Hi all, welcome to the best write-up on FINRA Series 66 Exam.
After reading this write-up to the end, we assure you that you will have a better overview of what the exam is all about, what it entails to prepare for it, the pass rate, and the passing score needed to go through it successfully.
In this article we look at the following:
Today, let’s focus on the Series 66 exam.
Introduction to FINRA Series 66 Exam
Originated by the North American Securities Administrators Association (NASAA), this exam is administered through Financial Industry Regulatory Authority (FINRA).
And it’s super difficult.
So the more you know about FINRA Series 66 Exam before you tackle it, the better.
Don’t worry, you are in the right place for that.
If you would like to know more about this exam as a way to secure a Series 66 license, then this is a must-read.
The FINRA Series 66 Exam Rundown
Also known as the Uniform Combined State Law Examination, this licensing exam covers material such as how to conduct securities transactions and giving investment advice.
It has no prerequisites unlike the Series 6 exam, which requires candidates to pass the Securities Industry Essentials (SIE) exam first.
It is, however, a necessity for candidates who want to operate with a Series 7 license as securities agents, investment adviser representatives, or broker-dealer.
Therefore the Series 7 license is a corequisite.
Therefore, if you want to sell the products below, you will need to pass this FINRA exam:
- Mutual funds
- Variable annuities
Individuals do not need to be sponsored by a FINRA-member firm to take this exam.
Note, however, that if you are not affiliated with a member firm and are not registered with Form U4, you will need to request a Form U10 when registering and paying for the Uniform Combined State Law Exam.
Format Of The Series 66 Exam
The FINRA 66 exam covers the following:
- Economic Factors and Business Information: Five questions or 5% of the exam.
- Investment Vehicle Characteristics: 20 questions or 20% of the exam.
- Customer Investment Recommendations and Strategies: 30 questions or 30% of the exam.
- Laws, Regulations, Guidelines (including Prohibition and Unethical Business Practices): 45 questions or 45% of the exam.
Further insight into the Series 66 Exam
Above, we’ve covered the four modules that the Series 66 coursework will cover.
Let’s look at those in a little more detail.
Economic Factors and Business Information
The main topic covered here has to do with analytical methods including:
- Concepts relating to time value of money such as interernal rate of return and net present value
- Various descriptive statistics such as mean, media, mode, range, standard deviations, as well as Alpha, Beta and Sharpe ratios
- Various financial ratios and how they are used including quick ratios and debto-to-equity ratios
- Valuation ratios
There are only five questions in total from this module.
Investment Vehicle Characteristics
Topics covered in this module include the following:
- Valuation factors of fixed income securities including factors affecting fixed income valuations such as maturity, duration, yield-to-call and yield-to-maturity as well as conversion valuation, bond ratings, credit spread and more (5 questions in total)
- Valuation factors of equity securities including technical and fundamental analysis, divident discoutn and discounted cash flow (3 questions)
- Evaluation of pooled investment vehicles including liquidity, shared classes, tax implications and fee structures (5 questions)
- Futures including definitions thereof, costs, risks and benefits (1 question)
- Characteristings, risks and application of investment accounts including leveraged and inversed funds, exchange traded notes, structured products and life settlements (1 question)
- Insurance based products such as annuities and life insurance (3 questions)
- Other assets such as investment real estate, commodities as well as precious metals (1 question)
Customer Investment Recommendations and Strategies
Topics covered in this module include the following:
- Types of customers such as sole proprietorship, individuals, natural person, business entities including general partnership, limited partnership, LLCs, corporations, trusts, estates, foundations and charities (2 questions)
- Customer profile covering financial goals, current and future financial situations, risktolerance, non-financial investment considerations, data gather about the customer and more (6 questions)
- Capital market theory such as investment theories and models (2 questions)
- Portfolio management strategies, style and techniques (5 questions)
- Tax considerations including income tax fundamentals for individuals and corporates, trusts and estates as well as estate and gift tax (2 questions)
- Retirement plans including individual accounts, both traditional and Roth as well as qualified retirement plans and non-qualified retirement plans (3 questions)
- ERISA issues such as fiduciary issues, investment policy statements and prohibited transactions (1 question)
- Special types of accounts such as education related, UTMA/UGMA and health-saving accounts (1 question)
