Wednesday, November 18, 2015

Training Cost Arbitrations To Disappear? FINRA Introduces New Broker Exam

FINRA is proposing to add a new exam to its roster. The exam, which will be similar to the Series 7, but more general, would be valid for 4 years and will not require a firm sponsor.

LogoToday, potential brokers are typically sucked into recruiting programs at major firms. Some of those firms require trainees to pay the firm for their "training costs" if they leave before a period of years. Those training costs? At some firms in excess of $60,000. Given the high failure rate, and the relative low actual cost of training, this is hardly a fair scenario. Add the fact that you cannot take the Series 7 without being sponsored, and it is a huge road block.

We can debate whether the world needs more brokers. With large firms eliminating pay on accounts of less than $250,000, and others moving to robobrokers, the financial adviser profession ain't what it used to be. At the same time, there is still a need for skilled financial professionals.

The new exam would not require a sponsor, and would enable candidates to demonstrate their ability before applying for a position. Once they join a firm, they'd be required to take a more specialized exam correlated to their particular role.

Whether this avoids training costs is doubtful, and while it is outrageous that firms charge their new hires on how to use their internal software, it is a step in the right direction.

FINRA’s Proposed Exam Change Could Be a Boon for Recruiting:


Mark Astarita is a securities attorney who represents brokers and investors across the country in their financial and regulatory disputes. For a free consultation, call him at 212-509-6544, or contact him by email at