Education Program Strategic Review

RECO’s Registration Education Vision – White Paper for Comment Fall 2014

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Contents

Introduction.................................................................................................................................................... 3 Phase Two – Registration Education ........................................................................................................ 4 A proposed new Registration Education Learning Path ............................................................................ 4 A vision for implementing a new Registration Education program ............................................................ 7 Our partner in analysis .............................................................................................................................. 7

The focus of the research ............................................................................................................................. 8 Guiding principles ...................................................................................................................................... 8

The approach taken .................................................................................................................................... 10 The options considered ........................................................................................................................... 11

Option 1 ............................................................................................................................................... 11 Option 2 ............................................................................................................................................... 12 Option 3 ............................................................................................................................................... 12

The lead option ........................................................................................................................................... 14 A roadmap to the future .............................................................................................................................. 15 Conclusion................................................................................................................................................... 16 Acknowledgement ....................................................................................................................................... 17 Have comments? ........................................................................................................................................ 18 Appendix A – Current Registration Education Learning Paths ................................................................... 19

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Introduction

In early 2012, the Real Estate Council of Ontario (RECO) initiated a review of its education programs – encompassing both registration education (pre-registration, articling, and broker) as well as continuing education. The goal of the initiative is to balance RECO’s mandate of consumer protection with sound adult learning methodology. The desired outcome is a comprehensive set of programs that enhance registrants’ skills, knowledge and abilities required to trade in real estate in Ontario. The programs should also address when in the registration cycle these skills, knowledge and abilities are required and how they are effectively acquired by learners.

Any new education program will incorporate research on industry opinion that was compiled on behalf of RECO by Benchmark Performance Inc., an award winning performance consulting and training design firm. In order to gather a broad range of perspectives in the review of the education program, Benchmark conducted surveys and focus groups with stakeholders including registrants, Ontario Real Estate Association (OREA), approved education providers, and all Ontario real estate boards/associations, and collected input from other industry associations and regulatory bodies.

The overall feedback from Benchmark’s research identified the need for RECO to:

• Make the material practical for day-to-day work; relevant for both entry and ongoing • Increase the focus on ethics and professionalism • Keep course content up-to-date with emerging trends • Make the program more flexible as registrants’ needs vary • Make it more convenient to learn • Provide checklists and support tools

Given the size of the program, RECO followed a two-phased approach to assess and implement changes and enhancements to the education programs. The first phase covers continuing education, while the second addresses registration education – pre-registration, articling and broker.

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The first phase, covering continuing education, resulted in the successful launch of a new Mandatory Continuing Education program on August 1, 2013. The new program moved RECO away from the practice of approving hundreds of courses covering diverse real estate topics in favour of developing a focused program whose content is more closely aligned with its regulatory mandate.

In the first year since the launch of the program (August 1, 2013 to July 31, 2014), over 23,900 registrants signed up for the new program, and over 51,000 courses were completed. Feedback has also been overwhelming positive:

93% - Content was interesting and easy to follow 96% - Content is relevant to my real estate practice 95% - Course activities gave opportunity to apply learning 94% - Enjoyed flexibility and self-pace of eLearning

Phase Two – Registration Education

Building on the success of the new Mandatory Continuing Education program, efforts turned to focus on opportunities to enhance the Registration Education program. The initial analysis by Benchmark Performance indicated industry concerns that new registrants were not ‘practice-ready’ upon entering the profession. What follows is a proposed learning path to address feedback received, as well as a recommended process for delivering a leading-class registration education program.

A proposed new Registration Education Learning Path

Feedback from the industry outreach contributed to the development of a proposed learning path for registration education, incorporating pre-registration, articling and broker education requirements. This learning path would establish a curriculum framework based on the real estate transaction and emphasize experiential instruction through practical simulations at critical points in the learning process. See the following diagrams.

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A vision for implementing a new Registration Education program

To provide a rigorous and independent review, RECO selected global consulting firm Deloitte Inc., to conduct further research and analysis, and provide a point of view on a leading practice solution for developing, implementing and managing a new Registration Education program based on the proposed learning path and analysis originally completed by Benchmark.

