Securities legislation is quite clear on what courses and designations you need in order to register in the various categories, but what relevant experience is sufficient is less clear cut. No matter the category you are applying under, the regulators must determine than individual is fit for registration. They look at the proficiency of the individual based on their education, training and whether they have the requisite experience to meet the requirements of the particular category of registration. They also look at an individual’s integrity regarding outside business activities, potential for conflicts of interest – anything which may impact an individual’s ability to deal in the best interests of their client. They also look at the solvency of prospective registrants; a bankruptcy does not automatically disqualify you, but it could.
As for the proficiency requirements, to be a Dealing Representative of an Exempt Market Dealer, you must have completed the Exempt Markets Products Course or the Canadian Securities Course; there is no experience component required. The requirements to be the Chief Compliance Officer have become more stringent, along the lines of other categories of registration. The CCO must now have 12 months of relevant securities experience which includes the training and experience to perform the tasks required of a CCO, such as implementing and maintaining an effective compliance system.
There are only three categories of registration for individuals of a Portfolio Manager: Associate Advising Representative (AAR), Advising Representative (AR) and the CCO. To register as an AAR, you need to have completed either the first level of the CFA program or have achieved the CIM designation and have 24 months of Relevant Investment Management Experience (RIME). AAR’s can meet with clients and can make specific investment recommendations to clients but must be supervised by an AR. The most common qualifications for an AR are the CFA Charter and 12 months of RIME or the CIM designation and 48 months of RIME. The CCO must qualify as an AR and have completed either the PDO Course or Chief Compliance Officers Qualifying Exam.
Where things become less clear relates to exactly what can be considered Relevant Investment Management Experience; this is open to interpretation. Typically, it is made up of the ability to conduct research and analysis of securities in the context of portfolio selection and the ability to manage investment portfolios on a discretionary basis. Just because you have worked in the financial industry does not mean that all your experience is pertinent. You would need to show that you can conduct independent analysis of securities and then be able to create a portfolio according to clients’ needs.
There are many instances where individuals do not qualify, such as someone who works in corporate finance performing take-over bids and mergers and acquisitions. Their ability to conduct securities analysis may not be questioned, but the ability to apply it to portfolio selection is difficult to prove. Registered Representatives of IIROC firms do not typically qualify because although they do make specific investment recommendations and do construct client portfolios, many are limited by their firms to specific model portfolios, which may not involve the in-depth analysis the regulators require. MFDA Representatives also usually do not qualify because they are selling pre-packed products which do not involve the necessary analysis. However, each application is reviewed according to the information provided by the applicant so it is important to highlight relevant experience showing your activities in this field.
For those individuals that do not have the necessary courses to neatly fit into the requirements, there is the possibility of filing an exemption application. However, you would have to have many years of relevant experience to make up for the lack of book knowledge. A simple rule of thumb is that enough experience can make up for a lack of courses, but no amount of courses can make up for a lack of experience. In applying to be registered under a Portfolio Manager, the regulators do ask for letters from former supervisors attesting to your past activities and should match what you have put in your application, so always leave your past employers on good terms because you will need their support when seeking registration.
Jonathan Heymann began his career in the financial services industry working at Spectrum United, a mutual fund company. In 1999, Jonathan joined the Ontario Securities Commission and within two years became a Supervisor in the OSC Contact Centre, where he developed a broad knowledge of the Capital Markets in Canada and particularly the role of compliance.