0%

Post Content

    Series 7 vs Series 65; which one suits you best?

    Have you been considering taking either or both exams lately?

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

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

    Prerequisite knowledge
    Differences
    Significance
    Exam content
    Licenses

    This article will provide you with the relevant information you need to decide regarding taking the Series 7, Series 65, or both. 

    Let’s get started!

    Post Content

      What is Series 7?

      Series 7 FINRA exam is called the general securities representative exam (GS).

      The Series 7 exam seeks to assess the extent to which prospective general securities representatives can perform critical functions.

      The Series 7 exam and license are both administered by the Financial Industry Regulatory Authority (FINRA).

      Broker-dealers and banks prefer to recruit Series 7 licensees because they are sure they will be valuable assets to the having received a license.

      The Series 7 license authorizes you to engage in activities and products such as: 

      • Rights
      • Venture capital
      • Money market funds
      • Real estate investment trusts (REITs)
      • Warrants
      • Hedge funds
      • Mutual funds
      • Exchange-traded funds (ETFs)
      • Repos and certificates of accrual
      • Public and private placements of corporate securities (stocks and bonds)

      Series 7 Exam Eligibility

      Eligibility for the Series 7 exam requires that you get sponsorship from a member firm of FINRA or an authorized SRO.

      Your sponsoring firm is mandated to file a Form U4 on your behalf to enable you to register for the Series 7 exam.

      Securities firms and registered brokers are regulated and monitored by FINRA, ensuring that anyone who sells securities products is qualified and tested.

      Series 7 Prerequisite

      Series 7 exam has no prerequisite exam.

      There is, however, a corequisite for the Series 7 exam.

      The corequisite required for taking the Series 7 exam is the Securities Industry Essentials (SIE) exam. 

      Series 7 exam consists of 125 multiple-choice questions answered in 3 hours 45 minutes (225 minutes).

      The passing score is 72, that is, a 72% passing rate. 

      This exam covers all areas in stock and bond quotes, spreads and straddles, put and call options, ethics, margin, and other requirements in the account, etc.

      Candidates must pass the Securities Industry Essentials (SIE) exam and the Series 7 exam to obtain the General Securities Representative registration.

      You are to answer these multiple-choice questions within 3 hours 45 minutes (225 minutes), which is the total duration of the exam.

      What is Series 7 License?

      Series 7 license is known officially as the general securities representative (GS) license. 

      Both the Series 7 exam is administered by the Financial Industry Regulatory Authority (FINRA).

      The Series 7 securities license authorize holders to sell virtually any type of individual security. 

      These securities include call and put options, common and preferred stocks, bonds, and other individual fixed-income investments, including all forms of packaged products.

      The significant types of investments or securities that the Series 7 license does not authorize you to sell are life insurance, real estate, and commodities futures. 

      Series 7 licensees are officially listed as “registered representatives” by FINRA.

      These Series 7 licensees are, however, generally referred to as stockbrokers.

      The Series 7 license is also possessed by many financial advisors, financial planners, and insurance agents to facilitate certain additional transactions in their business.

      What kind of jobs can you get with a Series 7?

      The different financial designations mentioned below are jobs roles that can be done with the Series 7 license.

      These are:

      • Certified Financial Planner (CFP)
      • Financial Advisor
      • Financial Planner
      • Registered Client Service Associate
      • Registered Client Associate
      • Compliance Officer
      • Paraplanner

      Relevance of Securities Licenses

      Securities licenses are essential as well as mandatory for anyone who wants to market and sell investments. 

      The type of investments financial professionals want to sell, the method of getting compensation, and the scope of service to be provided, will determine the specific type of license to be obtained.

      Series 7 license was established for the purpose of having a standard level of competency and ethics for registered representatives (RR) in the securities industry.

      Registered Representatives

      A registered representative (RR) is a financial professional that works for a financial firm to help transact business on behalf of clients.

      Financial advisors, portfolio managers, brokers are all designations that registered representatives can work as.

      RRs’ mandate is to make sure that their clients’ interest for which they transact business is always paramount.