As you will see in the analysis, there is significant opportunity to build on the strength and quality of the existing program, and enable students to be increasingly practice-ready by leveraging leading adult education methodology. These changes would take time; thus a stepped approach is suggested to facilitate successful change and allow the education program to aim for content excellence without disrupting the current quality of education provided. This stepped approach would support achieving the following outcomes:

1. Improved education quality and better-prepared registrants: RECO would work with an advanced curriculum design organization to establish a new real estate registration program based on the proposed learning path, incorporating adult learning leading practices. Critically, the program would include simulation experiences that will provide students with the opportunity to apply their learning in context and thus emerge from the program better prepared to enter the profession and to support consumer protection.

2. Higher education standards: to further enhance the quality of learning outcomes, RECO would establish an independent certification exam representing the academic qualification students must obtain to apply for registration before being permitted to trade. The certification exam should be directed and managed by the regulator, rather than a delivery designate or designates, to transparently control the exam’s integrity and independence – this will become more important in a future where registration education is provided by multiple designates. RECO would work with a leading psychometric examination development organization so that the design of a rigorous exam is fully reviewed and tested by subject matter experts.

3. Greater choice: in addition to the current designate, RECO already enjoys an informal working relationship with some post-secondary institutions that offer real estate related education. RECO would begin further dialogue with a broader cross section of educational institutions that could result in students from those programs qualifying to directly sit the certification exam. RECO believes real estate as a profession is continuing to evolve, and post-secondary institutions would become important partners going forward to offer choice to students seeking education options (for example, pursuing a degree in business or economics with real estate specialization).

4. Enhanced real estate profession brand: The implementation of a new program based on the proposed learning paths would establish a new standard for excellence in the delivery of real estate education required for registration. Following this, RECO would move away from a contract approach with delivery designates and establish an approval-based process. The goal would be to open the market further to provide student-choice. The new program would stand as an example for designates seeking approval. The independent certification exam would remain the standard required to become a qualified applicant for registration. The ultimate goal would be to bring proven successful education solutions to the real estate profession in Ontario. Broadening choice and access to registration education programs would help enhance the brand of the real estate profession in our province, while reinforcing the paramount importance of consumer protection.

Our partner in analysis

In order to arrive at this vision it was important to not only research leading practice in curriculum content design, as RECO had previously, but also to consider the strategy, infrastructure, and education program operating model options that would be considered leading practice. The following is a summary of the analysis conducted with Deloitte’s assistance, which was initiated in May 2014.

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The focus of the research

In order to establish potential options for the future direction of registration education in Ontario it was important to fully consider key inputs:

• A thorough understanding of the current education program, and the history of its operation • Research regarding leading practice in the delivery of similar programs in both the US & Canada • Input from subject matter experts in adult learning curriculum, faculty management, delivery

infrastructure, and organization design & operations

It was consistently heard that there is an opportunity to build a program that prepares new registrants to be more practice-ready coming out of the program. Within the context of Deloitte’s experience building similar education programs (see Figure 1 for framework of standard program elements), key questions were framed that the new education program would need to address:

• To what extent could the approach RECO takes positively impact student experience and learning outcomes?

• How and where should advancements in education methodologies be incorporated into the new program?

• What would be the best way for the program to be delivered and what would be RECO’s role in the short and longer term?

• How could program costs and availability be managed while optimizing access to the program? • How could RECO enhance consumer protection and increase consumer confidence by raising

professional standards? • How could RECO build a leading practice curriculum, based on the above?

Figure 1: Deloitte’s Education Infrastructure Framework

Guiding principles

In consultation with the RECO Steering Committee, a set of guiding principles were established, which were used to test the validity of potential program design options. Those principles are:

1. Improve professional standards: builds the best possible student experience to engage learners in a program that tests end-to-end thinking, resulting in better prepared registrants

2. Efficient and economical delivery channel strategy to expand program reach: extends the program to all learners in a cost effective manner, regardless of location and delivery method

3. Source innovation externally: allows the introduction of innovation focused on improving student experience and program outcomes, without relying on RECO or a single designate to maintain leading practices across the varied disciplines required to build an outstanding program

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4. Increase agility and maintain program continuity: improves RECO’s agility to optimize the effectiveness of the program and to maintain program continuity

5. Adopt stewardship role in all program areas: helps RECO firmly establish its role as a steward, removed from direct program operations, focusing on program oversight, assurances and performance measurement of the education program and its providers

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The approach taken

Interviews were conducted with RECO and OREA as well as other industry stakeholders in order to understand the current program and to supplement the previous research on industry opinion. Research was also conducted into leading practices to help understand the preferences heard from focus groups in the context of ‘what is possible’. Critical to the success of the engagement was a rigorous process for strategic decision making, with the research added to allow for fact-based decision making.

