What Is a Series 6 & 7 License?
The Financial Industry Regulatory Authority (FINRA), formerly known as the National Association of Securities Dealers (NASD), administers and regulates the Series 6 and Series 7 exams that must be passed if you want to earn a license to sell certain financial products.
Successful completion of the exams and employment by a member firm are the two requirements for receiving a Series 6 or Series 7 license.
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History
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FINRA exams require investment professionals to learn specific details in the areas of marketing, operating and servicing customer accounts, product information, securities and tax law, securities markets and economics. Each exam focuses on specific types of financial products.
The Series 6 exam licenses individuals to sell only mutual funds and variable annuity products, while the Series 7 exam licenses individuals to sell any equity or debt instrument, including mutual funds and variable annuities, as well as stocks, bonds and derivatives.
Series 6
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If you pass the Series 6 exam, you may sell mutual funds and variable annuity products but not stocks, bonds, insurance products or options derivatives.
To sit for the exam, you must be sponsored by a financial company that is a member of FINRA. The exam consists of 100 questions, and you have two hours and 15 minutes to complete the exam. A passing score is 70 percent.
The questions break down as follows: product information, 26 percent; securities and tax regulations, 23 percent; marketing and sales, 18 percent; evaluation of customers, 13 percent; opening customer accounts, 12 percent; and securities markets, 8 percent. -
Series 7
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The Series 7 exam licenses individuals to sell any financial product except insurance. Insurance products (other than variable annuities, which are considered securities) are regulated by state departments of insurance and require a separate license.
To sit for the exam, you again must be sponsored by a financial company who is a member of FINRA. The exam consists of 260 questions, and you have six hours (broken into two three-hour sessions) to complete the exam. A passing score is 70 percent.
The questions break down as follows: providing customers with information and making appropriate recommendations, 49 percent; securities markets, 21 percent; opening customer accounts, 11 percent; customer portfolios and economic conditions, 8 percent; customer orders and transactions, 5 percent; marketing and new business accounts, 4 percent; and evaluates customers in terms of financial needs, current holdings and available investment capital and helps them identify their investment objectives, 2 percent.
Significance
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The Series 7 and Series 6 exams are important components of the securities industry. They give customers a level of confidence that the professionals with whom they work are well versed in financial rules, regulations and other important considerations.
While most investment professionals specialize in various segments of the financial services industry, each professional is required to have a base level of knowledge.
Considerations
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Taking either exam is a significant undertaking. There are review courses; the most well known and utilized is Kaplan Financial, which provides in-person reviews and practice exams.
The Series 6 review course is a half day, and the Series 7 review course is five full days, which illustrates that the Series 7 is a much more extensive exam covering many more financial products and situations than the Series 6.
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