- Ownership and estate planning techniques including methods of ownership transfer, beneficiary designation, trusts and wills and qualified domesticrelations order (3 questions)
- Trading securities covering terminology, roles of broker-dealers, custodians, market makers and the cost of trading securities (2 questions)
- Portfolio performance measures including returns, current yields and relevant benchmarks (3 questions)
Laws, Regulations and Guidelines including Prohibition on Unethical Business Practices
- Regulations of investment advisors including notice-filing requirements, registration/post registration, excemptions and investment advisor supervision (7 questions)
- Regulation of investment advisor representatives including definition and registration/post registration (5 questions)
- Regulation of broker-dealers including definition and registration/post registration (2 questions)
- Regulation of broker-dealers agents including definition and registration/post registration (2 questions)
- Regulation of sercurities and issuer including definition, registration/post registration, exemptions and state anti-fraud authority (2 questions)
- Remedies and administrative provisions including authority of the state securities administrator, administrative actions and penalties (2 questions)
- Communication with customers and prospects including disclosures, unlawful representation, performance guarantees, customer agreements and more (11 questions)
- Ethical practices and fiduciary obligations including compensation, customer funds and securities, customer conditions and obligations, conflicst of interest, privacy, data collection and cyber sercurity (14 questions)
Series 66 exam question format and exam duration
In total, there are 100 multiple choice questions and candidates will have 150 minutes to complete the exam.
That works out to one-and-a-half minutes per question.
Exam cost and pass rate
To register for and write the Series 66 exam, candidates will have to pay $177.
From the day that they register for the exam, they have a period of 120 days to write it.
To pass, you will need to score 73%.
And that means getting 73 out of the 100 questions correct.
To ensure a first-time pass, it’s highly recommended that candidates use extra study materials including full practice tests or practice questions.
While official pass rate statistics aren’t available as they vary from state to state, experts say that the passing rate for this exam is between 60% and 70%.
Series 66 Exam Registration
It’s simple enough and candidates can register online.
The exam can be written at one of the numerous Prometric testing centers across the United States.
You can also take it online.
Note, if that is your preferred option, you will need a personal computer or laptop with either a webcam or an attached 360-degree camera.
The software will also need to be downloaded to see if the computer and internet connection are sufficient to run the exam.
Candidates may reschedule the exam but there are certain rules in place.
- If you cancel or reschedule more than 10 days before the exam, there is no additional cost
- If you cancel or reschedule within 10 days of the exam, you have to pay $30 to secure a new date
- If you cancel or reschedule within 72 hours of the exam, you will pay $60 for a new date.
The Day Of The Exam
Let’s just run through a few things that candidates should remember on the day that they write the exam, whether it is online or at a test center.
Writing at a test center
Prometric test centers that offer this exam are found across America.
So finding one to write at really shouldn’t be a problem at all.
Of course, should you not live near one, you do have the chance to write the test online.
Here are a few things you need to consider should you write at a test center
Always arrive early to get the administrative formalities out of the way so you can focus on the exam.
FINRA suggests that you arrive at least half an hour before your scheduled exam time at least.
If you finish with the administrative activities, you can start the exam early, provided there is a workstation for you.
If you are late, you have 30 minutes following your scheduled time, to arrive.
If you don’t, your exam will be canceled and you will have to reschedule it with costs.
Remember to bring the email you received as confirmation of the exam date as well as your identification or a driver’s license.
Everything else you need to complete the exam will be given to you on the day including pens, paper, and a four-function calculator should you request it.
If your laptop or PC meets the requirements as set out by FINRA, you can take the test online.
This will all be determined beforehand, however, as you will need to download software that checks if it will work for testing purposes.
The online test also requires that your laptop has a webcam or attached camera so invigilators can check your surroundings for any coursework or notes.
Other than that, you may use a pen, paper, and four-function calculator to help you while you take the exam.
That’s all the critical information that candidates need to know about the Series 66 exam.
Make sure that when you tackle it, you are fully prepared!
That’s the best advice we can give you.
Should you have any further questions, make sure you leave a comment below.