A Series 7 License is needed to in order sell virtually any type of individual security. This license is also commonly known as the General Securities Representative License. For instance, it includes stocks, bonds, options, and other fixed income assets.
With a Series 7 license, the only major investments you are not authorized to sell are life insurance, commodities futures, and real estate.
Who Needs A Series 7 License?
If you are looking to work in the financial industry, most employers will require you to obtain this license. It is the entry-level license for general securities representatives. By obtaining this license, you will be able to help your clients with retirement plans, stocks, mutual funds, college savings plans, taxes, and more.
How To Get A Series 7 License
However, there are two main parts to securing your Series 7 license. Firstly, you need to secure a sponsorship. And secondly, you need to take and pass the Series 7 exam.
Series 7 Requirements
Passed in October 2018, a new requirement states that candidates must first pass the Securities Industry Essentials (SIE) exam before taking the Series 7 exam.
The SEI exam is an introductory test to gauge your knowledge about basic industry information. In short, this exam includes knowledge of the regulatory agencies and their functions, structure of the industry markets, products and their risks, and prohibited practices.
After you have completed the SIE exam, you will need to be sponsored by a FINRA (Financial Industry Regulatory Authority) member firm, or other Self-Regulatory-Organization (SRO) member firm.
The sponsoring firm is then required to file a Form U4 (Uniform Application for Securities Industry Registration or Transfer). Additionally, they need this form to confirm your eligibility to register for the Series 7 licensing exam.
Series 7 Exam
The next step is to complete the exam. Out of all the securities license exams, the Series 7 exam is one of the longest and most difficult. Be prepared to spend 225 minutes covering all aspects of stocks, bonds, and trading.
There are 125 exam questions in total:
- 9 Questions – Seeks business for the Broker-Dealer from Customers and Potential Customers
- 11 Questions – Opens Accounts after Obtaining, Evaluating Customers’ Financial Profile, and Investment Objectives
- 91 Questions – Provides Customers with Information about Investments, Makes Recommendations, Transfers Assets and Maintains Appropriate Records
- 14 Questions – Obtains and Verifies Customers’ Purchase and Sales Instructions Agreements; Possesses, Completes, and Confirms Transactions.
Overall, to be successful and pass your exam, you will need to study and prepare. Ask your sponsor if they have any in-house training programs or recommendations for external training providers. You will need a score of 72% or higher to pass your exam. The good news is, once you pass your exam, you have your Series 7 license.
Other Common Licenses
While the Series 7 license is the most common license for financial advisors, there are other licenses to help in distinctive areas of focus.
If you are looking to solicit securities in a particular state, you will need to obtain a Series 63 license. The North American Securities Administrators Association (NASAA) has created an exam that covers state securities regulations. Its intent is to assess your understanding of state laws and regulations. However, representatives in District of Columbia, Florida, Colorado, Maryland, Ohio, Louisiana, and Puerto Rico are not required to hold Series 63 licenses.
The Series 63 exam is not as grueling as the Series 7. This exam consists of 65-multiple choice questions and is also conducted by FINRA. You should allot 75 minutes for the exam. Since the Series 63 exam is considered entry-level, there are no prerequisites required.
The Series 66 license requires an exam that is a co-requisite to the Series 7 exam. This license is required to work as an investment advisor in the United States.
You will be tested on your ability to provide professional investment advice within the financial services industry. Like the other examinations, it is offered by the NASAA and administered by FINRA.
The series 66 exam consists of 100 multiple choice questions that are to be answered within the allotted 150 minutes. The exam tests your knowledge of regulations, client relations, investment vehicles, and economic factors.
If you are looking to supervise or manage a branch as a broker-dealer, you will be required to hold a Series 24 license. To do so, you will need to complete the Series 24 exam.
This exam tests your competency and knowledge to perform your job dependent on your own co-requisite registrations. To be registered as a General Securities Principal (GP) you will need to take the SIE and the Series 7 exams, along with the Series 24.
The Series 24 exam consists of 150 questions with three hours and 45 minutes to complete the exam. There is no other reference, study material, or calculators permitted in the exam room besides the provided calculators, dry-erase boards, and markers.
If you are looking to have more specific financial industry proficiencies other than the Series 7 License, look at the Series 79 license.
This license will provide you with the requirements needed to become an investment banking representative. The exam will test you on critical functions needed to become an investment banker. For example, it focuses on mergers and acquisitions, debt and equity offerings, and beyond.
The 175-question exam should be completed within a 150 minute timeframe.
Finding A Financial Advisor With The Right Licensing
As you can see, there are various license options available for financial advisors in the United States. No matter who you choose, their licenses will be a good indicator if they can fit your planning and investment needs.
The examinations required for each license will provide good faith that your financial advisor has the knowledge and competency to provide you with the best solutions for your personal interests.
When you’re ready to find a Financial Advisor to help you achieve your financial goals, don’t hesitate to get started, but be sure to ask which licenses they hold.