Finra sets big change in motion with new option for licensing grace period

The MQP: There's a lot of potential packed into that Finra acronym.

The self-regulatory organization that governs brokerage firms and registered reps (among other tasks) has broken through a barrier that stymies many other professions: It reconciled licensing requirements with the common career and family timeline. Until now, the intersection of the two was more of a traffic jam that forced many women to steer out of the industry.

And the Maintaining Qualifications Program was adopted due to the advocacy of three women governors, its origin story thus illustrating the change it is intended to effect.

“Finra is in the lead on this,” said Kwamie Dunbar, associate professor of finance at Simmons University, which was founded as a women’s college and is still renowned for programs that advance women. “Outside of Finra, I haven’t seen anything as significant as this.”

In short, the new rule creates a five-year grace period during which registered reps can maintain their credentials by taking continuing education, even if they're not actively working in the industry. The prior period was two years — far too short to accommodate the time that many women need to establish families, and that many people of all ages need to tend to family caregiving or personal health.

The Maintaining Qualifications Program was passed in March and is just starting to enroll participants. It sets a standard and establishes a philosophy of diversity that will cascade through the industry, said Dunbar. 

“Most employers will piggyback on the policy that’s set in place,” he said. “Having the regulators take a bold step, it forces employers to follow.”

Three women members of the Finra board of governors collaborated to design the program and press for its adoption through a maze of federal and state regulatory bodies and affiliated industry organizations.

“I’m sorry it took so long but I’m thrilled that it’s here,” Wendy Lanton said about the MQP. She's chief compliance officer with Herold & Lantern Investments. The program is especially relevant now, Lanton said, in an era of high turnover at all employers and employee empowerment. She said that investment industry employers can use the MQP either to retain valued staff or to prop the door open for their return, if they decide to fully pause their careers.

The imperative for the change is based on inarguable evidence that the lifelong caregiving responsibilities shouldered most often by women are in direct conflict with the shorter window for maintaining credentials. As well, the MQP will support greater diversity among ethnic minorities and older professionals, who must reconcile cultural expectations and age discrimination with the industry's traditional career path.

As Linde Murphy got to know Lanton and another governor, Paige Pierce, as all three served on the Finra small-firms committee, they pieced together their own experiences as mothers and financial professionals and realized that they were in a position to neutralize work-life conflicts for the current generation of young parents.

Finra committee work “asks you to bring your background into the room,” said Pierce, president and CEO of Bley Investment Group Inc. She, Lanton and Murphy debated the wisdom of advocating for the program on the basis that it would be especially relevant to women. “There are men caregivers, too,” Pierce said, “But it’s 78% women. Women were disproportionately affected by the two-year window.”

“I want those women back. I want them working with me,” said Murphy, president and chief compliance officer at M. E. Allison & Co. Inc.

Dunbar says that the existence of the program is already changing expectations for women students weighing the pragmatic potential of a career in finance and investing. “I tell them, this removes an obstacle. You can still have a career in finance,” he said. “This move is nothing small, and I expect other industries to follow.”

Lanton, Pierce and Murphy promise to carefully monitor the rolling results of the new program with an eye toward understanding the nuances of who benefits, how and why.

One of the few precedents offers some clues as to how engineered midcareer pauses play out in real life — and the sort of unexpected results that Finra might have to address. Over a decade ago, a few universities realized that the seven-year “publish or perish” pressure cooker of the tenure track collided with the family aspirations of many rising women.

The solution: “stop the clock” programs that enable women pursuing academic tenure to put the tenure clock on hold while they take time out for family responsibilities. Now, “stop the clock” programs are common at universities but have delivered mixed results: An in-depth study of such policies found that gender-neutral programs boosted men’s chances of attaining tenure because they used parental leave to take deep-dive time to research and write.

Women, on the other hand, usually are biologically compelled to use parental leave to cope with the physical and physiological effects of childbearing. They were more likely to gain tenure only if they took the qualifications they built while the clock was stopping and starting and found a tenured position at a different university.