed to provide a helpful starting point to walk firms through planning, developing and implementing of their Firm Element CE program.
While chock full of useful and incredibly insightful information, for those who want just the top questions from the list, we’ve got you covered. Below are our top 10 takeaways; read on to learn more!
1.) What are the Firm Element CE Program requirements?
Generally, the Firm Element rules require broker-dealers to evaluate and prioritize annually their training needs, i.e., conduct an annual needs analysis, and develop a written training plan. The plan must consider the firm’s size, organizational structure, scope of business activities, and regulatory developments. If a firm’s analysis establishes the need for supervisory training for persons with supervisory responsibilities, such training must also be included in the firm’s training plan.
Training programs used by firms to implement their training plans must, at a minimum, cover training topics related to the roles, activities, and responsibilities of their registered persons and to professional responsibility. Firms must also maintain records documenting the content of their training programs and the completion of the programs by their registered persons.
2.) Firms’ training plans must, at a minimum, cover training topics related to the roles, activities, and responsibilities of their registered persons and to professional responsibility. Is there any additional guidance on this? Should the training cover specific products? Should the training cover ethics?
The training topics should address the registered person’s role, and overall activities and responsibilities, within the firm. For instance, if a registered person is performing back-office functions, the training should cover topics related to those functions. This would include training on any specific products that a registered person handles as part of their job. The training topics should also address professional responsibility, which broadly includes professional behavior and standards as well as ethical obligations.
3.) What in particular should firms consider when undertaking their annual needs analysis?
Firms may want to consider changes to firm or industry demographics from the prior year. Firms may also want to consider new products, new rules related to firm business, and problems the firm has experienced, such as complaints and regulatory or legal actions. Refer to the Council Guide to Firm Element Continuing Education Programs document for additional information.
4.) Must a firm utilize a questionnaire from its registered persons as part of its needs analysis?
Questionnaires from registered persons are not required, although they could be helpful in informing the firm about actual educational needs.
5.) What are some best practices when assessing the need for supervisory training?
Firms may want to review their internal supervisory policies, the effective use of internal monitoring or supervisory systems, the effective use of escalation processes, and the sources of information or assistance available to supervisors within the firm.
6.) What should a firm’s documentation address?
The documentation, among other things, should describe the methodology the firm used in conducting its needs analysis. It should also identify the factors considered by the firm, the kinds of information reviewed, and the conclusions reached from the analysis. Refer to Documentation of the CE Firm Element Program in the Council Guide to Firm Element Continuing Education Programs document for additional information.
7.) Is there a deadline by which a firm must complete the needs analysis and written training plan?
No. While there is no specific deadline, each firm must evaluate its training needs and develop a written training plan for each year. Based on the Council’s experience, some firms evaluate their training needs in the fourth quarter of the prior calendar year, while others do so in the first quarter of the year in which the training is delivered.
8.) Are there tools available from the Council to assist firms in building their written training plans?
Yes, refer to the Council Guide to Firm Element Continuing Education Programs document for additional information.
9.) When must training begin each year and how often must it be conducted?
There is no definitive date on when training should begin, those dates may vary depending on the firm size and needs; however, the training plan should be completed within a 12- month period and outlined in the firm’s policies and procedures. Sufficient time should be allocated to allow proper planning and execution of training. Training dates are determined by the firm and incorporated into the training plan.
Firms with limited products or small numbers of registered persons might find it appropriate and sufficient to conduct training on only one or two occasions during the year. Conversely, firms with multiple product lines and large numbers of registered persons may find it appropriate to conduct training on an ongoing basis throughout the year. Whatever the timing and frequency, firms should ensure that training is relevant to identified needs and adequate to convey the desired information.
10.) Should a firm develop written procedures that address compliance with the Firm Element requirements?
Yes. Firms should develop written procedures designed to reasonably ensure compliance with the rules governing the Firm Element requirements (refer to the rules that are applicable to your firm). Such procedures should include, among other things:
- designating an appropriate officer or principal to oversee compliance with the program;
- developing processes for creating and implementing Firm Element programs; and
- monitoring and tracking completion of the requirement.
To read the full document, click here.