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    Series 66 vs Series 63 exams: which one is worth considering?

    That is a smart consideration on your part, we got you covered.

    Ride with us to uncover appropriate tests/licenses to consider based on your area of interest in the securities industry.

     At the end of this article, you’ll learn the:

    Significance of both Exams
    Educational Requirements
    Exam Content
    Cost of Exams
    Duration of Exams

    This article will provide you with the relevant information you need regarding Series 66, Series 63, or both. 

    Let’s dive right in!!

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      Series 66

      Series 66 exam owes its development to the North American Securities Administrators Association (NASAA).

      Series 66 is also called the Uniform Combined State Law Examination.

      Series 66 exam is a relatively new examination.

      The Series 66 exam is the newest of all the NASAA developed securities examinations.

      NASAA introduced the Series 66 examination based on securities industry requests.

      NASAA created this exam following requests by broker-dealers and other financial services firms. 

      Series 66 combines both Series 63 and Series 65. 

      The Series 66 Exam 

      The Financial Industry Regulatory Authority is responsible for administering the Series 66 exam.

      The Series 66 exam is also called the Uniform Combined State Law Exam. 

      The Series 66 exam is designed to evaluate and qualify candidates both as:

      • Securities Agents
      • Investment Adviser Representatives

      This examination covers relevant topics essential in effective securities transactions and the provision of investment advice to clients. 

      The exam consists of 100 multiple-choice questions and 10 pretest questions.

      The 10 pretest questions do not count towards the Series 66 exam score.

      To pass the Series 66 exam, you must correctly answer at least 73 of the 100 questions.

      This invariably means that the passing score for the Series 66 exam is 73%.

      The time allotted for candidates to write the exam is 1 hour 30 minutes (150 minutes).

      The examination is a closed-book test that evaluates the in-depth understanding of the test-takers.

      The score for each completed section and the entire test is immediately made available to you on completion of the test.

      The exam fee required to be paid by candidates taking the exam is $177.

      Series 66 Exam Registration

      Registering for the Series 66 exam is an essential step towards getting the Series 66 license.

      Below we have outlined the registration process for the Series 66 exam. 

      You can do this in one of two ways:

      1. A candidate can open an enrollment window via FINRA.org and pay the examination fee.
      2. A firm can file an electronic Form U4 (Uniform Application for Securities Industry Registration or Transfer)

      The U4 is very useful to FINRA, Self-Regulatory Organization (SRO), and jurisdictions in checking elicit employment history and disciplinary information of candidates before they are registered.

      Upon registration, FINRA will open a 120-day window to you, within which you can schedule for the Series 66 exam.

      Series 66 Outline

      The outline of topics covered in the Series 66 exam are listed below:

      • Economic Factors and Business Information
      • Investment Vehicle Characteristics
      • Client Investment Recommendations and Strategies
      • Laws, Regulations, and Guidelines, including Prohibition on Unethical Business Practices

      Prerequisite for the Series 66 License

      It is important to note that the FINRA Series 7 is NOT a prerequisite but rather a corequisite exam.

      This implies that both the Series 7 exam and Series 66 exam must be passed to get a Series 66 license. 

      However, you have the option to take either exam first but must complete both satisfactorily.

      The successful completion of both exams qualifies a candidate to apply to register with a state and get licensed. 

      Recall that to get the Series 7 license; you must also satisfy the condition of passing both the SIE exam and Series 7 FINRA exam (general securities representative exam). 

      In a nutshell, to get the Series 66 license, you must have the SIE and Series 7 licenses. 

      What does Series 66 allow you to do?

      Acing the Series 66 exam avails you the opportunity to register in your state of operation and get licensed.

      The Series 66 license allows you to function in two significant respects:

      1. Provision of Investment Advice to clients as an Investment Adviser Representative (IAR)
      2. Effecting Securities transactions for clients as a Securities Agent

      Let’s have an understanding of what securities agents and investment adviser representatives entail.

