Hey, guys welcome to the most sought-after article on Series 6 vs 63 Licenses.
After reading through this article, you would get a fuller understanding of the Series 6 and Series 63 licensing exams, as well as how to prepare and techniques for passing the exams.
To that effect, we’ll walk you through:
Let’s get started.
Introduction on Series 6 vs 63 Licenses
If you are getting started in the securities industry, you’ve most likely come across Series 6 and Series 63 licenses.
But since these licenses are often mentioned together, you might be stuck at what sets them apart.
Luckily, we have your interest at heart.
We want to help you better understand Series 6 and Series 63 licensing exams.
Series 6 Vs 63 Licenses: A Quick Overview
Series 6 and 63 licenses go hand in hand because they are required before you can sell insurance products, which are usually tied to securities.
The Series 6 exam is developed and administered by the Financial Industry Regulatory Authority (FINRA).
Series 63 exam is created by North American Securities Administrators Association and administered by FINRA.
The licenses allow advisors to sell and buy limited investment products within the states they are working.
Let’s take it a step further and examine what sets these two licenses apart.
What is Series 6 License?
Series 6 license, formerly known as Limited Investment Securities License, is administered by Financial Industry Regulatory Authority (FINRA).
It’s an entry-level license that introduces securities professionals to the financial service industry.
This license allows the licensees to buy and sell investment products, including mutual funds, variable annuities, unit investment trusts, municipal fund securities, and variable life insurance.
It is also a license specifically for packaged investment products.
That is to say, licensees can’t buy or sell stocks or bonds, options, direct participation programs, or other types of securities apart from those authorized by the license.
With the license, a securities professional becomes an Investment Company Products/Variable Contracts Limited Representative.
FINRA’s Series 6 license is recommended for insurance sales agents since the life insurance products they sell are grouped with securities.
Nonetheless, other securities professionals, such as private bankers and investment advisors, will find the license helpful.
To get FINRA’s Series 6 license, FINRA has several licensing requirements that candidates have to meet.
Series 6 Exam
This securities series exam covers securities and taxation, mutual funds, insurance products, variable annuities, and retirement plans.
Applicants must be sponsored by a FINRA member firm or a self-regulatory organization to take the Series 6 exam.
The sponsoring firm also files form U4, the Uniform Application for Securities Industry Registration or Transfer, on behalf of the candidate.
They’ll then be required to pay the registration fee of $40 through the Central Registration Depository (CRD).
Candidates must also pass the background check to get their license.
Additionally, the Securities Industry Essentials (SIE) exam is a co-requirement for the exam.
Candidates may choose to do the SIE exam either before or after the Series 6 exam.
Although, the common practice is that advisors usually start their career journey with the SIE exam before proceeding to Series 6.
Candidates only obtain the Investment Company and Variable Contract Products Registration after passing both the Securities Industry Essentials exam and Series 6 exam.
The Series 6 exam constitutes 105 choice questions and takes 135 minutes.
Of the 105 questions, 100 questions are counted towards the final score, while five are experimental.
The exam is taken at the Prometric test centers, which are found across the country and the pass mark for this exam is 70%.
Once a candidate passes the exam, they register with FINRA through the sponsoring firm.
More importantly, series 6 licensees are required to maintain their license through FINRA’s continuing education.
Preparing for Series 6 Exam
The Financial Industry Regulatory Authority reports a pass rate of 59% for first-time students.
If that statistic is anything to go by, we can all agree that the Series 6 exam is not a walk in the park.
Perhaps that’s why experts recommend 100 hours of study to prepare appropriately for the actual exam.
This FINRA series exam evaluates candidates’ knowledge in analyzing clients’ financial life to have a complete picture of their finances before recommending investment products.
It also focuses on servicing customer accounts, securities and tax regulations, and marketing and sales, among other vital areas vital in selling the securities allowed by the license.
Given the course content, it’s critical that Investment Advisers take time to familiarize themselves with the concepts and further reinforce their knowledge through practice tests.
So, depending on an advisor’s study style, they may find third-party courses helpful in preparing for the exam.
Now, this is important.
Preparing for this FINRA exam is essential because if one fails in the first trial, they’ll have to wait 30 days before registering again.
It goes without saying they’ll have to pay the fee again.
What is Series 63 License?
Series 63 license is also known as the Uniform Securities Agent License exam.
The license is a requirement for broker-dealers to sell securities products within the different states in the U.S.
That means if an advisor moves to a different state, they have to take that state’s Series 63 exam to be eligible to work with securities firms and insurance companies.
