Selling securities or financially advising clients requires a license, and which license a professional needs depends on a number of factors, including what type of securities are being offered for sale, what type of financial transaction is being conducted and the advice being given. The Financial Industry Regulatory Authority (FINRA) handles the procedures for a number of securities licenses. FINRA sets qualifications for each license and oversees the exams for each one. Here’s a breakdown of the main securities licenses.
Securities Industry Essentials
The Securities Industry Essentials (SIE) is an introductory level exam for persons seeking to enter or re-enter the securities industry. The exam assesses a candidate’s knowledge of the industry, its basic products, regulatory agencies and their functions as well as regulated and prohibited practices. To become a registered representative at a FINRA member firm, applicants still need to take a “top-off” exam, either a revised Series 6, Series 7 or other qualification exam appropriate to their prospective job functions.
The Series 6 license means you can sell investment products that include:
- Mutual funds
- Variable annuities
- Variable life insurance
- Unit investment trusts (UITs)
- Municipal fund securities, like 529 savings plans
While financial professionals can get this license, so can insurance agents who sell variable life insurance and annuities.
If you’re looking to get the Investment Company and Variable Contracts Products registration, you’ll need to pass the Series 6 exam as well as the Securities Industry Essentials (SIE) exam. The Series 6 exam is 90 minutes long and costs $40.
For those looking to get the General Securities Representative registration, you’ll need to pass the SIE exam as well as the Series 7 exam. This license gives you permission to sell much more than a Series 6 license — almost any type of security — including:
- Public and private stocks and bonds
- Mutual funds
- Money market funds
- Real estate investment trusts (REITs)
- Hedge funds
- Government securities
- Direct participation programs (DPPs)
- Securities traders
- Options on mortgage-backed securities
- Venture capital
- Repos and certificates of accrual on government securities
- Sale of municipal securities
This series is best for stockbrokers, some financial planners and advisors as well as some insurance agents. The Series 7 exam is almost 4 hours long and costs $245.
The Series 3 license is for those who want to sell commodity futures contracts. This license is more specific than Series 6 or 7 and is generally reserved for those who specialize in selling commodity futures.
The National Commodities Futures exam is from the National Futures Association (NFA) but administered by FINRA. It’s 2 hours and 30 minutes and costs $130.
The Series 31 license is like a subset of the Series 3 license. It allows you to sell futures managed funds.
Stockbrokers or those who want to sell stocks, bonds, mutual funds or annuities, you’ll need a Series 63 license. Formerly known as the Uniform Securities State Law Exam, it’s required by each state and you’ll also need to have the Series 6 and 7 licenses. It focuses on the ethical and fiduciary obligations that one must uphold as an investment professional. North American Securities Administrators Association (NASAA), an international organization centered on investor protection, handles the licensing requirements for this.
The Series 65 license, also known as the Uniform Investment Adviser Law Examination, is best for financial planners, advisors or others that provide financial advice. Stockbrokers or those who handle managed-money accounts would also need this license. This exam was created by the NASAA.
The Series 66 license, officially called the Uniform Combined State Law Examination, essentially combines Series 63 and 65. If you’ve already earned both of these licenses, you don’t need to take the Series 66 exam. However, if you haven’t, you can skip taking two exams and instead take one. The Series 7 exam is a co-requisite.
The experts suggest you set aside 75 to 100 hours of study time before taking the test. Most people with full-time jobs can break this down into four to eight weeks of study sessions.
This exam, also known as the Investment Banking Representative Exam, is for financial professionals who deal with:
- Mergers and acquisitions
- Asset sales
- Financial restructuring
- Debt and equity offerings
- Tender offers
- Corporate reorganizations
- Business combination transactions
To get the Investment Banking Representative, you’ll need to pass the SIE exam as well as the Series 79 exam. The Series 79 exam is 2 hours and 30 minutes long and costs $245. Those who pass the exam can work as entry-level investment bankers.
For financial professionals looking to work for firms, agencies or other types of financial companies, they’ll need to get specific licenses for their specialties. For investors, it’s important to know what your financial expert specializes in. It should also give you peace of mind knowing that they’ve passed specific exams to prove they’re an expert in their field.
Tips for Investing
- Series licensing is one of many factors to consider when you’re choosing a financial advisor to manage your money. SmartAsset’s free tool matches you with financial advisors in your area in five minutes. If you’re ready to be matched with local advisors who will help you achieve your financial goals, get started now.
- If you’re more of a hands-off investor or don’t have the extra cash to use on a human advisor, you may want to think about using a robo-advisor instead. Your investments are made based on your age, your risk tolerance and time horizon. Some robo-advisor programs include the option to talk to human advisors for an extra fee, but are otherwise much less expensive to use compared to firms that use licensed human advisors.
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