Hello everyone, welcome to the expository piece on FINRA Series 65 Exam.
By reading this piece to the end, we promise you that you will be able to know what this exam covers, the format it takes, and the passing score required to go through this exam.
This article on the NASAA/FINRA Series 65 exam will provide information about the following:
Rest assured, this article is packed with all the information that you as a financial professional need to know about this securities exam.
Introduction to FINRA Series 65 Exam
Are you looking into the Series 65 exam and want to know what it’s all about?
Well, welcome to our comprehensive overview of this North American Securities Administrators Association (NASAA) licensing exam.
Like other NASAA exams, it is administered by the Financial Industry Regulatory Authority (FINRA).
It’s required in states across America and is a necessity for those working in the securities industry.
The FINRA Series 65 Exam Rundown
So for a start, this exam is also known as the Uniform Investment Adviser Law Examination.
This is a state law licensing test that’s required by state regulators across the United States for those who want to practice as an investment adviser representative.
So where the Series 63 exam covers information that provides a license for broker-dealers, the Series 65 is the equivalent for investment advisor representatives.
With a Series 65 license, candidates can advise clients on general financial issues as well as giving investment advice as stipulated by state securities law.
Those undertaking Series 65 jobs cannot sell registered investment packages, however.
FINRA-member firm employed candidates have to submit a Form U4 to write this exam.
Those that aren’t employed by a FINRA-member firm don’t need a form U4 but a form U10 to write the FINRA 65 exam.
That’s the only prerequisite unlike the Series 6 for 7 which requires the Securities Industry Essentials (SIE) exam.
Format Of The FINRA Series 65 Exam
In this section, we take a deep dive into the format of the Series 65 exam and how it is broken down.
That begins with looking at just how the questions are structured via subject.
So let’s look not only at the subjects covered but the percentage weight of the questions in each of them.
- 30% of questions pertain to recommendations and strategies
- 30% of questions pertain to regulations and guidelines.
- 25% of questions pertain to investment vehicles
- 15% of questions pertain to economic factors and business information
The NASAA website gives a further breakdown according to the topics questions will cover, the number of questions in each section, and their overall weight.
And here they are:
- Economic Factors and Business Information: 20 questions and 15% weight
- Investment Vehicle Characteristics: 32 questions and 25% weight
- Client Investment Recommendations and Strategies: 39 questions and 30% weight
- Laws, Regulations, and Guidelines (which includes Prohibition on Unethical Business Practices: 39 questions and 30% weight
Further Insight Into Exam Topics
Now that you have an overview of the topics this FINRA exam covers, let’s break down each of those a little more.
Economic Factors and Business Information
This includes questions about the following topics:
- Basic economic concepts including inflation, deflation, business cycles, monetary policies, fiscal policies, and more (6 questions)
- Financial reporting including income statements, balance sheets, annual reports, and more (4 questions)
- Analytical methods including money concepts and their time value and descriptive statistics, various financial ratios, and where they would be used (4 questions)
- Types of risks including systematic and unsystematic, opportunity cost, and capital structure (6 questions)
Investment Vehicle Characteristics
This includes questions about the following topics:
- Types and characteristics of cash and cash equivalents including insured deposits and money market instruments (1 question)
- Types of fixed income securities including government and agency securities, asset-backed securities, and various bonds (3 questions)
- Characteristics and valuation factors of fixed income securities including characteristics such as tax implications, bond ratings, and more (3 questions)
- Type of equity securities including common stock both domestic and foreign, preferred stock, employee stock, and restricted stock (2 questions)
- Methods used to determine the value of equity securities including technical, dividend, fundamental analysis (3 questions)
- Types of pool investments including mutual funds, private funds, UITs, ETFs, REITs (3 questions)
- Characteristics of pooled investments including share classes, liquidity, tax implication, pricing, and fee structures (3 questions)
- Types of derivative securities including the definition of options and warrants, futures and forward contracts (2 questions)
- Alternative investments including limited partnerships, inverse funds, structured products, leveraged funds, and more (2 questions)
- Insurance-based products including life insurance and annuities (2 questions)
- Other assets including commodities, precious metals, and investment real estate (2 questions)
Client Investment Recommendations and Strategies
This includes questions about the following topics:
- Types of clients including sole proprietorship, natural persons, individuals, business entities, trusts, estates, foundations, and charities (3 questions)
- Client profile including financial goals, current financial situation, future financial situation, risk tolerance, data gathering, and more (7 questions)
- Capital market theory including investment models and theories (3 questions)
- Portfolio management strategies, styles, and techniques (6 questions)
- Tax consideration including income tax fundamentals for individuals, corporates, trust, and estates (2 questions).