Figure 2: Deloitte’s approach to analysis and visioning

Internal Scan

• Reviewed research on industry opinion

• Conducted legislative scan including REBBA, MTCU, and PCCA regulations

• Analyzed OREA program guidelines, reports, and service designate agreements

Interviews

• Interviewed 19 individuals from RECO and OREA to understand the current program

Focus Group

• Conducted a focus group with 7 members of the Registrar’s Education Advisory Committee and additional industry representatives to identify opportunities for improvement and discuss the risks of change

RECO Workshops

• Vision/guiding principles session established preferred “guard rails” for the lead options

• Lead options session tested the proposed models under different scenarios to select a preferred option

• Developed and presented process flows to further test and understand the preferred option

Jurisdiction Scan

• Reviewed comparable real estate industry education initiatives

• Researched and consulted with comparable organizations

• Literature review of white papers, peer-reviewed articles, and reported news

• Leveraged internal Deloitte resources (e.g. SMEs, Bersin) for leading practices

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The options considered

From the analysis of a broad spectrum of options, three options were developed and considered for the potential structure of a future Registration Education program. The options were developed in consideration of the guiding principles and vision established for the program and also reflect the approaches taken by other leading real estate jurisdictions and regulated professions; they are largely differentiated by the role RECO could take in the governance and operation of the program:

These options were not considered independently, and are not mutually exclusive. Important to note is that attributes from some or all options often formulate the preferred model

Option 1

The first option emphasizes the role of RECO as a steward of the education program in the purest sense. It is a model seen often in other professional disciplines, and in real estate education programs in US jurisdictions where multiple program delivery designates establish curriculum and seek approval from the regulator to be a recognized provider. An effective implementation of this model would require strong executive governance from RECO, providing designates with strategic direction, ongoing review of program performance metrics, and quality auditing.

While this option turns to the marketplace to bring proven successful education solutions, there are risks in proceeding directly with Option 1; it assumes the education market has the experience and willingness to invest in building a new program ‘out of the gate’ – an assumption that would need to be validated.

Key elements of the option:

• A comprehensive set of standards for curriculum, faculty, delivery and student pricing would be introduced, and designates seeking approval to deliver an education program must meet these standards

• Course delivery would be opened to multiple designate(s) through an approval or accreditation process; this process replaces the current approach of issuing and managing contracts and opens the market to those designates that see opportunity and can meet RECO’s standards

In the market: Michigan is representative of the other US real estate jurisdictions surveyed. Minimum education standards related to curriculum, faculty, and delivery are established in conjunction with an external advisory board composed of industry members and the public. Education providers independently develop curriculum and delivery methods and nominate faculty for review and approval by the Michigan Department of Licensing and Regulatory Affairs. Doing so has resulted in a range of education options spanning online and in-class options with private education institutions and community colleges. Education standards and oversight are enhanced by a state licensing exam that students must pass after completing the education program. A portion of the exam deals with state specific laws and practices while the remainder addresses laws and regulations that apply commonly across all states. Responsibility for both portions of the exam is outsourced to a 3rd- party, with the national portion accredited by the Association of Real Estate License Law Officials (ARELLO).

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• A new certification exam would be implemented, developed and administered by an established, independent examination body. The purpose of this would be to build a new leading practice exam based on the latest in examination design and psychometric testing

Option 2

Option 2 is identical in concept to the first option, but envisions RECO directing and managing the certification exam itself rather than designating this responsibility to an external organization. A State exam is common in US jurisdictions as a final qualifier for real estate registration, and this approach is used by the Organisme d'autoreglementation du courtage immobilier du Quebec (OACIQ). Not only would adding an exam managed by RECO enable appropriate independence from the designates delivering the program, it would also be wholly in line with RECO’s role as a regulator, ensuring compliance with regulation and protecting the interest of consumers.

