Securities Licensing in the US: What external applicants need to know

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A securities license is a license needed if someone wants to market and sell insurance policies tied to investments. The type of license allows the sales of different types of investments to be sold. The amount which is expected to be paid and the level of service they are able to provide to their clients. The two types of securities licenses needed are those administered by the Financial Industry Regulatory Authority (FINRA) and those from the North American Securities Administrators Association (NASAA). These are both required for financial service professionals. However, you will need multiple securities licenses to be able to market and sell securities.

Pre-License Exam Requirements

Before taking a securities licensing exam, the Securities Industry Essentials (SIE) exam is necessary. This exam is a basic FINRA test which tests basic knowledge of the securities industry. The prospective license holder would then have to be sponsored by a firm, company, or organization that is a member of FINRA. This is before registering for the Series 6 or Series 7 exams. Individuals working in the financial services industry should speak to their employer about registering for an exam. Some times many employers will cover the necessary fees.

Series 6

The Investment Company and Variable Contracts Products Representative Qualification Examination, known as the FINRA Series 6 license, allows the license holder to include mutual funds within the investment and insurance products that they offer. This license is often the first license that financial service professionals obtain. To register for the Series 6 License exam, a sponsorship by a FINRA-member firm, company, or organization is needed. The exam, which costs $40, covers 50 scored questions and covers four of the main job responsibilities that a Series 6 License holder is expected to fulfil. Such as: getting new business and clients, determining clients’ investment goals and financial profile to recommend accounts, providing investment recommendations, transfer assets, and maintain records, and processing transactions in accordance with customer purchase and sale instructions.

Series 7

The General Securities Representative Exam, known as the FINRA Series 7 License, supersedes the Series 6 license. This is because it is a more comprehensive securities licensing. This license allows holders to market and sell more securities-based products such as public offerings and/or private placements of corporate securities (stocks and bonds), rights, warrants and mutual funds to name a few. The Series 7 exam, which costs $245, includes 125 scored questions, and although the Series 7 license has the same job functions as the Series 6 license. The exam is much more comprehensive and requires much more preparation.

Series 63 and 65

To take either exam, it is required to be sponsored by a FINRA-member firm, company or organization. The Series 63 licensing exam, by NASAA, focuses on state laws and regulations. This licenses securities agents to take and process orders. This often compliments the Series 6 license, and is most common for bankers, insurance agents, and other financial services professionals. The exam, which costs $135, consists of 65 questions, and a score of at least 43 is required to pass the exam.

The Series 65 licensing exam, also by NASAA, is required for those who want to offer investment advisory services and to give advice. The exam covers state regulations and is more comprehensive than the Series 63 licensing exam. The exam, which costs $175, consists of 140 questions and requires a score of at least 94 to pass the exam.

Series 66

The Uniform Combined State Law Exam, known as the Series 66, allows you to skip the Series 63 and Series 65 licenses. Even though the Series 66 takes the place of the Series 63 and Series 65, the holder would still have to pass the Series 6 or Series 7 exam to sell securities licensing. The Series 66 license allows the holder the right to perform the functions offered by the Series 63 and Series 65 licenses. As well as the ability to take and process orders, and to give advice on securities-related products. The exam, which costs $165, has 100 scored questions. Also, it requires at least a score of 73 to pass the exam.

Being Fully Licensed

All licenses open doors for securities licensing holders, but to be fully licensed to sell and market mutual funds. Also, for variable annuities, variable life insurance, unit investment trusts, and municipal fund securities. You would need a Series 6 and a NASAA securities license. It is most common for insurance agents to obtain the Series 6 and Series 63 licenses.