The move next year to exam-based proficiency for prospective investment dealer personnel is expected to yield lower licensing costs and more choice in education. Meanwhile, prospective mutual fund licensees are set to experience the opposite — at least for the foreseeable future.
Earlier this year, the Investment Funds Institute of Canada rebranded as the Securities and Investment Management Association and expanded its mandate to include capital markets and investment dealers. As part of the change, it announced the closure of its educational arm, IFSE Institute. IFSE closes its doors for good on Monday, leaving the Canadian Securities Institute (CSI) as the sole course provider for mutual fund proficiency, as well as exempt market proficiency.
“We got caught flat-footed” by IFSE’s announced closure, said Chris Blair, the Calgary-based managing director of Saskatoon, Sask.–headquartered Sentinel Financial Group. Sentinel has a program to onboard prospective advisors who will be eventual successors to the dealer’s retiring advisors, and it used IFSE for both mutual fund and exempt market proficiency.
IFSE’s closure was “a bit of a surprise to us,” Mark Kent, president and CEO of Calgary-based Portfolio Strategies Corp. said. The firm used IFSE for mutual fund, ETF and exempt market proficiency. “To have another supplier of education off the street is a negative,” Kent said.
“The biggest factor [between IFSE and the CSI] was the cost difference,” Som Houmphanh, the Saskatoon-based chief compliance officer of Windsor, Ont.–headquartered Sterling Mutuals Inc., said. The dealer used IFSE “quite a bit,” Houmphanh said. A single education provider offers consistency, but it “doesn’t give the new registrants alternatives.”
Prospective mutual fund licensees, who could previously take IFSE’s Canadian Investment Funds Course, now must take the CSI’s Investment Funds in Canada course (or the Canadian Securities Course, which costs significantly more).
CSI prices are about 10%–30% more than IFSE prices, depending on course package and available discounts. CSI exam rewrites, at $300, are triple the price under IFSE.
Maria Jose Flores Suarez, president of Carte Wealth Management Inc. in Mississauga, Ont., said IFSE’s shorter Canadian Investment Funds Course (CIFC) had been a good choice for knowledgeable industry personnel — a longtime wholesaler, say — who wanted to shift to an advisory role.
New York–based Moody’s, which owns the CSI, didn’t respond to a request for comment.
Education providers shut out
Proficiency related to mutual fund dealers falls under the Canadian Securities Administrators’ (CSA) purview, and exams for the Investment Funds in Canada, Canadian Securities Course and CIFC (and others) are specified in National Instrument 31-103. As a result, other education providers are ostensibly shut out of providing mutual fund proficiency courses unless the instrument is amended.
The CSA said in March it was evaluating the potential impacts of IFSE’s shutdown on the market and investors, and it restated this position in an email on Friday.
John Waldron, founder of education provider Learnedly Canada Inc. in Toronto, said he tried for years to get regulatory approval to provide a mutual fund proficiency course — which would have meant a choice among three courses but probably also the regulatory work of creating a proposal and comment period. With the news of IFSE’s closure, Waldron said he asked the CSA to allow Learnedly to steward and administer the CIFC, but received no response.
“Not only do they [the CSA] not have any proper channels for allowing new course providers to offer the licencing courses, they’re allowing the existing ones to discontinue without any consultation [or] industry process,” Waldron said. “I don’t see how this could be in the industry’s best interest.”
In a submission earlier this year on continuing education harmonization for investment and fund dealers, the Federation of Independent Dealers said IFSE’s closure leaves “a single eligible licensing course,” and as such “creates risks within the advisory space” — for example, what happens if the course becomes unavailable? The federation said that “the gatekeeping nature of listing specific licensing courses within legislation is problematic and needs to be addressed.”
With the Canadian Investment Regulatory Organization’s (CIRO) new exam-based proficiency, which launches on Jan. 1, 2026, prospective securities licensees (and other personnel) will no longer be required to take specific courses, ending the longstanding relationship between the CSI and CIRO predecessor the Investment Industry Regulatory Organization of Canada.
In an email, education provider SeeWhy Financial Learning Inc. said it expects the new regime will support consumer choice, product innovation and competitive pricing.
“By comparison, the mutual funds licensing process seems to be moving in the opposite direction,” SeeWhy’s email said. “It is shifting from two providers to a single provider, which is owned by a foreign, U.S.-based company. We believe a more competitive structure would bode well for the Canadian mutual funds industry and its participants.” (IFSE students in the life licence qualification program were transferred to SeeWhy, and IFSE’s director of sales and marketing, Fatema Nazarali, will join SeeWhy on Sept. 2.)
Mutual fund proficiency out of scope
While the industry largely expects that mutual fund dealers will eventually be rolled into CIRO’s proficiency regime, the regulator was clear during the consultation process that mutual fund proficiency is outside its scope.
“We do not have the responsibility to set proficiency standards for mutual fund dealers, and therefore [that] is not part of CIRO’s new exam-based proficiency regime,” Elsa Renzella, senior vice-president, member compliance and registration with CIRO, said in an email. “These proficiencies are the responsibility of the CSA.”
While reviewing proficiency was part of the CSA’s 2022–25 business plan, it isn’t mentioned in its 2025–28 business plan, released on Thursday.
Meanwhile, dealers and educators are considering how proficiency will evolve.
“To have IFSE essentially no longer provide a mutual fund exam … sends a fairly strong message … that everybody’s got to write the CSC now,” Blair said, suggesting that prospective registrants will forgo mutual fund licensing. Eventually, “there might not even be a value in a mutual fund dealer if they don’t offer a full product suite for their advisors,” he said.
“We don’t have clarity too much on the mutual fund side,” Flores Suarez said, and some prospective mutual fund licensees have questions about potential proficiency under CIRO’s new regime. She said she expects more clarity to emerge over the next few months.
In comments during the proficiency consultation, Waldron suggested that the industry wasn’t large enough, especially in certain registration categories, to support a high-quality competitive market of education providers through an open proficiency model, and also that the Jan. 1 launch date isn’t realistic. As such, CIRO may have to step in as the industry’s de facto curriculum provider, he said.
To ensure quality education, Waldron continues to believe a competitive single-vendor model, awarded every five years, is best.
“The problem was not CSI,” he said. “The problem was a non-competitive single-vendor model.”