The North American Securities Administrators Association (NASAA) Series 63 exam is undertaken by many candidates entering the securities industry.
And if you want to know everything to do with this licensing exam, administered by the Financial Industry Regulatory Authority (FINRA), be sure to read on.
In this article on FINRA Series 63 Exam, we will cover:
So let’s jump straight in and see why many who look to become financial professionals might need to consider the Series 63 exam.
What is The Series 63 Exam? A FINRA Rundown
To start, we are going to take a more general look at this Series exam.
Formerly known as the Uniform Securities Agent State Law examination, as mentioned in the introduction, this is not a FINRA exam but only administered by them.
NASAA developed the Series 63 as a state law test that’s aimed at broker-dealers who have their Series 6 or 7 license already.
Of critical importance here is the term “state law”.
Ultimately, the Series 63 exam tests the overall knowledge of state laws pertaining to various regulations, ethical practices, and fiduciary obligations.
For example, those in which a candidate will conduct transactions as an investment adviser.
In other words, those that pass can then solicit orders in their particular state and for any type of security according to state securities regulations.
These regulations are called Blue Sky laws.
Interestingly, some states don’t require that investment adviser representatives or other registered representatives with Series 6 or 7 licensing pass the exam.
These states include Colorado, Florida, Louisiana, Maryland, Ohio, the District of Columbia, and Puerto Rico.
Those that pass the exam can work in the securities industry and sell securities and investment products.
- Variable annuities
- Mutual funds
- Unit investment trusts
- And more
People with Series 6 and 63 licenses can operate as financial advisers or insurance agents.
Generally, they work at insurance companies, banks, investment firms, and brokerages.
Unlike other FINRA series exams, you won’t need to have the Securities Industry Essentials (SIE) qualification exam as a prerequisite.
All candidates would have passed that already, however, as a necessity to move onto their Series 6 or 7 qualification.
And you won’t need sponsorship from a FINRA-member firm or a Form U4 either to obtain a Series 63 license.
To register, non-FINRA candidates will need a Uniform Examination Request (form U10).
How long does a Series 63 license last?
Candidates keep their Series 63 license indefinitely unless:
- They leave a firm and do not find employment in the next two years
- If they do, that employment must be with a FINRA-member firm or SRO.
Format Of The Series 63 Exam
As we’ve already established, the Series 63 exam covers rules prohibiting unethical practices and state securities regulations in the securities industry.
But it’s useful to know the format of the exam and how questions are broken down.
So here is a percentage split of the questions and the topics they cover:
- 45% of questions pertain to regulations
- 25% of questions pertain to ethical practices
- 20% of questions pertain to customer communication
- 10% of questions pertain to administrative provisions
Now let’s look to break that down even further.
According to the NASAA website, question topics, the number of questions, and their overall weight are as follows.
- Regulation of Investment Advisers: 3 questions and 5% weight
- Regulation of Investment Adviser Representatives: 3 questions and 5% weight
- Regulation of Broker-Dealers: 9 questions and 15% weight
- Regulation of Agents of Broker-Dealers: 9 questions and 15% weight
- Regulation of Securities and Issuers: 3 questions and 5% weight
- Remedies and Administrative Provisions: 6 questions and 10% weight
- Communication with Customers and Prospects: 12 questions and 20% weight
- Ethical Practices and Obligations: 15 questions and 25% weight
Further insight into exam topics
Now that we know the questions and their overall weight towards the exam, let’s get a further idea of what each topic covers as per NASAA outlines.
Regulation of Investment Advisers
A question here could include the definition of an investment adviser and the activities they carry out that require registration.
Regulation of Investment Adviser Representatives
A question here could include the definition of an investment adviser representative and the activities they carry out that require registration.
Regulation of Broker-Dealers
A question here could include the definition of a broker-dealer.
It could also pertain to broker-dealer supervision as well as registration or post-registration including books and records or registration maintenance requirements.
Regulation of Agents of Broker-Dealers
A question here could include the definition of a broker-dealer agent.
It could also pertain to registration or post-registration including books and records or registration maintenance requirements.
Regulation of Securities and Issuers
A question here could include the definition of securities and issuers.
