Wondering what the SIE and Series 7 exams entail?
Thinking about the benefits of taking either or both exams?
Ride with us to uncover appropriate exam(s) to consider based on your area of interest in the securities industry.
At the end of this SIE vs Series 7 comparison, you’ll discover the:
This article is painstakingly written to help you make smart decisions in regard to taking either the SIE, Series 7, or both.
Let’s get started right away!!
What is SIE?
To begin the SIE vs Series 7 comparison, let’s find out what SIE stands for:
Securities Industry Essentials (SIE).
It is also called Essentials.
The SIE Exam is an introductory financial essentials exam relevant to the securities industry.
FINRA introduced the SIE as a new exam on October 1, 2018.
It tests basic knowledge of products, risks, structure, and the function of the securities industry.
It also evaluates a basic grasp of the regulatory agencies and the regulated and prohibited practices enforced by these agencies.
The SIE starts you off in good stead in your financial services career.
This exam is delivered and administered by the Financial Industry Regulatory Authority (FINRA).
It is a computer-based exam taken at a Prometric testing center.
FINRA organizes the SIE to evaluate the competence of prospective SIE professionals.
This SIE exam evaluation covers a range of topics as:
- Good knowledge of industry terminologies
- Understanding of Products and Their Risks
- Knowledge of Capital Markets
- Overview of the Regulatory Framework
- Grasp of Trading, Customer Accounts, and Prohibited Activities
Acing the SIE is a good way of jumpstarting a professional career in the financial services industry.
It is indeed a plus to ace the SIE exam as current or potential employers are more likely to notice and bring you onboard where necessary.
It positions you as someone having basic industry knowledge in financial services.
Let’s get a better understanding of what FINRA stands for in the financial services industry.
What is FINRA?
FINRA: Financial Industry Regulatory Authority is a private, government-authorized, not-for-profit, self-regulatory organization (SRO) that oversees US-based registered broker-dealer firms.
The core mandate of FINRA is to regulate U.S. member brokerage firms, brokers, and exchange markets.
This mandate enables FINRA to effectively monitor the daily market activities of brokers, respond to customer complaints, and maintain a well updated educational resource for investors.
FINRA‘s mandate aligns with its Mission of “Investor protection and market integrity to facilitate vibrant capital markets.”
It provides many valuable and up-to-date resources, including BrokerCheck, to assist investors in making crucial and intelligent investment decisions.
The summary of the core duties of FINRA is to:
- Administer examination to players in the financial services industry.
- Regulate and oversee brokers‘ activities
- Maintain its BrokerCheck database on firms and brokers
- Provide dispute resolution services to aggrieved parties (E.g., brokers, and customers)
- Receive and address customer complaints appropriately
- Close monitoring of equity markets
- Offer resources and tools for investors
Anyone interested and qualified in trading securities with the public must first be registered with FINRA to do so legally.
Prerequisites for taking the SIE Exam
Sitting for the SIE exams is an excellent way of marking your legal year attainment of 18.
The SIE is particularly beneficial if you have a keen interest in finance from a young age or have some form of external motivation.
The SIE exam is open to anyone that is 18 years or older.
So long you have attained the legal age of 18, you can sit for the SIE exams.
Affiliation with a member firm of FINRA or any authorized self-regulatory organization (SRO) is not required, to be eligible as a candidate to take the SIE exam.
All that you need is to be 18+ years. Sounds interesting, right?
However, the SIE is ideal for college students who want to start a career in the financial services industry.
It is also essential as it helps stand them out to potential employers while still studying in college.
Now that we have established the criterion for taking the SIE exams, let’s dive into what’s needed to become a professional in the securities business.
To sell securities in the securities business, you must be registered with FINRA and sit for relevant FINRA exams.
These exams are choice-based, as the exam taken depends on the type of securities you want to sell.
Here’s a quick outlook of the qualifications, exam pass rate, and validity period for the securities industry essentials (SIE) exam.
1. SIE Qualification Outlook
To qualify to take the SIE exam, you must be 18 years or older.
There is, however, no educational barrier to taking the SIE exams so long you meet the age requirement.
Passing the SIE exam is a first step towards qualifying to register with a firm member of FINRA.
The SIE does not permit you to engage in any securities business.
The SIE and Series 7 exam must be passed to obtain the General Securities registration.
