In the highly regulated financial services industry, there may be sound reasons for Finra’s two-year expiration on securities licensing. Yet this policy puts women at a direct disadvantage, and the pandemic has only exacerbated the issue.
According to a study from the National Women’s Law Center, of the 1.1 million people who left the labor force between August and September of this year, 865,000 — or 80% — were women. While the historic election of a female vice president may indicate that social norms are changing, these sobering numbers plainly show that the burden of caregiving in the United States still falls disproportionately on women.
Anyone who has had to re-license with the Financial Industry Regulatory Authority Inc. after taking a break understands the process can be demanding. Finra’s current licensing requirements give exemptions for leave taken due to military service, but the organization does not extend the same treatment to those who return to work after having children, caring for a sick or elderly family member, or acting as a home school teacher in the midst of a pandemic.
For women who have built careers in finance, Finra requirements can turn a relatively short break into the end of a career.
After eight years as a registered representative, I left the industry in 2013 to care for both my newborn daughter and my terminally ill mother. In 2015, my licenses lapsed as my mother entered hospice care because it had been two years since I had worked as a registered rep.
Under existing Finra regulations, a financial professional typically completes at least five exams over the course of her career, but once her licenses lapse, she must retake those exams to regain the licenses. Reinstating these licenses can take four to six months, including studying time, the registration process and the potential of further delays in scheduling exams. Such hurdles significantly delayed my ability to reenter the workforce and placed me at a competitive disadvantage compared to applicants making a lateral move.
For example, when I wanted to return to the workforce, I first had to convince an employer to hire me after an extended period of unemployment, a difficult hurdle for any professional. When I found a company interested in hiring me, my employer had to accept that I would be unable to perform the majority of my required responsibilities for a considerable period of time. Although Finra has an application process to bypass the licensing exams to reinstate a previously registered representative, my understanding from speaking with industry professionals was that such requests were costly, rarely granted in their entirety and often required legal support.
Existing Finra policies are outdated and need to be reviewed to give women and caregivers an easier path to reenter the industry. Changes such as giving options for continuing education or expanding the circumstances in which a license relief can be granted would have easily addressed many of the hurdles I faced when trying to return to work.
In September 2018, Finra published Regulatory Notice 18-26, which touched on this issue, claiming the CE Council is “exploring program changes that would allow individuals to maintain their qualification status following the termination of their registrations by completing continuing education in an effort to address the challenges that industry professionals face when attempting to re-enter the industry after an absence.”
More than two years after that notice, it’s time for Finra to take some real action. While I don’t believe that Finra’s mission is to keep caregiving individuals out of the finance workforce, that is exactly the dynamic its current policy creates.
Caroline Hayes is president of Finitive.
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As our second lead editor, Cindy Hamilton covers health, fitness and other wellness topics. She is also instrumental in making sure the content on the site is clear and accurate for our readers. Cindy received a BA and an MA from NYU.