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.
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:
However, to handle those responsibilities, candidates must prepare for the Series 26 exam.
What’s in the Series 26 Exam?
- 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, unscored questions 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 $100.
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.
The Bottom Line
Not everyone working financial industry must take the Series 26 Exam, but some do. If you’re on the track for becoming an Investment Company and Variable Contracts Products Principal, you’ll need to pass the Series 26 Exam. But if there are other financial sectors you want to explore, you might not need to take a test.
Having certifications and licenses are not only great for your firm but also great for you. These specialties and others can boost your reputation and earnings. The more knowledge you have, the more in-demand you’ll be. Consider this as you browse through different exams to take during the course of your career.
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, such as the CFP or CFA designations. Finding the right financial advisor that fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in 5 minutes. If you’re ready to be matched with local advisors that will help you achieve your professional goals, get started now.
- Some financial certifications have strict requirements, and some are intended only for professionals with certain specialties, like divorce planning or mutual funds. Whether you’re a financial professional or just looking to hire one, it’s good to know the different certifications.
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