      Securities Agents

      What do Securities Agents do?

      Well, securities agents help to facilitate securities sales by assisting clients in purchasing and selling securities. 

      Securities agents readily work for an investment and trading firms to deliver these services to clients. 

      These agents interface with clients to help assess their financial status at the time and also get insight into their financial goals. 

      Knowledge gotten from the above exercise is channeled into developing a client-specific financial plan to help meet the client’s needs. 

      Securities agents analyze the state of the market to ensure transactions are conducted at the most promising times.

      In addition, they help to identify possible investment opportunities for recommendations to clients. 

      Other duties are clerical-related such as keeping records of financial transactions, plan implementation document preparation, and filling sales order tickets. 

      Investment Adviser Representative

      Investment adviser representatives (IARs) are individuals that work for registered investment advisor (RIAs)

      The primary responsibility of IARs is to give investment advice to clients.

      Asides from providing investment advice, they also:

      • Manage client portfolios 
      • Evaluates appropriate advice and recommendation to give clients
      • Get compensated for selling, offering, or soliciting investment advice
      • Act as supervisors to other IARs that perform those above.

      IARs get compensated either by commission (flat or hourly) or by getting a percentage of assets under management (AUM).

      To get the IAR designation, you must be licensed appropriately to do so. 

      You may want to know exactly what it takes to get licensed as an IAR.

      This is what we will be diving right into now. 

      Investment Adviser Representative Licensing

      If becoming an investment adviser representative interests you, we have got you covered with what you need to get licensed and serve in this respect.

      First off, you need to take and pass the Series 7 and Series 66 exams or the Series 65 exam. 

      So you have the option to choose from concerning the exam to take. Interesting right?

      To take the licensing exam, you need sponsorship from a FINRA member firm.

      Note, if you do not have any such sponsorship, you are permitted to legally enroll for the NASAA series 65 or 66 exams on your own.

      Some states waive the Series 65 exam if you have other financial professional designation like the Certified Financial Planner and Chartered Financial Analyst (CFA). 

      Do well to check with your state to confirm that the above applies. 

      RIA and IAR | Differences

      Registered Investment Advisor (RIA) may seem like an individual designation; in reality, it is not. 

      RIA is a firm that provides investment advisory services to clients. 

      RIA is duly registered with the Securities and Exchange Commission (SEC) or a state’s regulatory body. 

      An investment Adviser Representative (IAR) is an individual who works for a Registered Investment Advisor (RIA) to help render investment advisory services to the firm’s clients to get a fee. 

      IAR can work with RIA or broker-dealers in providing the above services.

      What is Series 63? 

      The North American Securities Administrators Association (NASAA) developed the Series 63 exam.

      Administration of the Series 63 exam is done by the Financial Industry Regulatory Authority (FINRA).

      NASAA’s development of the Series 63 exam collaborated with securities industry representatives and financial industry associations.

      Series 63 examination is also called the Uniform Securities Agent State Law Examination.

      This examination has the designation of “State Law” because it tests the extent to which candidates taking the exam understand the state’s laws and regulations in which they will conduct transactions. 

      The Series 63 exam has 65 multiple-choice questions containing the topics listed above. 

      Of the 65 questions, 60 questions count towards your exam score, while the other 5 questions. 

      The 5 pretest questions are pretested intentionally for the possibility of adding them to functional question banks. 

      These pretest questions are randomly distributed within the exam questions. 

      The duration of the Series 6 exam is 1 hour 15 minutes (75 minutes).

      The exam pass score is 43; candidates must correctly answer at least 43 questions out of 60 questions that will be scored. 

      Hence, the Series 63 exam qualifies candidates that pass the exam to become Securities Agents. 

      This exam’s scope of knowledge covers the essentials of securities regulation as stipulated in the Uniform Securities Act.

      Relevance of a Series 63 Study Guide

      Series 63 exam study guide is quite essential as it consists of the entire content and format of the exam.

