Why is the Series 7 vs Series 66 debate so huge in the industry?
Have you been considering taking the Series 7 or Series 66 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:
This article will provide you with a comprehensive overview of what Series 7 and Series 66 entail.
Let’s dive right in!
Series 66
Series 66 exam is also referred to as the Uniform Combined State Law Examination.
This exam owes its development to the North American Securities Administrators Association (NASAA).
Series 66 exam was necessitated by securities industry requests.
Series 66 is relevant to individuals who intend to become:
- Securities Agents
- Investment Adviser Representatives
Securities transactions and investment advice for clients are core areas that the Series 66 exam covers.
The Series 66 exam is managed by the Financial Industry Regulatory Authority (FINRA).
The exam comprises 100 questions and 10 pretest questions that are not added to the score of the exam.
In total, we have 110 questions with 10 being pretest questions.
For you to pass the Series 66 exam, you must answer at least 73 of 100 questions correctly (i.e. 73%).
From above, it is evident that the passing score of the Series 66 exam is 73.
Candidates taking the exam are allowed 2 hours 30 minutes (150 minutes) for the entire exam.
The exam is a closed-book test that assesses test-takers understanding of the content covered in the exam.
Candidates immediately get their test scores after the exam is concluded.
$177 is the Series 66 exam fee.
Two ways the Series 66 exam can be enrolled and scheduled for are:
- Opening of an enrollment window via FINRA.org and due payment for exam fee by individual candidate.
- Filing Form U4 (Uniform Application for Securities Industry Registration or Transfer) by sponsoring firm for candidate.
The U4 is very useful to FINRA, other Self-Regulatory Organizations (SROs), 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
Series 66 Exam Prerequisite
The Series 66 exam has the FINRA Series 7 as a corequisite but NOT a prerequisite.
The above simply means that Series 7 and Series 66 are required to be passed to obtain the Series 66 license.
This comes with flexibility as you can take either of the exams first.
Passing both exams is what qualifies you for registration and licensing.
What does Series 66 allow you to do?
To register and get licensed as either investment adviser representatives or securities agents, you must pass both Series 7 and 66.
Series 66 license lets you perform in two important respects:
- Providing Investment Advice to clients
- Executing securities transactions on behalf of clients
What is the Series 7?
The Series 7 exam is a FINRA general securities representative exam (GS).
The Series 7 exam is well detailed, with an in-depth knowledge evaluation of candidates.
This in-depth evaluation is geared towards ascertaining candidates’ proper grasp of relevant concepts and ability to perform critical functions.
These critical functions have bearing in the areas of purchase and sale of corporate securities, solicitations, direct participation programs (DPPs), investment company products, variable annuities, municipal securities, options, and government securities.
Obtaining the Series 7 permits you to carry out other activities and products such as:
- Warrants
- Rights
- Hedge funds
- Mutual funds
- Venture capital
- Money market funds
- Unit investment trusts (UITs)
- Exchange-traded funds (ETFs)
- Real estate investment trusts (REITs)
- Repos and certificates of accrual
- Public and private placements of corporate securities (stocks and bonds)
A corequisite to taking the Series 7 exam is the Securities Industry Essentials (SIE) exam.
It consists of 125 multiple-choice questions.
You are to answer these multiple-choice questions within 3 hours 45 minutes (225 minutes), which is the total duration of the exam.
The exam‘s passing score is 72 on a scale of 0-100, that is, 72% passing score.
Candidates are mandated to pass the Securities Industry Essentials (SIE) exam and the Series 7 exam to obtain the General Securities Representative registration.
Series 7 makes you eligible to take the Series 66 exam.
What is the series 7 Top-Off Exam?
The restructured FINRA representative-level qualification exam program on October 1, 2018, introduced the Series 7 Top-Off and the new SIE exam.
These two exams we introduced by FINRA following the splitting of the legacy Series 7 exams.
By this action, FINRA sought to straighten the path to obtaining the General Securities Representative (GS) Qualification registration.
It also helped to simplify the process of entering into the securities industry by interested individuals.
You can get relevant study materials for the Series 7 Top-Off exam from FINRA.
What is the difference between Series 7 and 66?
Series 7 differs from Series 66 in many respects, as clearly outlined below:
- Series 7 is a FINRA Representative-level exam administered by FINRA, while Series 66 is a North American Securities Administrators Association (NASAA) exam administered by FINRA also.
- Series 7 exam is also called the General Securities Representative Qualification Exam (GS); the Series 66 exam is called Uniform Combined State Law Exam.
- The corequisite for the Series 7 exam is the SIE exam, while the corequisite for Series 66 is the Series 7 exam.
- Series 7 qualifies candidates to become securities representatives, while Series 66 qualifies candidates to become investment adviser representatives and securities agents.
- The duration for taking the Series 7 exam is 3 hours and 45 minutes (225 minutes), while that for the Series 66 is 2 hours and 30 minutes (150 minutes).
- The total number of exam items (multiple-choice questions) for Series 7 is 125, while that for Series 66 is 100 with 10 pretest questions which are not part of the 100 scored questions.
- The exam cost for Series 7 is $245, while that for Series 66 is $177, making the Series 7 exam more expensive than the Series 66 exam.
Series 7 Study Guide
Is your plan to ace the Series 7 exam on your first try?
Great! You need to put in 80-100 hours of studying if you have a background in finance.
You will need about 150 hours to study for the Series 7 exam if you do not have any background knowledge in finance.