You are only eligible to register with a FINRA member firm after passing the SIE exam and qualification exam that aligns with the type of securities business you wish to do.
2. The SIE Pass Score
The SIE has a passing score of 70. This passing score is on a scale of 0 to 100.
SIE test-takers should do well to keep in mind the minimum passing score to prepare effectively for the test.
All candidates’ test scores for the SIE exam are placed on a common scale with the standard test scores.
Statistical adjustments of scores are made at the end of the exam to account for slight difficulty variations in different exam questions.
3. SIE Validity Period
The SIE result is valid for four (4) years before expiration.
Within this validity period, you can leverage it to take the series 7 top-off exams.
Later in this article, we’ll get a better understanding of the exam restructuring of the legacy Series 7 exam by FINRA that led to the introduction of both the SIE and Series 7 Top-Off Exams.
For now, let’s get some in-depth understanding of the SIE exam outline and difficulty level of the SIE exam to help prepare us for what to expect in the SIE exam.
SIE Exam Outline
The SIE is a multiple-choice question exam. The total number of questions covered in the SIE exam is 75.
You are to answer all 75 multiple-choice questions in 1 hour and 45 minutes.
The enrollment cost for the exam is $60.
This amount is low to accommodate all those interested in starting a career in the securities business.
The content outline of the SIE exams is a good summary of the four (4) main topic areas covered in the exam.
This summary is helpful so that candidates sitting for the exam have insight into the depth of knowledge they should have to excel in the securities industry essentials exam.
Below we have outlined the four main topic areas covered, the percentage of exam questions, and the exact number of exam questions in each area:
1. Knowledge of Capital Markets (Percentage of exam questions – 16%, Total number of questions – 12).
2. Understanding Products and Their Risks (Percentage of exam questions – 44%, Total number of questions – 33).
3. Understanding Trading, Customer Accounts, and Prohibited Activities (Percentage of exam questions – 31%, Total number of questions – 23).
4. Overview of Regulatory Framework (Percentage of exam questions – 9%, Total number of questions – 7)
SIE Exam Prep Tips
The SIE exam preparation process can be an easy one for some candidates, while for others it may pose to be a very difficult nut to crack.
This exam preparation difficulty level depends on the familiarity of the test taker in the financial sector and how fast the individuals in question can understand new concepts.
While some test-takers will find the exam hard, others might just easily ace the exam.
Whichever category you think you belong at this time, you shouldn’t be overconfident or underconfident.
Whether you have some background knowledge in finance or not, SIE exam questions can prove elusive.
This is where study guides and materials play a vital role in polishing the knowledge of test-takers familiar with the finance industry.
These study materials come in handy for test-takers who do not have any background knowledge of finance, economics, or business.
Study materials will significantly help boost your chances of success in the SIE exam if you fall under the above-mentioned category.
It is best practice to use recommended study materials to cut down on your study time and invariably improve your overall exam performance, this being the ultimate goal.
With consistent practice, you will definitely see improvements in your practice exam performance.
Once you start having consistent scores in your practice test, as high as 85% and above, you are good to go with the SIE exam.
Most brokers/dealers and financial advisors use KAPLAN and Securities Training Corporation (STC) study materials for SIE exam prep.
We recommend that you get either of the above-mentioned study materials to help you ace the SIE exam on your first try.
SIE Enrollment Criteria
1. How old do I have to be to take the SIE?
To be eligible to take the SIE, you must be 18 years or older.
2. Do I have to be a citizen of the U.S. to take the SIE?
No, you must not be a U.S. citizen to be eligible to take the SIE exam.
3. Do I have to be associated with a broker-dealer to take the SIE?
NO, you are not mandated to be associated with a broker-dealer to be eligible to enroll and take the SIE exam.
4. Do I have to provide a Social Security number to enroll for the SIE?
YES, you must provide your Social Security number to enable you to enroll and take the SIE exam.
Alternatively, if you do not have your Social Security number, you will be required to provide your mother’s maiden name for enrollment.
FINRA restructured its representative-level qualification exam program on October 1, 2018.
The restructuring led to the splitting of the legacy series 7 exams to the two new exams viz:
- The Securities Industry Essential (SIE) exam
- The Series 7 Top-Off exam
Kaplan has study materials for both the SIE and the Series 7 Top-Off exam.
The 2018 FINRA initiative has simplified the trajectory to obtaining the General Securities Representative (GS) Qualification registration.
