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The Debate Over the CSI

November 19, 2014 | I.C.M. Clark, Principal, Street Technology Limited

The Debate Over the CSI

IIROC Notice 14-0181

Did you know that the Canadian Securities Institute (CSI) is a US owned and for-profit company? If not, don’t feel you’re alone as I hadn’t been thinking much about the CSI either. I am still grateful to the CSI examiner who many years ago gave me a passing mark on my Partners Directors and Senior Officers (PDO) exam and I remember another newly minted VP at my old firm, despairing that he would ever retain enough of the capital calculation, putting off his PDO exam and likely humiliation for as long as possible. The CSI has touched many others over its forty-four year existence. According to a recent Globe and Mail article, an estimated 370,000 people have enrolled in the Canadian Securities Course, the CSI’s flagship product.

Those who think of the CSI as a sort of staid utility owned by the Canadian investment industry will be surprised to learn that the CSI is now Moody’s Analytics Global Education (Canada) Inc. having been acquired in 2010 for the impressive sum of 155 million dollars. Now “for-profit”, the CSI still retains its monopoly on the education and examinations needed to be mastered by everyone seeking to obtain a license as an industry professional. And that is where the debate comes in – would the investment industry be better served if other education companies were allowed to contribute new ideas and programs? Are the CSI courses kept up to date with changes in products and the evolving role of the advisor as a wealth manager? Are the prices paid for courses in Canada, both by new entrants and licensed professionals, in line with costs in other countries?

Smarten Up Institute’s clients have expressed concern with the above and one just has to look south of the border to see a different model at work. If one wishes to become a General Securities Representative (i.e. an advisor) in the United States, one studies for the Series 7 exam which grants a comprehensive licence covering equity, debt, options, derivatives, retirement plans and investment companies. Having passed the Series 7 and a smaller state licensing exam, US advisors can manage a wide range of instruments including options strategies within their client’s portfolios. The Series 7 and state exams and attendant courses cost about $1,000 – one quarter of the $3,915 that the bundle or courses to provide the same capability costs in Canada. In the US, there are many independent course providers and students can choose the education vendor that best suits their budget and learning style – some may prefer weekend seminars, others traditional classrooms while studies show that virtual classrooms (similar to Smarten Up Institute’s “Smart Talk”) are effective for the social media generation. The CSI’s self-study courses are the sole option in Canada at the moment.

Animating this debate is Notice 14-0181, a call for comments issued by the Investment Industry Regulatory Organization of Canada this July. IIROC is conducting a consultative process on “proficiency assurance” prior to the expiry in early 2016 of its contract with the CSI. One of the main questions to be answered is whether IIROC should again renew this exclusive contract. The Smarten Up Institute strongly believes instead that IIROC should implement a new and improved framework for education and examinations. The IIROC/CSI contract seeks to mandate change and limit prices but this is clearly out of step with the pace and dynamism with which the investment industry is evolving. Choice and competition are better ways to control the price of courses and to improve their quality. Choice and competition are the norm in other countries including Australia, Britain and the United States.

If you would like to learn more, visit IIROC’s website where you can view comment papers from industry stakeholders including one by the Smarten Up Institute. The relevant IIROC webpage can be found be looking at IIROC’s Administrative Notices section or by viewing

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