In the market: Independent licensing exams directed and managed by regulators were common across the jurisdictions and regulated professions reviewed. Examples outside real estate include nurses, paralegals, and mortgage brokers and agents in Ontario, as well as lawyers and life insurance agents across Canada. The provincial real estate regulator in Quebec (OACIQ) is one Canadian real estate example. The OACIQ views their role in directing and managing the licensing exam as essential to their mandate as regulator. In the past, they have responded to concerns about professional standards by introducing a licensing exam based on professional situations and skills. The exam now reflects a newly developed competency framework that focuses on problem-solving and skills-based questions, and enforces consistent competencies across all areas of practice.

Option 2 was seen as most in-line with the guiding principles and the vision for the program, and was well supported by the jurisdictional scan.

Key elements of the option, in addition to those from Option 1:

• RECO would assume full responsibility for the development, management, and delivery of the certification exam and would contract with 3rd-party designate(s) to provide subject matter expertise (e.g. psychometric services) and delivery capacity (e.g. testing facilities)

• In the approval/accreditation approach RECO could work with select post-secondary institutions offering real estate education to qualify their graduates to sit the exam directly

Option 3

The third option also includes a certification exam directed and managed by RECO, but differs clearly from the first two options as RECO would take an active role in building and managing a new curriculum in coordination with delivery designates. This approach would be similar to that taken in Alberta, for example, with the difference that RECO would still work with a designate or designates to deliver the program. This option recognizes that RECO and its network of real estate subject matter experts have a deep understanding of the requirements for a successful registration education program.

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While there are some examples in the market of professional/regulatory organizations getting directly involved in content, technology, and faculty management, there was some concern that this model could be expensive and make it more difficult to bring the best the education market has to offer into the program.

Key elements of the option in addition to the certification exam:

• RECO would assume full responsibility for curriculum content development and maintenance but will contract with 3rd-party vendors for a leading practice implementation;

• The new curriculum could be licensed to one or more delivery designate(s) at a fee on a cost-recovery basis

In the market: The Real Estate Council of Alberta (RECA) is unique amongst regulators surveyed in being wholly responsible for curriculum development, maintenance, and delivery for their required real estate licensing courses. This is a new role they recently assumed after their existing education provider no longer wished to continue in that role. RECA assumed the role themselves after they were unable to identify other entities to develop and deliver courses they envisioned. Courses are now developed, implemented, and updated with internal resources and benefit from adult learning subject matter experts maintained in-house. Additional expertise is contracted for as needed with 3rd-parties. This is the approach RECA takes with course delivery, where they contract with a 3rd-party online learning developer to port and host courses online. In consideration of RECA’s pedagogical goals and resource capacity, courses are now only offered online.

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The lead option

Option 2 incorporates proven practices in the education market by building a leading education program, and it establishes the certification exam to safeguard excellence in education standards. However, option 3 would provide RECO with the opportunity to directly manage effective and focused curriculum changes to address feedback received in the initial analysis regarding fostering practice-ready registrants.

A hybrid approach is therefore being advanced by RECO, creating a phased journey that builds on the strengths from Option 3 then transitions to Option 2. The longer term approach would allow RECO to establish an outstanding education program as a model before turning to the real estate education market for delivery, upkeep, innovation, and maintenance of the program.

The advantage of this option can be understood in three phases:

Phase 1 – Get it right – establishes the new program with a leading practice curriculum developed and maintained by RECO who works with the delivery designate(s) to establish excellence in education

Phase 2 – Raise the bar – introduces a new certification exam representing the academic qualification students must obtain to apply for registration

Phase 3 – Bring the best the market has to offer – once the new curriculum is in place, opens up the market to additional designates through an approval process based on an established curriculum, allowing students greater choice

An example of what the transition might look like follows below:

Phase 1: Establish New Program Phase 2: Transition Phase 3: Program Future

State

• RECO selects adult learning experts through RFP process to develop leading practice curriculum for new program

• RECO establishes comprehensive education standards aligned with new curriculum

• RECO selects one or more delivery designate(s) that meet education standards, through RFP process

• RECO strengthens internal governance focused on strategic direction, and relationship & performance management

• RECO develops and launches certification exam supported by psychometric expertise selected through RFP process

• RECO recognizes select real estate post-secondary degrees/diplomas – graduates allowed to sit certification exam directly

• Continued maturation of education standards and internal governance

• RECO begins approving additional providers who meet new education standards

• Providers develop curriculum that meets program standards

• RECO continually improves standards and monitors compliance

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A roadmap to the future

The initial timeline would see a staggered roll-out of key program changes in order to minimize up-front capital requirements, moderate the demands on RECO resources, and manage the impact of the changes to the real estate profession.

