The Series 66 license is required to work as an investment advisor in the United States. To obtain it, you must pass a rigorous exam covering methods of delivering investment advice and other topics. Below, we’ll tackle what the exam is, what exactly it covers and how you can best prepare.
What is the Series 66 Exam?
The Series 66 exam is designed to assess your ability to provide investment advice as a professional in the financial services industry. Officially called the Uniform Combined State Law Examination, it’s offered by the North American Securities Administrators Association (NASAA). It’s administered by the Financial Industry Regulatory Authority (FINRA).
To take the exam, your employer can register you by using the Form U-4 or the Form U-10. Here are the exam’s particulars:
- Format: Multiple choice
- Number of questions: 100 (10 pretest questions are not scored)
- Required Score: 73%
- Duration: 150 minutes
The Series 7 exam is a co-requisite to the Series 66 exam. In other words, you must take both at the same time unless you already took and passed the former.
What Does the Series 66 Exam Cover?
The content of the series 66 exam revolves around providing investment advice. So expect to be tested about the functions and risks of different investment vehicles. You’d also have to understand regulations affecting the investment space as well as their treatment under the tax code.
The test’s content breaks down like so:
- Regulations: This section covers the laws you must adhere to as an investment advisor at the state and federal level. It would also touch on ethical standards and fiduciary matters. This makes up 45% of the test.
- Client relations: In this section, you’ll encounter questions about client profiles, portfolio management strategies for different clients, tax implications, economic theories and more. This makes up 30% of the test.
- Investment Vehicles: This section covers the workings of different investment products, so expect to answer questions about fixed-income securities, equities, alternative investments and more. This makes up 20% of the test.
- Economic factors: This section asks questions about SEC filings, annual reports and other type of recordkeeping you’d engage in as an investment advisor. It would also quiz you on different investment risks including rates of return, interest rates, inflation, political factors and more. This makes up 5% of the test.
Updates to the Series 66 Exam
Following the passage of the Tax Cuts and Jobs Act, NASAA updated exam questions to reflect changes in the tax code. These updates were first rolled out in January 2019. However, the structure listed above represents these changes.
Taking the Series 66 Exam
After registering, you’d take the Series 66 test at one of the Prometric testing centers. You don’t have access any kind of reference material while taking the test. However, you’d be provided with a basic calculator, a white board and dry-erase pens.
Some questions require the use of charts, graphs and other graphics.
Studying for the Series 66 Exam
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 doesn’t mean cram and try to memorize the test. You’re going to need to dive into the material in depth and understand the concepts thoroughly. Many of the questions are designed to trick you, so this is critical to passing.
And because of the complexity behind these points, you’re also going to need a quiet and well-lit place to study. Sometimes, you’d also have access to free videos and other reference material before the big day.
There are several study materials out there dedicated to the Series 66 exam, so do your research and make sure you’re getting the best. And keep in mind that the test underwent major changes in January 2019 to reflect the new tax laws. So ensure you have updated material.
Also, check to see if you have access to instructors and classes near you. Regardless of what study material you decide to resort to, make sure you take it seriously. This means read the book cover to cover. The Series 66 exam is not the kind you can just skim a reference book for a little bit.
So read for the context of the book and take practice questions to reinforce this knowledge. Take as many as you can. Aim for at least 100 per section to get a taste of how the test makers approach each subject.
To further your career as an investment advisor, you’re going to need your Series 66 license. To get it, you have to pass the Series 66 exam, which covers a wealth of topics from the regulations you would need to abide by to the inner workings of the investment vehicles you may recommend. The exam also deals with the client relations you may have. So make sure you study strategically by diving into the context of the content being presented rather than simply memorizing points.
Tips on Taking the Series 66 Exam
- Avoid cramming and memorizing definitions. Read your study material by thinking of how you would apply this information in the real world. You should take the same approach as when tackling your Series 7 exam.
- If you want some professional guidance, we can help you find a financial advisor. Our tool will link you with up to three qualified professionals in your area.
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