- Retirement plans including qualified, non-qualified and individual retirement accounts (3 questions)
- ERISA issues including fiduciary issues, prohibited transactions, and investment policy statements (2 questions)
- Special types of accounts including health-saving and education-related (2 questions)
- Ownership and estate planning techniques including trusts, wills, QDROs, and methods of ownership transfer (3 questions)
- Trading securities including terminology used, the role of custodians, broker-dealers, and cost of trading securities (4 questions)
- Portfolio performance measures including returns, current yield, and more (4 questions)
Laws, Regulations, and Guidelines
This includes questions about the following topics:
- Regulation of investment advisors including definitions, investment adviser supervision, registration, and more (6 questions)
- Regulation of investment advisor representatives including the definition of this role as well as registration (4 questions)
- Regulation of broker-dealers including the definition of the role (2 questions)
- Regulation of agents of broker-dealers including the definition of the role (2 questions)
- Regulation of securities and issuers including the definition of the role, registration, and exemptions (2 questions)
- Remedies and administrative provisions including the authority of the state security administrator, administrative action and penalties and liabilities (2 questions)
- Communications with clients and prospects including disclosures, client contracts, performance guarantees, correspondence, and advertising (10 questions)
- Ethical practices and fiduciary obligations including compensation, client funds and securities, conflicts of interest, cyber security, and more (11 questions)
As you can see, there are many subjects covered in this exam and the coursework is extremely word-heavy.
But a comprehensive understanding of where the questions will come from and just how many there are from each section is a great help in your preparation.
Series 65 exam question format and exam duration
As with all FINRA exams, multiple-choice questions are used during this exam.
There’s a lot more than the 60 of the Series 63 exam, however.
There are 130 questions in total and candidates have a full three hours to complete the exam.
That might seem like a long period but it is around a minute and 30 seconds per question.
Candidates that have prepared thoroughly and taken pretest questions should be able to finish in time.
Exam cost and pass rate
If you compare it to other longer FINRA exams, you’d think that the Series 65 would be pretty pricey.
But it’s just a couple of dollars more than the Series 63 exam.
It costs $187.
As always, to register for Series 65 payment is made upfront and you can only schedule once you’ve done that.
As for the passing score, candidates will need to achieve a score of 72%.
That means 94 out of 130 questions must be answered correctly.
I would suggest that working through the coursework and taking additional steps to ensure that you pass this licensing exam and secure your Series 65 certification is a necessity.
That extra Series 65 exam prep can include things like:
- Practice exams
- A Series 65 study guide
- Additional study materials such as flashcards, online practice questions, and more
While this helps build your overall knowledge base, there’s another critical aspect to using these additional methods, practice exams in particular.
It helps to expose gaps in your knowledge.
By doing that, your Series 65 prep can then focus on those areas in particular to improve your chances of passing this exam.
As for the pass rate, well this is something that’s extremely difficult to determine.
That’s because obtaining figures from the various states is nigh on impossible.
And unlike the Series 63 exam, where the Wall Street Journal polled 350 000 financial advisors to determine a pass rate, nothing similarly has been done for this exam.
So determining an overall pass rate is going to be pure guesswork.
