What is the Series 26 Exam and License?

Financial professionals who plan on selling closed-ended funds, mutual funds, and variable products must follow a specific career path. They’ll take the Investment Company and Variable Contracts Products Principal Qualification Examination (Series 26) and obtain the Series 26 license. Here’s what that entails, and what it means if an advisor has this license.

If you need help with own long-term financial planning, consider working with a financial advisor.

What is the Series 26 Exam and License?

The Series 26 exam has another name: The Investment Company and Variable Contracts Products Principal Qualification Examination. It tests the knowledge and competency of investment company and variable contracts product principals to ensure they can do their jobs.

The exam is developed and administered by the Financial Industry Regulatory Authority, or FINRA. If you pass, you can supervise:

Initial offering closed-end funds.
Mutual funds.
Variable annuities.
Variable life insurance.

However, to handle those responsibilities, candidates must prepare for the Series 26 exam.

What’s in the Series 26 Exam?

series 26
There are 110 multiple choice questions spread across three major areas in the exam, including:

Personnel Management Activities and Registration of the Broker-Dealer: This deals with conducting personnel management activities as well as administering the registration of the broker-dealer in the Central Registration Depository, or CRD. You’ll also provide training and educational resources on securities industry structure, firm policies and product characteristics.
Supervises Associated Persons and Oversees Sales Practices: Candidates monitor, supervise and document sales activities, review compliance with securities industry rules and regulations and give feedback when necessary on product knowledge and performance. They’ll also monitor and approve public-facing communications for compliance purposes as well as supervise the handling of customer accounts and transactions. There might be times where they need to review and address violations (or potential violations) of the securities industry rules and regulations.
Oversees Compliance and Business Processes of the Broker-Dealer and its Offices: Candidates discuss supervising the firm’s operational processes as they relate to compliance and regulatory requirements, as well as the maintenance of customer accounts. They’ll monitor and report suspicious activities (if necessary), and verify that necessary documentation is filed. They’ll also develop and test internal controls and business activities for compliance purposes, as well as to conduct office inspections as needed. There’s the handling of customer complaints, too.

To pass, candidates answer 70% of the questions correctly. You’ll have two hours and 45 minutes to complete the exam. Aside from the 110 scored questions, there are 10, questions that aren’t scored scattered throughout the test. That means candidates answer 120 questions in total. FINRA has a content outline you can use to study for the Series 26 Exam. The exam fee is $150.

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Eligibility for the Series 26 Exam

You’ll need a FINRA member firm as your sponsor before registering for and taking the exam. Also, you’ll need to first meet the qualifications as an Investment Company and Variable Contracts Products Representative (the Series 6 exam), or General Securities Representative (the Series 7 exam). You must also complete the Securities Industry Essentials (SIE) exam.

The FINRA member firm that sponsors you must file a Uniform Application for Securities Industry Registration or Transfer (Form U4) in the Central Registration Depository (CRD) and request the Investment Company and Variable Contracts Products Principal position on the Form U4.

Bottom Line

The Series 26 license is designed for financial professionals who want to take on supervisory roles within investment firms, particularly overseeing the sale of mutual funds, variable annuities and insurance products. By focusing on compliance, regulation and team oversight, it helps ensure that firms operate within industry rules and protect investors. For those advancing into management positions, earning the Series 26 can be an important step toward greater responsibility and leadership in the financial services industry.

Finance Career Tips

The Series 26 is important for many financial professionals. But if you’re looking for a financial advisor you may want to prioritize other qualifications. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
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