The Importance of Continuing Education for Retirement Plan Financial Advisors: What Business Owners and HR Teams Need to Know

As a business owner or a member of the HR team, managing employee retirement plans like 401(k), 403(b), and non-qualified employee benefits is a crucial responsibility. You rely on financial advisors to provide expert guidance on these complex matters. However, it's essential to understand the continuing education requirements that financial advisors licensed through FINRA and state insurance boards must meet. In this article, we'll explore why this is so important for your business relationship.

 Why Continuing Education Matters

 Retirement Plan Advisors play a pivotal role in shaping the financial future of your employees. With ever-changing laws, regulations, litigation risks, and market dynamics, staying updated and knowledgeable is imperative. Here's why continuing education matters:

1. Regulatory Compliance: Financial advisors need to adhere to strict regulatory standards. Staying current with changing rules and regulations is a legal requirement. Failure to do so can result in fines, legal issues, and reputational damage for your business.

2. Market Dynamics: The financial world is constantly evolving. New investment products, tax laws, and economic trends can greatly impact retirement plans. Advisors need to understand these changes to make informed recommendations.

3. Fiduciary Responsibility: Employers have a fiduciary responsibility to act in the best interests of their employees. If you hire advisors who are not well-informed, it can lead to conflicts of interest, mismanagement, or suboptimal financial outcomes for your employees.

4. Employee Trust: Your employees trust you to provide them with reliable retirement plan guidance and resources. Choosing advisors who prioritize ongoing education helps build and maintain this trust.

FINRA Requirements

Financial advisors who are licensed through FINRA (Financial Industry Regulatory Authority) have specific continuing education requirements. These requirements ensure that advisors are well-equipped to provide accurate and up-to-date advice. The FINRA requirements include:

1. Regulatory Element: Advisors must complete periodic training related to industry regulations and standards. This helps them stay informed about changing rules and regulations.

2. Firm Element: Advisors are required to participate in annual ongoing training provided by their employing firms. This ensures that they stay current with the latest products and services offered by their firm.

State Insurance Board Requirements

In addition to FINRA, Financial Advisors who maintain insurance licenses may also be regulated by their state insurance boards. These boards set their own continuing education standards to ensure that advisors are well-versed in insurance products and regulations specific to their state.

Newly implemented continuing education requirements proposed by the North American Securities Administrators Association (NASAA) impact Investment Adviser Representatives in currently ten states. Maryland was the one of the first three states, in 2022, along with Mississippi and Vermont, to adopt the provisions of Model Rule 2022-411(h). Seven more states, and Washington, D.C. implemented requirements in 2023, and five additional states will begin in 2024. This is an additional annual continuing education, at least in Maryland, that focuses on Products & Practice and Ethics &Professional Responsibility

Finally, in addition to the continuing education requirements imposed by FINRA and state insurance boards, Retirement Plan Financial Advisors often hold various certifications, such as Certified Plan Fiduciary Advisor (CFPA®), the Accredited Investment Fiduciary (AIF®), or even the Chartered Financial Analyst (CFA). Each of these certifications has its own set of CE requirements, which are equally important to consider when choosing the right Retirement Plan Financial Advisor for your retirement plans.

Some Additional Benefits of Certification-Specific Continuing Education

 Advisors who hold certifications and diligently fulfill their CE requirements bring added expertise and credibility to the table:

•  Specialized Knowledge: Different certifications have different areas of specialization. By working with a certified advisor, you can tap into their in-depth knowledge of specific financial domains, which can be particularly advantageous for retirement planning.

•  Ethical Standards: Many certifications require adherence to strict ethical standards. This can instill confidence that your advisor is acting in your employees' best interests, aligning with your fiduciary responsibilities.

Benefits for Business Owners and HR Teams

 Choosing Retirement Advisors who prioritize continuing education offers several benefits for business owners and HR teams:

1. Reduced Legal and Compliance Risks: By working with Advisors who meet their regulatory education requirements, you may minimize legal and compliance risks.

2. Appropriate Financial Outcomes: Well-informed Advisors can help your employees make more informed decisions about their retirement plan participation, potentially resulting in more appropriate financial outcomes for their risk comfort and time horizons.

3. Employee Satisfaction: When your employees have access to knowledgeable Advisors, they're more likely to be satisfied with their retirement benefits, which can boost morale and retention.

4.  Enhanced Reputation: By providing your employees with trustworthy and well-informed Advisors, you enhance your company's reputation and can attract top talent.

 Choosing the Right Retirement Plan Advisors

 When selecting a Retirement Plan Advisor to work with your organization's retirement plan, inquire about their continuing education requirements obligations. An advisor who holds industry-related certifications in addition to the FINRA and State Insurance Board associated licenses and prioritizes ongoing education is more likely to offer your employees a well-rounded and up-to-date approach within the retirement plan. You may also ensure that your employees receive important guidance for their retirement plan experience. This not only reduces risks but also enhances your employees' financial well-being, job satisfaction, and your company's reputation. If you're looking for a Retirement Plan Advisor to help you start or manage your retirement plan, email us today, Christina.Tunison@lpl.com.

This information is not intended as authoritative guidance or tax or legal advice. You should consult your attorney or tax advisor for guidance on your specific situation. In no way does advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations.

#494055 October 2023