They could also cover exemptions, state anti-fraud authority, and registration or post-registration, for example, state registration requirements.
Remedies and Administrative Provisions
Questions here could be based on the authority of the state securities administrator and various administrative actions.
Others could cover penalties and liabilities.
Communication with Customers and Prospects
Questions from this section could cover performance guarantees, customer agreements, disclosures, and unlawful representations pertaining to registrations.
Ethical Practices and Obligations
Questions here can cover compensation, customer funds and securities, conflicts of interests, and other ethical issues as well as data protection and cyber security.
Series 63 exam question format and exam duration
Candidates will only have to deal with multiple-choice questions during this exam.
In total, the exam consists of 60 questions and all will need to be answered.
Unlike FINRA exams, however, there are no additional questions to answer that don’t contribute to your score.
The exam isn’t very long at all.
You have 75 minutes to complete those 60 questions which clock in at a little over a minute a question.
Don’t worry, if you know your stuff, you won’t have any trouble keeping up the pace needed to complete everything.
Exam cost and pass rate
Considering it is just 60 questions and 75 minutes of your time, the Series 63 exam is pretty pricey.
Yes, it’s going to cost you $147 to register to write it.
Payment must be made when you register and once that’s out of the way, candidates can then schedule their exam.
And it works just like the Series 6, for example.
You have a period of 120 days from the day you register and pay for the exam to take the FINRA 63 exam.
The passing score needed is 72%.
That’s pretty much the standard score when it comes to these licensing exams.
To achieve that, a candidate must get 47 questions right.
To ensure a first-time pass, it’s always recommended that candidates look beyond the coursework provided for this licensing exam.
Extra exam prep should include the likes of flashcards, practice exams, and other additional study materials that you can easily find online.
Not only will these help you reinforce areas where your knowledge is strong, but more importantly, identify those where you are lacking.
That makes it far easier to improve your overall knowledge, giving you every opportunity to pass the exam easily enough.
Practice questions are perhaps the best way to gauge just where your knowledge is.
When it comes to the overall pass rate for this exam, there aren’t many official figures because it varies from state to state.
Luckily, the Wall Street Journal looked into this and ended up asking over 350 000 financial advisors who had written the Series 63 exam.
Around 86% of them said that they had passed on their first attempt.
That’s far higher than the Series 6 or Series 7 exam, for example.
But then again, this is a very different kind of challenge, isn’t it?
Series 63 Exam Registration
To register for the exam, you need to do so through the FINRA website.
It’s the same registration portal as used for all other FINRA exams and it can be accessed here.
Registering requires an upfront payment as with other series exams from FINRA.
Once you’ve paid your $147 you can schedule your exam at any time over the next three months.
Note that you will have to create your account or use an existing one that you might already have.
An account is necessary to register at the Prometric Test Center when writing your exam and also if you choose to take it online instead.
Just mark your preferred way of writing the exam when you register.
If you do opt for the online option, there are a few things to remember.
Firstly, you will need a computer or laptop where you can sit down and take the exam.
Secondly, it will need either a webcam or some form of a movable camera attached to it
This will be used to check each candidate’s surroundings for crib notes, as well as helping to identify you for the test.
Thirdly, a stable and fast internet connection is a must.
Lastly, testing software will be downloaded to the laptop or computer that you use, so if you are borrowing one, make sure the owner is ok with that.
These are all critical aspects that are easily overlooked by those who want to take the exam online, so you must be aware of them.
Scheduling your exam and cancellation policy
Like I’ve already mentioned – and as with all other exams run by FINRA – you must write your exam within 120 days of the day you registered.
It’s more than enough time to prepare, that’s for sure.
But remember the Series 63 covers subjects like state regulations, ethical practices, and more.
That can be pretty tough to get through, so the earlier you start your preparation, the better.
Sometimes, however, life can usurp even the best-laid plans.
So can the Series 63 exam be canceled or even rescheduled?
Well, yes, but there are certain rules in place for candidates who need to do so.
Here’s a breakdown of what FINRA allows when it comes to cancelations/reschedulings.
- Cancel your exam or reschedule it to another date and do it within 10 days of the registered date means you will have to pay $30 to do so.
