As year-end approaches, it’s critical for broker-dealers (BDs) and Registered Investment Advisors (RIAs) to meet their respective annual training requirements. Compliance training is an essential, yet sometimes overlooked and underappreciated component of a strong culture of compliance. How a compliance department communicates and manages a firm’s program, including expectations for compliance with deadlines, is equally as important as the content.
In this blog, we’ll explore key strategies to develop an effective training program, tips for ensuring completion by firm (and regulatory) deadlines and discuss how leveraging technology, like Quest CE, can help streamline the process.
The Core Components of Effective Training – Research is Key
For both BDs and RIAs, a comprehensive training program should do more than fulfill regulatory requirements — it should enhance the competence of employees and ensure they are equipped to handle the complexities of their roles. A well-managed training program addresses several key areas:
Addresses regulatory “Hot Topics”: BDs and RIAs must ensure these topics are included in their training programs annually to remain compliant with FINRA and SEC rules.
- Anti-Money Laundering (AML) compliance
- Regulation Best Interest (Reg BI)
- Privacy and cybersecurity best practices
- Ethics and insider trading prevention
- Suitability requirements
- Electronic Communications – Firm Policies/Regulatory Implications
Role-Based Training: Different courses should be assigned based upon firm roles – compliance, supervision, sales, operations, trading, financial, etc. to allow staff to focus on the regulatory compliance topics most relevant to their responsibilities.
Create a Comprehensive Training Program: Combine your Annual Questionnaire, Annual Compliance Meeting and Firm Element/IAR CE to be assigned together for a cohesive compliance program.
Research, Research & MORE Research: BDs and RIAs should be completing annual risk assessments, conducting 206(4)-7 (RIAs) & 3120 testing (BDs), and completing a Firm Element Needs Analysis (BDs only). These various compliance evaluations are critical in pointing out the issues within your own firm that should be addressed in your Annual Compliance Meeting, Annual Questionnaires, and Firm Element or IAR course assignments. Additionally, reviewing your top complaints, paperwork errors, and regulatory guidance become the foundation for creating your annual program. To help with this research below are some of the industry’s best places to go for the insights you need to design your training.
For BDs:
For RIAs:
Leveraging Quest CE Technology – Automation and Reporting
One way to ease the administrative burden of managing annual training programs is through technology. Quest CE’s platform offers a suite of tools that allow firms to automate key tasks such as scheduling, monitoring, and reporting on training completion. Here’s how to leverage Quest CE to streamline the training process:
- Automated Communications and Reminders: Quest CE allows firms to schedule automatic email reminders for employees to complete training modules, minimizing the need for manual follow-ups.
- Tracking and Reporting: Quest CE’s platform provides real-time tracking of training progress, enabling compliance officers to easily monitor who has completed the required courses and who may need additional reminders. For those BDs that aren’t aware- Quest CE is 17a-4 compliant!
- Customization: Training modules can be customized based on specific firm needs, offering a tailored approach that addresses relevant regulatory updates and firm-specific risks.
Managing Deadlines – Set the Tone!
To reduce the frustration, use the following tools to communicate, set expectations, and hold people accountable for their training. This does require some “buy-in” from management, but once everyone is on the same page and the tone is set, it becomes easy to get 500+ people through your training program by the initial deadline – with no exceptions!
- Make sure that @QuestCE is white-listed with your IT department
- Issue an internal memo and email it directly to those required to complete the training before you launch the program. In this memo include:
- Information about how the training will be communicated and deadlines
- Reiterate repercussions for not completing by the deadline Tip: Have management agree to penalties, internal disciplinary action, etc. that is in place annually to ensure compliance with deadlines – whether it’s strictly enforced is up to management – but putting something like this in place aligns the compliance and management expectation for focus and completion on time.
- Launch your program and include the memo in the initial launch communication with a second email within 3 days; escalate your reminders – the first 2 weeks they should be every 3-4 days; the last 2 weeks increase in frequency, with the last 5 days reminders going out daily (this is critical to success).
- Approximately 2 weeks before your deadline, compile a report to the respective management teams with their employees that are incomplete.
- The first day after your deadline, have daily automatic reminders from Quest CE to any employees who have not completed all assignments.
- Begin daily communications with management regarding their outstanding incompletes (once you create the first management report, updating is not a cumbersome process).
- Be flexible! Adjust deadlines for anyone on a medical Leave of Absence and if there are extenuating circumstances (such as a storm closing business, or technical issues), look at extending your deadline.
These steps may appear to be repetitive or almost overkill, but will go a long way in meeting your deadline and the work during the program will save you a ton of frustration once you are past the deadline. Also, the more years in a row you consistently set this expectation, the easier and easier your program will become!
Conclusion
Ensuring compliance with annual training requirements is a crucial task for broker-dealers and RIAs alike. By developing a comprehensive, well-managed program and leveraging technology like Quest CE, your firm can effectively address training needs, manage deadlines, and tailor programs to specific roles. Preparing now will not only help your firm meet its compliance obligations but also strengthen your overall culture of compliance.
An effective training program is not just about checking a box – and it shouldn’t be a painful process either. Running a training program that is backed by knowledge, research, and thought demonstrates to regulators your firm’s appreciation for compliance with regulations and care for your customers.