      It is this transacting of business that makes the services of RRs transaction-based. 

      Registered representatives must be duly licensed in order to sell securities legally on behalf of clients.

      Passing both Series 7 and 63 exams is very essential to get licensed as a registered representative of a firm sponsoring you.

      FINRA and SEC are responsible for regulating and administering the Series 7 and Series 63 test.

      Series 7 and Series 63 enable you as a registered representative to transact different types of businesses within the permission of the license held.

      Registered representatives can trade variable annuities and unit investment trusts (UITs) with the Series 63 license.

      State securities prerequisites make up a better part of the Series 63 exam, that is, the Uniform Securities Agent State Law Exam.

      Holding the Series 65 or 66 license expand your areas of specialized services in the securities industry.

      Regulatory firms’ suitability standard is what registered representatives must hold up in high esteem and value.

      The industry regulator’s plan is to up the standard of suitability to a much stricter fiduciary standard.

      What Is a Registered Investment Advisor (RIA)?

      Registered Investment Advisor (RIA) is a designated financial professional or firm who gives investment advice and manages the assets of wealthy individuals to meet their long-term financial goals.

      The responsible of RIAs to their clients position them as fiduciaries.

      By acting as fiduciary to their clients, we mean that RIAs are obliged to always place the benefits of their clients first before anything else.

      RIAs can register their securities licenses with an approved broker-dealer, who will legally oversee and hold their licenses in return for a portion of the commission income.

      Professionals that hold themselves out to the public as Registered Investment Advisors are mandated to register with the state they do business in if their assets under management (AUM) are less than $25 million in value.

      However, the location of the RIA‘s principal office and the number of assets under management, determine whether the RIA must register with the SEC.

      RIA helps manage the assets of individual and institutional investors and advises them on the best way to grow their wealth by leveraging long-term investment options.

      RIAs get remuneration in ways similar to portfolio managers.

      These professionals or firms get their revenue via management fee comprised of a percentage of asset under management (AUM), usually 1% per annum of the client’s AUM.

      The management fee may fluctuate, but the average fee on AUM is around 1%.

      It is so structured that the more assets a client have, the lower the fee they can negotiate with an RIA.

      The above is in the client’s best interest, as the advisor (RIA) cannot make any more money on the managed asset unless the client increases their asset base (AUM).

      Assets under management (AUM) is the total market value of the investments that a professional or entity manages on behalf of clients. 

      Registered Investment Advisors are considered fiduciary because of the nature of their job and their role in ensuring their client’s interest is always prioritized.

      For this reason, RIAs are held to a higher standard of conduct than registered representatives (RR). 

      This fiduciary standard mandates the RIAs to always unconditionally put the client’s best interests ahead of theirs.

      RIAs are required as a matter of professionalism to inform their clients of any possible conflicts of interest.

      The above, position the RIA as upholding high ethics without any form of deceit in business dealings with clients.

      While most RIAs charge clients a percentage of their AUM, others charge either an hourly or flat rate to dispense advice.

      The above infers a lesser possibility of a clash of interest and unbiased service from the advisor to the client. 

      RIAs who adopt the flat fee one-off model must obtain the Series 65 license to practice in this respect.

      What is Series 65?

      Series 65 exam is also known as the Uniform Investment Adviser Law Examination.

      This exam study outline was developed by the North American Securities Administrators Association (NASAA).

      The Financial Industry Regulatory Authority is responsible for administering the Series 65 exam.

      The Series 65 exam qualifies candidates who pass it to become investment adviser representatives.

      NASAA has structured the exam to cover relevant topics necessary for financial professionals‘ practical investment advice to clients.

      The exam is a closed-book test to ascertain candidates’ grasp of knowledge necessary to perform excellently as investment advisers.

      The score of each test section and the exam’s overall score is displayed to the exam candidate.

      This examination consists of 130 multiple-choice questions with 10 pretest questions randomly distributed among all 130 questions.

      The time allotted for the exam is 3 hours (180 minutes).