      The study guide also provides valuable information in NASAA’s Model Rule, Uniform Securities Act, and Policy Statement. 

      Before taking the Series 63 exam, the study guide comes in handy as a quick exam revision material. 

      What is Series 63 Exam

      The Series exam is a closed-book exam, which means external materials and resources like textbooks are not permitted as references for the exam. 

      On request, scratch paper can be provided to exam takers by the proctor in charge of the exam.

      The candidate sees each section score and the total score for the exam at the end of the exam. 

      This means you do not need to wait with anxiety to get your exam score, ensuring transparency in the examination process. 

      The Series 63 exam has a minimum competency that is based on a criterion. 

      The above statement implies that; the minimum passing criterion for the exam is 43/60.

      Once you meet this criterion, you are considered to have attained the minimum competency level for the Series 63 exam. 

      Assembling the Series 63 exam is termed “on the fly” and done by FINRA. Each has two parameters in the pool of questions – the “content” and “difficulty” parameters.

      The above implies that each question is structured to meet the standard specifications regarding content and difficulty level matching other exams in the same Series. 

      Series 63 Exam Procedures

      Talking about the Series 63 procedures, it is not a complex procedure considering that the exam does not have a corequisite. 

      You have to be patient during the entire exam registration process and follow guidelines as clearly spelled out below for your perusal. 

      If you work with a FINRA member firm, your firm should file Form U4 (electronic form) for you. 

      If you are unemployed or work for a non-member FINRA firm, you can proceed to FINRA.org to open an enrollment window and pay the $147 examination fee. 

      Kindly open the “Enroll for a Series Exam” page on the FINRA.org website to register for the Series 63 exam.

      A 120-day window will be opened for you once registration is finalized.

      Within these 120 days, you can schedule your exam for a date that best suits you.

      Series 63 Exam Failure Waiting Period

      There is a need to specify the waiting period for the Series 63 exam. 

      This is particularly useful to clients that have attempted but failed the Series 63 exam.

      Below we have clearly outlined the minimum period that you must wait before retaking the Series 63 exam. A minimum period of:

      (1) 30 days from the day you failed your first exam to the second enrollment for a rescheduled exam;

      (2) 30 days from the day you failed your second exam to the third enrollment for a rescheduled exam;

      (3) 180 days from the day you failed your third exam to the fourth enrollment for a rescheduled exam. 

      After failing the Series 63 exam thrice (3X), you will need to subsequently wait for a retake of the exam after 180 days.

      These waiting periods are the same for exams sponsored by FINRA.

      Where must I take the Series 63 Exam

      A lot of test-takers do not know if there is any flexibility with the location of taking the Series 63 exam. 

      You can register and take the Series 63 exam or any other NASAA developed exam like Series 65 and 66 in any Prometric center in the U.S. 

      It is not mandatory that you must take these exams in the state where you will be licensed.

      What is next after passing the Series 63 Exam

      Super Congratulations! You have successfully passed your Series 63 examination.

      You have fulfilled a portion of becoming licensed as a Series 63 holder by passing the exam.

      However, you are not yet eligible to transact business until you get the Series 63 license from the state where you conduct transactions.

      The next step in line is to get your Series 63 license.

      To get this license, you must know and conduct your transactions according to the laws and regulations governing the state where you transact business, amongst other requirements that vary in different states.

      On satisfying the state’s requirements where you conduct business, you will get licensed, which authorizes you to transact business as an Investment Adviser.

      The Series 63 license also qualifies you as a Registered Representative (RR).

      This brings us to discuss what a Registered Representative is about. 

      Registered Representative (RR)

      A registered representative is a financial professional that works for a client-facing financial firm such as a brokerage company to help deal with client transactions by serving as a representative.

      This transaction can be with trading investment products and securities on behalf of their clients. 

      RRs may be employed in different respects as brokers, financial advisors, or portfolio managers.

      RRs are permitted to buy and sell securities for clients as long as they are licensed. 

      They primarily get paid for each service rendered (transaction) in the securities industry space.