To obtain the GS registration, you must meet the requirements of passing both the SIE and the Series 7 Top-Off Exams.
The restructuring was necessary, and according to FINRA, it was birthed out of two primary purposes:
- To reduce the repetitive nature of FINRA exams that had repeated content in several of its securities exams.
- To ease entering into the securities industry by interested individuals.
What is Series 7?
The Series 7 exam is under the FINRA Representative-level Exams category.
This Series 7 exam evaluates the competence of an entry-level registered representative to deliver on their job as a general securities representative.
The in-depth content of the exam seeks to assess the extent to which prospective general securities representatives can execute important duties.
These important duties are in the areas of sales of corporate securities, investment company securities, direct participation programs (DPPs), variable annuities, municipal securities, options, and government securities.
The prerequisite for taking the series 7 exam is to be associated with and sponsored by a FINRA or other self-regulatory organization (SRO) member firm recognized by the SEC.
The Series 7 exam has 125 multiple-choice questions to be answered in 3 hours 45 minutes (225 minutes).
The passing score is 72 on a scale of 0-100 (i.e. 72%).
This implies that you must answer at least 90 questions correctly out of 125 total questions to pass the exam.
It covers all areas in stock and bond quotes, spreads and straddles, put and call options; ethics; margin, and other requirements in the account.
Candidates must pass the Securities Industry Essentials (SIE) exam and the Series 7 exam to obtain the General Securities Representative registration.
Acing the FINRA Series 7 licensing exam is the next step in line after getting your SIE.
With both certifications, you are good to start your career in the securities industry as an expert.
Your proven expertise avails you the opportunity to sell a broad range of securities.
The Series 7 Exam Outline
The Series 7 Exam outline is well detailed and provides anyone wanting to take the Series 7 exam with the core content areas to study for the exam.
The outline covers four primary job functions of a general securities representative (GS).
It is so structured to provide successful candidates the essential knowledge to perform professionally as GS representatives.
Candidates test will be in these major functions, and the number of questions asked in each functional area is as follows:
- (F1) Seeks Business for the Broker-Dealer from Customers and Potential Customers – Number of Exam questions (9)
- (F2) Opens Accounts after Obtaining and Evaluating Customers’ Financial Profile and Investment Objectives – Number of Exam questions (11)
- (F3) Provides Customers with Information About Investments, Makes Recommendations, Transfers Assets and Maintains Appropriate Records – Number of Exam questions (91).
- (F4) Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes and Confirms Transactions – Number of Exam questions (14).
SIE vs Series 7: The Difference
The differences between the SIE and Series 7 are as follows:
- The Series 7 exam, now called the Series 7 Top-Off Exam, is more detailed and challenging than the SIE, a securities preliminary exam.
- The Series 7 Top-Off exam is lengthier in terms of the scope and duration of the exam. The SIE exam has 75 multiple-choice questions, the Top-Off consists of 125 multiple-choice questions.
- Series 7 has a higher passing score of 72 as against SIE with a passing score of 70.
- While the SIE is an introductory securities exam, Series 7 is a more detailed exam for professionals who want to create a niche in the securities industry.
- The prerequisite for taking the SIE exam is to attain the legal age of 18 and above; this implies there are no significant prerequisites asides from age. In contrast, the prerequisite for taking the series 7 exam is to be associated with and sponsored by a FINRA member firm or other applicable self-regulatory organization (SRO) recognized by the SEC.
In wrapping up!
Both the SIE and Series 7 exams can pose to be difficult if not approached with seriousness.
Again, this greatly depends on the background of the candidate.
It is good practice to prepare for both exams with seriousness and make use of relevant study materials.
Commit to your studies and study for at least one month before taking the SIE exam.
Prep yourself for at least two months before taking the Series 7 exam.
Note that if you have ample time to study, do well to learn for as long as you can.
This prolonged learning helps you easily ace any of the exams.
Remember! The Series 7 exam is more complex and, as such, should be given more time if you wish to take both exams at a go.
It is best practice to take one exam starting with the SIE before taking the Series 7 exam.
It is liking to reading chapter 1 of a book before reading chapter 2 of the same book.
Since both exams overlap, taking the SIE first is ideal on all levels.
If you have questions about the SIE or Series 7, or anything else related to this article, please do well to comment below.
We will make sure to get back to you as soon as possible.
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