What Is the Series 86 Exam and License?

Passing the Series 86 exam, also known as the Research Analyst Qualification exam, is necessary for anyone who wants to work as research analyst for a broker-dealer member of the Financial Industry Regulatory Authority (FINRA). Series 86 comprises the first portion of the two-part Series 86/87 exam. The test is designed to determine how well an entry-level representative can perform the job of research analyst.

What Is the Series 86 Exam?

The Series 86 exam is a professional licensing test required for individuals who want to become research analysts in the securities industry. Administered by the Financial Industry Regulatory Authority (FINRA), the exam focuses on evaluating a candidate’s ability to analyze financial data, assess company performance and develop investment recommendations. Passing the Series 86 is typically one part of the qualification process, often paired with the Series 87 exam, which covers regulatory and ethical standards.

The Series 86 exam is designed to test a candidate’s proficiency in financial analysis and valuation techniques. Topics include financial statement analysis, ratio interpretation, earnings projections and industry analysis. These skills are essential for research analysts who provide insights and recommendations on securities.

Candidates are expected to interpret complex financial information and translate it into actionable investment insights. The exam evaluates the ability to assess trends, compare companies and understand how economic factors impact performance. This emphasis reflects the real-world responsibilities of analysts working in investment research.

Passing the Series 86 is a key step for professionals pursuing a career as a research analyst at a brokerage firm or investment bank. It demonstrates that the individual has the technical knowledge needed to support investment decisions and publish research reports. When combined with the Series 87, it helps ensure analysts meet both analytical and regulatory standards.

Part 1: Series 86

The Series 86 portion of the exam includes two tracks: information and data collection, and analysis, modeling and valuation.

Information and data collection: This part of the exam tests knowledge on topics including economic indicators, market forces, monetary policy, government statistics, long- and short-term trends in the economy, demographic information, and domestic and international issues.
Analysis, modeling and valuation: Test-takers will also be evaluated on their ability to conduct analysis of data obtained about industry sectors, competition within the industry, and supply and demand in industry sectors.

Some test-takers can opt put of the Series 86 portion of the exam, however. If you’ve already passed levels I and II of the Chartered Market Technician (CMT) or Chartered Financial Analyst (CFA) certification exams, you can request an exemption from the Series 86 part of the test.

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Part 2: Series 87

The Series 87 portion of the exam, or part two, tests regulatory administration and best practices. Registrants of the Series 87 exam, which costs $130, have one hour and 45 minutes to complete 50 questions. To pass this section, test-takers need a score of 74% or higher.

Series 87 tests proficiency in two sections: preparation of research reports and dissemination of information.

Preparation of research reports: This section tests the ability to prepare research reports, adhere to regulatory requirements when preparing research reports, and write reports with a conclusion supported by evidence and analysis.
Dissemination of information: How thoroughly and accurately you present and discuss your recommendations to clients, buyers and the media is also assessed. This part of the test is responsible for evaluating the candidate’s ability to discuss market trends with clients, a firm’s institutional and retail sales forces, and trading department.

Benefits of the Series 86/87 License

SmartAsset: What Is the Series 86 Exam and License?

If you want to become a research analyst for a FINRA-member broker-dealer, there are no two ways about it: You’ll have to take the Series 86/87 exams.

The benefits of doing so can translate not only to more clients, but also to clients who have confidence that a Series 86/87 license-holder can satisfactorily perform the functions of a research analyst. These critical functions might include preparing communications that analyze equity securities, companies and industry sectors.

Series 86 License vs. Series 7 License

Not to be confused, the Series 7 license allows someone to sell securities in the U.S, and most employers in the financial services industry require their employees to pass the corresponding exam.

Like the Series 86/87 license, FINRA administers the Series 7 exam. Similarly, license-holders must be associated with and sponsored by a FINRA-member firm to have either the Series 86/87 or Series 7 license. However, candidates for either license must pass a separate test — the Securities Industry Essentials (SEI) exam — before they’re eligible to take the Series 7 or Series 86/87 exam.

The Series 7 exam covers topics like client communications, financial industry regulations, and different types of securities as well as the associated risks. Series 7 financial advisors also specialize in building diversified, risk-assessed portfolios for their clients, while Series 86/87 license-holders must be able to analyze securities, companies and industry sectors.

In a nutshell, those who hold Series 86/87 licenses specialize in analyzing securities and preparing written communications that provide information upon which clients can base an investment decision. Series 7 license-holders specialize in building portfolios for their clients. But both can offer high-quality advice, depending on what you are looking for.

Bottom Line

In broad terms, a research analyst is responsible for investigating securities and assets for either in-house or external-client use. The only way to become a licensed research analyst for FINRA-member broker-dealers is to pass the Series 86/87 exam after already passing the Securities Industry Essentials (SIE) exam.

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