Often, representatives take the Series 63 exam in conjunction with other exams, say Series 6 or Series 7 exams.
All securities representatives with Series 7 and Series 6 licenses must have Series 63 licenses.
However, there is an exception to this rule, as not all states have this requirement.
Ohio, New Jersey, District of Columbia, Louisiana, Florida, Puerto Rico, Vermont, and Maryland are some states that don’t require representatives to hold Series 63 licenses.
For registered representatives to get a Series 63 license, they must take the Series 63 exam developed by the North American Securities Administrators Association (NASAA).
NASAA is an international corporation that protects investors.
The exam is administered by FINRA and is usually taken at the Prometric test center.
Series 63 Exam
Series 63 exam focuses on state laws.
It concentrates on the different laws that regulate the selling of securities within a particular state.
Specifically, the exam covers ethical practices, fiduciary obligations, state securities acts, and related rules and regulations.
Financial Advisors don’t necessarily need sponsorship to sit for the exam.
As self-sponsored, an Advisor files form U10 instead of form U4, which firms file if they sponsor a candidate.
From there, they’ll be required to pay a registration fee of $135.
Series 63 exam has 65 multiple choice questions and takes 75 minutes.
It’s only 60 of the exam questions that go towards the final grade.
The additional five questions are purely experimental.
NASAA uses these questions to evaluate how relevant the test will be in the future.
60% of the exam questions focus on the state securities acts and related rules and regulations, while 40% is about ethics and fiduciary obligation.
The passing grade is 72%, which translates to answering 43 out of the 60 questions correctly.
The Series 63 exam may be the shortest, but it’s also the trickiest of all the NASAA exams.
The goal is to ascertain that investment advisers can clearly distinguish the required transactions and the ones allowed by the law.
Once a Financial Advisor passes the exam, they must also pass the background check to get their license.
Suppose an Advisor fails the exam, they have to wait for 30 days to retake the exam.
However, failing the third time calls for 180 days waiting period.
Preparing and Passing Series 63 Exam
If we compare Series 6 vs 63 licenses, Series 63 is notoriously tricky.
One is prone to fail flat if they’ve not meticulously read through the study materials.
So, it is best to have the Series 63 textbook and read through the entire book back to back.
The key is to familiarize oneself with the material and master the book’s definition of terms like securities, agent, broker-dealers, among others.
The next thing is to take as many practice tests as possible.
Here an advisor should focus on the structure of the questions, especially the wordings.
Ideally, candidates preparing for the Series 63 exam should expect to study between 30 and 40 hours.
No matter the exam you choose to take, preparation is key.
This next section will show preparation techniques that can help you pass the license exams.
The Best Preparation Techniques
The only way to pass exams is to prepare.
And so, we’ve put together pro-tips to help candidates get ready for Series 6 and Series 63 exams.
Take Time to Study
There is no way around passing these exams apart from studying – the exam questions are specific.
Not even common sense will help a candidate.
Of course, choosing the night before the exam to cram everything will backfire big time.
So to be on the safe side, advisors should start their studies at least 2 weeks before the exam.
Of course, one can start earlier but not too early to forget the content before the exam day.
The best way to go about it is to schedule for the exam and then start studying.
With a deadline, there’s no room to dilly dally.
Additionally, it’s best to do one exam at a time to avoid confusion and mixing up of information.
Take Practice Exam
The next step is to take practice exams.
Practice tests give one a feel of how the actual exam looks – it’s a reflection of what to expect.
A Financial Advisor can comb through the internet to find free practice exams or, better yet, sign up for a comprehensive exam prep course like Kaplan’s.
Exam prep courses have all the study tools one needs to prepare for the Series exams.
Take Regular Breaks
The human brain can focus for 2 hours straight, after that, one needs a break.
So, reading for hours on end without a break won’t increase one’s retention capacity.
Hence, it’s best to have a study routine with breaks to promote utmost concentration.
Plan Your Exam Day
The exam day is finally here!
It will be a sad state of affairs if one will prepare for the exams only to go home without taking the exam because they didn’t bring the requirements.
In which case, they’ll have to pay and review the study materials again on top of nursing their disappointment.
A day before the exam, candidates must ensure they have all the exam requirements.
Though the Series 6 vs. 63 licenses review shows that these exams are different, both Series 6 and 63 licenses are essential to Financial Advisors.
An Advisor can only sell securities if they have both.
But again, an advisor should check their state regulations to find out if both are required.
More importantly, students should study for these exams as general knowledge won’t help much.