What Is a Mutual Funds Brokerage Firm?

Brokerage firms offer clients investments to buy, sell or trade. Full-service brokerage firms offer a spectrum of investments, such as stock equities, bonds, certificate of deposits, treasuries and commodities. They also offer mutual funds as a part of the investment menu. A mutual fund brokerage firm is one that is licensed to sell only mutual fund vehicles. It cannot sell individual equities, bonds or other investments outside of a mutual fund. Its brokers have a minimum of a Series 6 License, and others have both a Series 6 and a Series 63.

Series 6

In order to sell mutual funds or variable annuities, brokers need to pass the Series 6 exam. It is administered by the FINRA (Financial Industry Regulatory Authority)---formerly known as the NASD (National Association Of Securities Dealers)---to review all policies and securities regulations in the solicitation, sale and maintenance of mutual funds.

Series 63

The Series 63 is a license administered by FINRA that ensures that those selling mutual funds are versed in all Uniform Securities Agent State Laws. Passing this test will allow a broker to solicit and sell in all 50 States where they are licensed.

Banks

Many banks are associated with full-service brokerage firms. Beyond this, many personal bankers are now Series 6 licensed, to retain more clients with greater investment options.

Insurance Agencies

Insurance agencies and agents who wish to sell variable life insurance or annuities are required to become a mutual fund brokerage. It has become commonplace for insurance agents to hold Series 6 and 63 licenses to provide more complex insurance products to their clients.

Pros and Cons

Being able to purchase a mutual fund investment vehicle through one's insurance agent or banker makes things convenient. However, investors may greatly limit their resources and experience by not working with full-service brokerages and fully licensed financial advisors.