First off, draw up a study guide and make sure it fits into your schedule.
Secondly, you should split the time allotted for your entire study period uniformly.
We recommend that you should have a consistent study guide. Consistency is better than hard work; always remember that.
If you are more unrestrained on weekends, you may consider allowing more study time on weekends and less on weekdays.
Allocate enough time for your study, keeping in mind that breaks are inclusive and necessary.
Take breaks from study to allow for proper understanding and percolation of concepts.
We strongly recommend that you include a Series 7 preparation package as part of your study plan.
The determinant factor for successful acing of your Series 7 exam is to be CONSISTENT in your study.
Practice Questions Tips for Series 7 and 66
You can always leverage practice questions as your secret weapon for winning the Series 7 and 66 exams.
Practice questions do a lot for you by exposing you to the different types of questions these exams have.
It serves to direct and redirect you to areas where questions are frequently asked.
We recommend that you dedicate and put in a reasonable amount of time in answering questions.
By answering more exam questions, you’ll understand areas you are good at as well as areas you are struggling to understand.
It will also help you in dedicating more time to your weak points and do some in-depth studying.
If you have an exam prep provider from which you can get resources, such as a question bank database, grab such valuable study assets with both hands.
Practice Exams Tips for Series 7 and 66
While practice questions are good, practice exams remain one of the best ways to improve your chances of success in either or both exams.
This is because practice exams help replicate the actual exam as closely as possible in terms of difficulty, degree, format, and weighting.
Again, practice exams are most times updated to the latest regulatory amendments to retain their relevance to test-takers at any time.
Also, most practice exams give diagnostic feedback at the end of the practice exam, which saves you time checking for the correct answers to questions you failed.
These exams help boost your confidence for the actual exam, which is a plus on its own.
The better your performance in practice exams, the greater your chances of passing your actual exam.
NASAA Licensing
The North American Securities Administrators Association (NASAA) is responsible for supervising the requirements of the Series 63, Series 65, and Series 66 licenses.
Having discussed Series 66 earlier in this article, let’s quickly look at Series 63 and 65 below.
Series 63
Series 63 license is also called the Uniform Securities Agent license.
License applicants must pass the Series 63 exam and have relevant knowledge of ethical practices and fiduciary obligations binding in the state of securities business operation.
This license permits the holder to solicit orders for any type of security in the particular state of operation.
The license is a valid authorization to work with a FINRA-member firm or other self-regulatory organization (SRO).
Series 65
You must possess the Series 65 license if you intend to provide any kind of financial advice or service on a non-commission basis.
Financial planners and financial advisors that provide investment advice for an hourly fee are captured in this category.
Also, stockbrokers or other registered representatives (RR) that deal with managed-money accounts, likewise fall in this category.
The Series 65 license can only be applied for after successfully passing the Series 65 exam, a NASAA Investment Advisers Law exam administered by FINRA.
The Series 65 exam is a multiple-choice exam spanning 180 minutes in time duration.
This exam covers rules and regulations related to registered investment advisors and various investment vehicles and disciplines.
However, registered investment advisors do not need to associate themselves with a broker-dealer as long as they are registered in the state where they conduct business and have the appropriate securities license.
Registered Representative | What is it about?
Individuals who work for financial firms like brokerage firms are called registered representatives.
As the name implies, Registered representatives (RR) represent their clients and help them in trading investment securities and products.
A registered representative can be any of these; financial advisor, broker or, portfolio manager.
For most RRs, the payment received for service delivered is mainly per service rendered.
A licensed registered representative is authorized to sell distinguished securities.
Also, they mandated to have sponsorship from a firm duly registered with FINRA.
Registered representatives must pass licensing tests to carry out their duties seamlessly in their respective states of business operation.
Passing the licensing exam is a must-have criterion to enable RRs to conduct transactions in the state where they are registered.
The FINRA and the Securities and Exchange Commission (SEC) furnish the regulations that guide registered representatives.
FINRA has a suitability standard that registered representatives are charged to follow.
Licensing exams such as Series 7 and 63 coupled with adherence to rules of FINRA and SEC are a must to become licensed as a registered representative.
Variable annuities and unit investment trusts (UITs) are tradable by registered representatives.
If you want to be able to perform more functions as an RR, you will need to get the Series 65, or Series 66 license.
Sale of stocks, mutual funds, municipal securities, options and, specific variable contracts (e.g., insurance or annuity products) for their clients is possible for RRs that possess the Series 7 license.
State securities preconditions across the U.S. make up a reasonable portion of the Series 63 exam.
You can also obtain other licenses to apply for different types of transactions.
You may also obtain the Series 65 or Series 66 licenses to expand your set of allowable activities within a state of operation.
Conclusion
In Conclusion!
You may ponder what securities exams are necessary for you to perform certain functions in the securities industry.
It implies from above why we have taken out time to write you this article.
It is best practice to take exams in the most appropriate order to avoid going back and forth.
This is why we recommend that you take the Series 7 exam first.
Make sure you pass the Series 7 exam before taking the Series 66 exam.
We strongly recommend that you implement all necessary measures for success in either or both exams you are preparing for.
Draw up a study plan that suits your schedule.
Get prep materials, study exam questions and take practice exams.
Give it your best shot and be consistent with your exam studies.
Remember, “If You Fail to Plan, You Are Planning to Fail” — Benjamin Franklin.
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FAQs
References
1. FINRA
2. Investopedia
3. Kaplan
4. Knopman
5. NASAA
6. Wikipedia