      To sell designated securities legally, a registered representative must be licensed. 

      In addition to been licensed, they must also be sponsored by a FINRA member firm (firm registered with FINRA).

      Registered representatives must pass licensing tests to carry out their duties seamlessly in their respective states of business operation.

      Regulations guiding registered representatives are provided by the Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC).

      RRs must adhere to the suitability standard of FINRA. 

      RRs must also uphold the suitability standard as FINRA monitors their activities in collaboration with SEC to ensure they abide by the standard.

      Registered Representatives are mandated to pass strict licensing requirements, including the Series 7 & 63 exams, and must follow the rules set out by FINRA and the SEC.

      The Series 7 license allows the registered representative to buy and sell stocks, options, mutual funds, municipal securities, and specific variable contracts (e.g., insurance or annuity products) for their clients. 

      The Series 63 license allows registered representatives to trade variable annuities and unit investment trusts. 

      A good part of the Series 63 exam is focused on state securities requirements across the U.S.

      What is an Investment Adviser?

      Investment Adviser refers to a firm or individual who gets compensation for providing investment advice to clients, analyzing securities, and issuing reports.

      An Investment adviser can be any of these financial professionals listed below:

      • Investment Consultants
      • Money Managers
      • Financial Planners
      • General Partners of Hedge Funds

      The list goes on to include other financial professionals who get compensated for providing securities advice to clients. 

      Investment advisers must register with the state securities authorities where they transact business or with the Securities and Exchange Commission (SEC).

      This will give them the legal standing to conduct business, having met all requirements. 

      You can readily visit Investor.gov – the SEC’s online resource that helps investors make informed investment decisions and avoid being defrauded. 

      The online resource also provides a free “Check Out Your Investment Professional” tool, which helps investors check for investment advisers’ license and registration status. 

      Investment Adviser Duties

      Investment adviser function in the following respect listed below:

      • Provision of investment advice to clients. 
      • Advice on specific securities such as mutual funds, bonds, stocks, commodity pools, and limited partnerships. 
      • Benefits of investing in securities as against other types of investment such as real estate and coins. 
      • Market trends advice 
      • Asset allocation 
      • Provision of securities selective list
      • Advisers selection or retention process

      Series 66 and Series 63 | Differences

      Although both Series 66 and Series 63 are exams developed by NASAA, they vary considerably. These differences are outlined below.

      • Series 66 exam is called Uniform Securities Agent State Law Exam; the Series 63 exam is also called Uniform Securities Agent State Law Exam.
      • Series 66 qualifies candidates to become investment adviser representatives and securities agents while Series 63 allows candidates to become Securities Agents.
      • The Series 66 exam is for 2 hours and 30 minutes (150 minutes), while Series 63 is 1 hour 15 minutes (75 minutes).
      • The total number of exam items (multiple-choice questions) for Series 66 is 100, with 10 pretest questions that do not count towards the 100 scored questions. In comparison, that for Series 63 is 65 multiple-choice questions with 5 pretest questions that do not count toward a candidate’s score. 
      • The exam cost for Series 66 is $177, while that for Series 63 is $147.
      • The corequisite for Series 66 is Series 7 while Series 63 has no corequisite to obtaining the license.

      Conclusion

      In wrapping Up!

      Before deciding which securities exam to take, it is ideal to know what each allows you to do.

      You want to be a securities agent or an investment adviser representative; you should take the Series 66 exams to get the Series 66 license.

       Be sure of the financial implication of each of these exams in terms of the enrollment fee if you are enrolling on your own, payment for study materials, and study courses.

      This will enable you to set aside sufficient money to cater to all these expenses so you can prioritize preparing for the exam. 

      We strongly recommend that you use study materials to study for these exams. All the best. 

      Kindly ask any questions you have for more clarity by making use of the comment box.

      We will be glad to hear from you and give a reply to your questions.

      Please take your time to check other articles that interest you on this website.

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      Sources

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