      The required passing rate is 72%; candidates must answer 94 questions out of 130 correctly to pass the exam.

      It is interesting to note that the Series 65 exam does not have a corequisite exam.

      Series 65 license covers the rules and regulations of registered investment advisors and various investment vehicles and disciplines, economics, analysis, and ethics.

      A good part of what is covered on the Series 65 material is covered on the Series 7 exam.

      The above seeks to provide relevant exposure to Series 65 test-takers as many advisors who sit for the Series 65 exam may never become Series 7 licensed.

      Series 65 Study Materials

      There are tens of private entities that provide study materials for NASAA exams. 

      Considering contacting these private entities to get the Series 65 study guide?

      Great! We have selected 5 of these several vendors, especially for you. 

      We recommend that you contact them directly after searching online. 

      These vendors are not presented in any particular order. 

      Kindly find five (5) vendors you can readily contact for the Series 65 study guide below:

      1. Knopman Financial Training Services 
      2. Kaplan Financial Education 
      3. ExamFX 
      4. A.D. Banker & Company 
      5. Mometrix Test Preparation 

      How to get Scheduled for a Series 65 Exam

      Candidates who get scheduled for the Series 65 examination go about it in one of two ways:

      • Candidate’s firm file an electronic form U4 
      • The candidate opens an enrollment window via FINRA.org. 

      This schedule is followed by payment of the $187 examination fee directly to FINRA. 

      Please visit “Enroll for a Series Exam” on FINRA’s page to register for any state licensing exam of your choice. 

      Once registration is successful, FINRA will open a 120-day window, a valid period for the Series 65 exam scheduling. 

      The Chauncey Group International has designed the examinations questions, study guide, and the method of exam administration to help test-takers. 

      Benefits of the Series 65 Exam

      According to NASAA, the Uniform Investment Adviser Law Examination – Series 65 exam benefits both the securities industry and state regulators alike by creating uniformity. 

      This exam helps the investing public to have a higher degree of protection via enhanced and standardized qualifications of financial professionals.

      Passing the Series 65 exam qualifies you as an Investment Advisor Representative (IAR).

      Series 7 vs Series 65

      The main differences between Series 7 and Series 65 are outlined below: 

      • Series 7 is a FINRA Representative-level exam administered by FINRA, while Series 65 is a North American Securities Administrators Association (NASAA) exam administered by FINRA.
      • Series 7 exam is the General Securities Representative Qualification Exam (GS); the Series 65 exam is also called Uniform Investment Adviser Law Examination.
      • The Series 7 exam corequisite is the SIE exam, while there is no corequisite for the Series 65 exam. 
      • The Series 7 license makes you qualified to function as a securities representative, while Series 65 makes you qualified to become an investment advisor representative (IAR). 
      • The total exam time for the Series 7 is 3 hours 45 minutes (225 minutes); the total exam time for the Series 65 is 3 hours (180 minutes).
      •  The number of questions asked in the Series 7 exam is 125; that for Series 65 is 130 questions.
      • The exam cost for Series 7 is $245, while Series 65 is $187, making the Series 7 exam. 

      In Conclusion

      In wrapping Up!

      The Series 65 exam does not have a corequisite, making it an exam you can take without restrictions and become an Investment Advisor Representative (IAR).

      Whether you want to take the Series 7 exam or the Series 65 exam, we strongly recommend you create enough study time and have a study guide. 

      In addition to that, we recommend that you get as many study resources as you need and give it your very best.

      It is best practice to ace your exams on your first try. 

      Passing your exams on your first try is a confidence boost necessary to take on even more challenging exams in the future.

      Feel free to ask any questions about Series 7 or 65 or anything related to this article.

      Please do well to comment below.

      We will definitely respond to you in good time.

      Thanks for taking the time to read this article.

      We sincerely hope we answered all of your questions and more.

      Please do check the website to find more related articles.

      FAQs

      References

      1.  FINRA
      2.  Investopedia
      3.  Kaplan
      4.  NASAA
      5.  RIA
      Scroll to Top