What are the FINRA Firm Element Requirements?

Firm Element Continuing Education: who needs it? Why do we need it? And what’s involved in the training process? These are the common questions that broker-dealers (BD) deal with on an annual basis. To put it simply, FINRA Rule 1250 states that broker-dealers are required to establish and maintain a formal continuing education program that is designed to keep the firm’s covered persons up-to-date with job and product-related subjects relevant to the firm’s business. Okay, so this tells us that broker-dealers need it, and that it’s important because it keeps them up-to-date with the latest product and industry trends, so that still leaves us with the question, “what’s involved in the training process?”

To comply with FINRA regulation, firms must establish, maintain and keep records of the entire training process. This includes a Needs Analysis, which is later used to formulate a Written Training Plan that outlines the firm’s assigned training program.

Step One: Determine the Firm’s Training Needs

Before deciding what training to assign, a firm needs to determine what their training pain points are through the use of a Needs Analysis Survey. It’s important that the Needs Analysis Survey isn’t too general, so that the results will help truly identify the firm’s training deficiencies. The Needs Analysis should include:

– details pertaining to the job functions at the firm, including who will perform these functions;
– a listing of the products and services the firm offers;
– details of any changes to industry rules or policies at the firm as well as;
– any internal feedback.

Once the Needs Analysis has been conducted, firms will analyze the data to identify potential training objectives and generate program goals. After a plan is in place, firms will have an idea of which course topics to assign. Before this step, however, broker-dealers need to take the aggregated data from the Needs Analysis and convert it into a Written Training Plan.

Step Two: Consolidate Findings in a Written Training Plan

As the second step of the Firm Element process, the Written Training Plan will implement the objectives identified in the Needs Analysis Survey and will be used as a point of reference throughout the training process.  In developing an effective Written Training Plan, firm should:

– address the objectives that were identified in the needs analysis;
– identify who will be responsible for ensuring that the training plan follows the outlined objectives;
– state the specific training needs; address which training will apply to individuals or to groups;
– outline the format that will be used for training; establish a delivery time frame for training and;
– document participation and make revisions to the plan as needed or at least annually.

In addition, firms should adequately document the decision-making process of determining which training topics will be added to the annual plan.

Step three: Implement and Execute the Training Plan

After the Needs Analysis has been evaluated and the training plan has been written, the firm can start offering training to its registered representatives. With this, it’s important that firms maintain books and records regarding all assigned training. Proper documentation will include detailed records reflecting how the Firm Element plan was developed, implemented, administered and monitored. Properly recorded documentation will include the Needs Analysis, Written Training Plan, training materials, and records of participation in training programs, as well as any correspondence regarding feedback.

It’s also important to note that there is a minimum requirement for Firm Element training. To comply with FINRA’s requirement, firms must cover the following topics:

– general investment features and associated risk factors;
– suitability and sales practice considerations and;
– applicable regulatory requirements.

Feeling Overwhelmed? We’re Here to Help

At Quest CE, we don’t believe in cutting corners. Our compliance management system (CMS) is built to take your firm through the entire Firm Element process. We offer a standard Needs Analysis template that can be customized to reflect the needs of your firm. Additionally, our Written Training Plan template is designed to help convert your survey results into a formalized plan that will address your firm’s training deficiencies. Finally, our system has the ability to assign, maintain and track your entire firm’s training completion statuses, all from one consolidated location.

Our CMS offers several unique features to help take your firm’s Firm Element program to the next level. To start, we offer the industry’s largest catalog of more than 450 courses, which ranges in topic, difficulty and length. We also give you access to our Email Blast Utility to set up automated email reminders to be sent to your registered representatives until training is complete. Apart from these features, our system has a whole slew of additional tools and resources, including detailed exam reporting, dynamic course interactivity and visual completion graphs.

So there you have it – a high-level overview of FINRA’s Firm Element requirement.

To learn more about our Firm Element solution, click here or contact sales at 877-593-3366 or sales@questce.com.