- Cancel or reschedule the Series 63 exam more than 10 days before the registered date won’t incur a fee at all.
- Should you cancel or reschedule your exam 72 hours before the registered date, you will have to pay a fee of $60.
The Day Of The Exam
No matter how much you’ve prepared, the day of the exam can be a tense affair.
While you might remember what it was like when writing your Series 6 or 7 license, let’s just remind you what to expect.
Being properly prepared both knowledge-wise and with the overall process can help settle those butterflies, that’s for sure.
Writing at a test center
FINRA has Prometric test centers all over the United States and if I am honest, I think it’s better to write at one of them than online.
But that’s just a personal preference.
When writing your exam here, you’ve got to make sure that you keep a few things in mind.
For example, when it comes to the time of your exam, you shouldn’t just pitch up five minutes before.
Candidates are expected to arrive for their exams at least 30 minutes before the start time.
Of course, there is some give or take when it comes to arrival times and yes, you can be a couple of minutes late, for example.
But if you are 30 minutes later than your scheduled start time, invigilators will not let you sit for the exam.
You can reschedule it, with costs, of course.
I’d advise arriving even earlier than 30 minutes before the scheduled start time just to set your mind at ease.
Plus, you can get everything done that needs to be completed from an administrative point of view and then, if you are ready, you will be allowed to start.
Note, however, that there isn’t an extended period then to complete the exam.
You will still be given 75 minutes to do so from the time you start writing.
Let’s quickly talk about what you need to bring with you.
Here’s a handy list:
- You would have received an email confirmation from FINRA when you scheduled your exam, so bring that along.
- Either your identification or driver’s license to confirm who you are
- Your email address (the one used to register for the exam)
You probably will have all of that on you anyway, right?
All candidates are checked to see if they have any crib notes on them and once that’s over and all the administrative formalities are completed, you can start writing.
You will be allowed to go to the toilet if you need to but just note that the exam cannot be paused if you do.
So rather make sure you get that out of the way before you sit down to write.
As for stationery, well candidates don’t need to bring anything with them.
You will be provided with:
- Four-function calculator (if requested)
For some, getting to a testing center to write the Series 63 exam might be troublesome.
And if you have the technology to write the exam online, the process isn’t too difficult at all.
There are a few things that must be noted, however.
To write online, a couple of checks have to be run beforehand to see that the PC or laptop you are writing on can do the job.
That means downloading the necessary pre-check software on the device you will be using.
Once that’s been done and the device and your internet connection are cleared, you are ready to take the test online.
Remember, the device you use will also need a webcam or 360-degree camera.
This is so FINRA observers can check that you have no one near you and that there aren’t any course notes to help you.
Once you are ready to start, you can, but again, the exam cannot be paused at any point.
So although you can get up if you have to – with authorization first, of course – try not to otherwise you might put yourself under time pressure.
Remember, there are only 75 minutes to complete the 60 questions.
If you’d like to know more about writing the exam online, click here.
You can find out information about the ProProter testing system, tons of frequently asked questions about online testing, and more.
Rewriting the exam
If you aren’t part of the 86% of people who pass the exam the first time, don’t stress too much.
The Series 63 can be rewritten 30 days after your first attempt.
Obviously, you will have to pay $147 for the chance to rewrite it.
Failure on the second attempt means waiting another 30 days before you can try again.
There is no limit to the number of times you can try to pass the exam but if you fail the third time, the period of waiting to write again jumps up to 180 days.
That’s six months and I am sure you will agree, it’s a long, long time!
So rather make sure you put in the necessary study time and use study guides, practice questions, and flashcards to prepare thoroughly.
So there you have it, all the critical information you need to know about the Series 63 exam.
As with all other exams from FINRA or administered by them in this case, put the time in and prepare thoroughly.
If you do that, you can easily be one of the 86% of people who pass first up.
Just remember, if you already have your Series 6 or Series 7 license and are in the following states, you don’t need a Series 63 license: Colorado, Florida, Louisiana, Maryland, Ohio, the District of Columbia, and Puerto Rico.
If you have any questions about the Series 63, make sure you leave a comment below and we will get back to you with an answer.