Continuing Education (CE) isn’t just a checkbox—it’s the backbone of maintaining professional standards and regulatory compliance. Two essential components of CE are the Regulatory Element and the Firm Element. While both are mandatory, they serve distinct purposes, and understanding their differences is crucial for compliance professionals overseeing training programs.
What is Regulatory Element?
Regulatory Element is a mandatory CE requirement administered by FINRA for all registered people. Its focus is on regulatory compliance, ethics, and sales practice standards, tailored to each individual’s registration category (e.g., registered representatives, supervisors). The key points for the Regulatory Element include:
- Frequency: Must be completed annually by December 31.
- Customization: Standardized across the industry with no flexibility for customization by firms.
- Recordkeeping: Tracked by FINRA, with completion linked to a registered person’s status.
- Consequences of Non-Compliance: Failure to complete the Regulatory Element results in inactive registration status.
This CE is essential for ensuring that individuals stay current on evolving regulations and compliance requirements specific to their roles.
Regulatory Update: In 2022, FINRA changed the Regulatory Element requirement from a three-year cycle based on registration anniversary dates to an annual requirement. Effective January 1, 2023, all registered persons must complete their Regulatory Element by December 31 each year, representing FINRA’s shift toward more frequent regulatory education in today’s rapidly evolving financial environment.
What is Firm Element?
In contrast, Firm Element is designed and administered by each individual firm, allowing for greater flexibility. Firm Element addresses the unique needs and risks of a firm’s business and focuses on professional responsibility and the roles and activities of registered people within that firm. The main elements of Firm Element include:
- Frequency: Must be completed annually, with deadlines set by the firm, typically aligned with the calendar year.
- Customization: Highly flexible, based on the firm’s needs analysis, which considers its business activities, structure, and regulatory priorities.
- Recordkeeping: Firms are responsible for maintaining training records for at least three years.
- Consequences of Non-Compliance: While failure to comply may not result in immediate consequences, it can lead to regulatory scrutiny during examinations.
Firms must develop a needs analysis to ensure that the training is relevant and specific to their operations and the risks they face. To find out what is required for your needs analysis, click here.
Key Differences at a Glance
| Feature | Regulatory Element | Firm Element |
| Administered by | FINRA | Each individual firm |
| Content Focus | Regulatory, compliance, ethics, sales | Firm-specific roles, risks, and professional responsibility |
| Customization | None (Standardized) | Fully customizable by firm |
| Recordkeeping | Managed by FINRA | Managed by firm for 3 years |
| Frequency | Annually by Dec 31 | Annually, timing set by the firm |
| Consequences of Failure | Inactive registration | Regulatory scrutiny or other firm consequences |
What Counts Toward Each Element?
Regulatory Element requires completion of FINRA-administered modules, which must be tracked via each individual’s FinPro account. These modules are non-negotiable, and failure to complete them by the deadline results in inactive registration.
For Firm Element, firms have the flexibility to determine what training counts, as long as it aligns with the firm’s annual needs analysis. This can include topics like anti-money laundering (AML) compliance, off-channel communication, and other relevant professional training. Notably, some training, like CFA coursework, can also be considered if it’s pertinent to the registered person’s role and responsibilities.
Discover Quest CE’s comprehensive library of industry-relevant training materials to enhance your Firm Element program by exploring our course selection here.
Best Practices for Building a Compliant Firm Element Program
Developing an effective Firm Element program requires more than just compliance—it’s about building a tailored approach that addresses the firm’s specific risks and needs. Here are a few best practices:
- Conduct a thorough needs analysis based on the firm’s structure, business activities, and risk profile.
- Develop a written training plan that includes specific topics such as AML and cybersecurity, and prioritize training based on risk assessments.
- Keep accurate records of all training, attendance, and completion for at least three years, as required by FINRA.
- Review and update training content regularly to reflect regulatory changes, emerging risks, and feedback from internal audits and compliance reviews.
Both Regulatory Element and Firm Element play crucial roles in ensuring compliance and protecting both firms and individuals in the securities industry. By understanding the distinctions between the two and ensuring that both elements are properly managed, compliance professionals can ensure that their firms meet the necessary legal requirements and are prepared for future regulatory challenges.
To view Quest CE’s catalog of 450+ Firm Element courses, click here. For additional resources on creating and managing effective CE programs, or for assistance in tailoring your firm’s training needs, reach out to Quest CE here.