Having said that to pass the Series 65, you can’t just turn up and write it.
Series 65 Exam Registration
All candidates will need to register for the NASAA Series 65 through the FINRA website.
Pay $187 to take the exam and you can schedule it at any point in the next 120 days (three months).
That provides plenty of time to get prepared properly, especially if you don’t leave everything for the last minute.
Whether you register and then schedule your exam at a Prometric test center or if you opt to take it online, you will need to register for an account.
This is then used right through the whole process, from Series 65 registration to scheduling and finally, on the day of the test itself.
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 from previous FINRA exams.
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
Once you’ve registered for the exam, all candidates have a period of 120 days where they will need to go to a Series 65 test center to write it.
Or, you can write it online but that 120 day period still stands.
But what’s the policy when it comes to candidates who may need to reschedule the exam, or perhaps even cancel it?
Well, like all other FINRA exams and those administered by the organization, rescheduling is an option for candidates should the need arise.
But there are certain rules in place and these are determined by just how long before the exam a candidate wants to reschedule.
They may reschedule an exam and if it is more than 10 days from that on which they are originally meant to write, there is no cost to do so.
If it’s within 10 days of the original date, a fee is incurred to register a new one.
That fee is $30.
Lastly, the fee will become $60 if the exam is rescheduled within three days of the original date.
The Day Of The Exam
Exams always get the nerves a-flutter, even if you are a veteran who has taken various licensing exams before.
Writing at a test center
With test centers all over the United States, finding one is relatively easy should that be a candidate’s preference.
Of course, there are rules and regulations that all candidates must strictly follow when doing so.
Let’s look through some that I would consider the most critical.
FINRA requests that all candidates should arrive half an hour before their scheduled writing time.
That’s because there are some administrative tasks to complete before you can sit the exam.
Of course, there are times where circumstances outside your control might mean you run late.
Luckily, there is some leeway if that should happen, but not much.
A candidate will only be given a 30 minute grace period after their scheduled start.
Should they arrive any time after that, they cannot sit to write the exam and it must be rescheduled at a cost of $60.
It’s probably best to give yourself more than enough time to get to the venue.
Nothing is stopping you from getting there an hour beforehand.
Also, there’s an advantage to doing this as well.
Should you have completed all the required administrative steps for the exam and you can be accommodated, candidates can start the test early.
For those administrative steps before you start you will need to have the following: the email confirmation of your exam date and time as well as a way to identify yourself, for example, your driver’s license.
Part of the pre-exam checks will see all candidates checked for any notes that may help them cheat.
Note that you won’t have to worry about bringing a pen or paper at all.
These, along with a four-function calculator (if requested) will be supplied for all candidates.
Lastly, it is a long exam (at 3 hours) but note that while a candidate can go to the restroom, the exam time won’t be stopped during that period.
For those wanting to write this exam online, FINRA gives the option.
There are some pre-requisites, however.
These pertain to the computer or laptop that you wish to write on.
For example, an application will need to be downloaded to check if it can run the testing software.
This will also check whether the internet connection is fast enough to ensure no interruptions during the exam.
Remember, you only have about a minute and 30 seconds for each question, so you don’t want any hardware issues, that’s for sure.
The other critical thing that the computer will need is either a webcam or an attached camera.
That’s because all candidates must show invigilators that the area around them is clear of any notes or pieces of paper.
Much like with an exam at a test center, you can move away from your computer if you have to but not without consent first.
Also, the exam will not be paused at this point.
Click here if you’d like to find out more about writing the exam online.
And that’s a comprehensive look at what the Series 65 exam is all about.
I hope it’s provided you with all the information you are looking for about this licensing exam that’s linked to the securities act.
There’s no doubt that those who don’t prepare properly will find themselves struggling.
But if you take it seriously from the start, use extra exam prep, work through practice exams, and pay due diligence to the course work, a first-time pass shouldn’t be an issue.
If you have any queries about this exam, make sure to leave a comment below and we will get back to you.