It may be possible to accelerate the timeline, particularly the time to recognize post-secondary real estate degrees/diplomas and the time to develop and launch the certification exam. Further analysis would be required to assess the extent to which the timeline could be compressed, and any associated risks or costs.

This is an initial timeline only, the full path to implementation would be fully developed once RECO engages with designate(s) and potential vendor(s)/supplier(s).

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Conclusion

Real estate education in Ontario has historically been strong and has seen incremental improvements and innovations over the years. There is a desire in the profession, however, to enhance the program further according to the research on industry opinion conducted earlier1. The plan presented herein would allow RECO to introduce education standards for a practice-ready curriculum, as well as an independent certification process, that focus on reinforcing RECO’s mandate of regulatory compliance and consumer protection. It further focuses RECO’s leadership on establishing and administering program standards, to be used within the education marketplace for the development and delivery of a variety of recognized real estate education programs.

1 See 2014 Education Program Review – Phase 1 Continuing Education (www.reco.on.ca)

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Acknowledgement

RECO and Deloitte would like to extend their thanks to the following industry professionals for their participation during the consultation process:

Gina Alexandris Senior Program Director, Law Practice Program, Ryerson University Tharma Athiththan Director, Information Technology, OREA Kirk Bacon Deputy Executive Director, RECA Nicholas Baker Manager, Curriculum Services, OREA Real Estate College John Burnet Manager, Complaints, Compliance and Discipline, RECO Mohan Cappuccino Director, OREA Real Estate College Helen Corrigan Licensing Education, Sauder School of Business, Real Estate Division Rahim Dharssi Senior Compliance Officer, Financial Services Commission of Ontario Paul Dorris Education Advisory Committee, RECO Cesar Dos Santos Directeur, Formation de base et examens, OACIQ Joseph Fernandez Registrar, RECA Peter Flagg General Manager, REvia.ca Gloria Fougere Manager, Finance and Accounting, RECO Ron Fullan Chairperson, Canadian Insurance Services Regulatory Organizations Heather Fuller Education Advisory Committee, RECO Ruth Garrett Manager, Insurance Programs, RECO Elliott Katz Senior Policy Officer, Financial Services Commission of Ontario Lisa Key Manager, Regulatory Learning and Professional Development, RECO Rick Kolari Education Advisory Committee, RECO Shelley Koral Director, OREA Real Estate College Terry Landon Chair, Education Advisory Committee, RECO Jody Lavoie Vice Chair, Board of Directors, RECO Ozzie Logozzo Executive Director, OREA Real Estate College Patsy Mackle Director, OREA Real Estate College Bruce Mathews Deputy Registrar, Regulatory Compliance, RECO Joan Miller Education Advisory Committee, RECO Douglas Monett Instructor, OREA Real Estate College David Moore Director, Licensing Education, Sauder School of Business, Real Estate Division Marilee Peters Communications Officer, Real Estate Council of British Columbia Brian Prendergast Manager, Inspections and Investigations, RECO Joseph Richer Registrar, RECO Sue Sherman Manager, Testing Education and Program Services, Michigan Department of

Licensing and Regulatory Affairs Brian Schlotzhauer Deputy Registrar, Industry Standards, RECO Elizabeth Silcox Manager, Legal Services, RECO Diane Usher Invitee, Education Advisory Committee, RECO Angela Volpe Manager, Registration, RECO George Watson Education Advisory Committee, RECO Mark Weisleder Invitee, Education Advisory Committee, RECO Deborah Wolfe Managing Director, National Committee on Accreditation and Director, Law

School Programs, Federation of Law Societies of Canada Tom Wright CEO, RECO

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Have comments?

This white paper has been posted for a public review and comment period starting December 15, 2014. If you would like to submit comments, please do so in writing to whitepaper@reco.on.ca or mail to the address provided below. Real Estate Council of Ontario Office of the Registrar – Education 3300 Bloor Street West West Tower, Suite 1200 Toronto, ON M8X 2X2 All comments received in writing prior to February 20, 2015 will be considered by the Registrar as part of the decision-making process. Please note, there will be no formal replies issued to any specific comments.

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Appendix A – Current Registration Education Learning Paths