Introduction To The Series 65 Exam

By Peter Cherewyk AAA

The Series 65, officially known as The Uniform Investment Adviser Law Exam, is designed to test an individual's knowledge and ability to advise clients in the area of investing and discuss general financial concepts. If you have a basic understanding of finance, economics and investing you will have a huge head start, but various laws and regulations are also covered, making studying much harder. (If you are thinking about switching careers, check out 6 Steps To Successfully Switching Financial Careers.)
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Who Needs the Series 65?
Many financial firms require registered representatives to provide investment advice to current and potential clients. The series 65 tests the candidate's comprehension of financial concepts and qualifies them to give investing advice and charge a fee. Most state securities regulators have set the Series 65 as the minimum requirement to become an investment advisor representative (IAR).

Registered investment advisor firms (RIAs) require these representatives to interact with current and potential clients. So if you are currently looking for a career in a financial advisory position, the Series 65 could be an asset on your resume. If you do not have it yet it could be a requirement that you get it once you get hired on. It is also a less difficult test than the more comprehensive designations and certificates such as the certified financial planner (CFP) or chartered investment counselor (CIC). (To learn more about financial designations, read Financial Designations Aren't All Created Equal.)

Who Doesn't Need the Series 65?
Depending on the scope of your job in the financial field, a series 65 might not be necessary, or it may be insufficient. The series 65 gives the holder the ability to charge a fee for providing and discussing investment advice. If you are not charging a fee and you do not regularly provide advice on securities, then you most likely do not need to get your Series 65 license. But this is rarely the case.

Other certificates and licenses can be deemed sufficient training in place of the Series 65 and exempt the holders from having to take this exam. For example most states will exempt you from the Series 65 if you have the certified financial planner (CFP) certification, chartered financial analyst (CFA) designation, charter financial consultant (ChFC), personal financial specialist (PFS), or chartered investment counselor (CIC).

Also if you hold a Series 7 and a Series 66 most states will accept this as adequate training and not require a Series 65 exam. In rare occasions, a representative can apply for exemption from the Series 65 exam and still become an investment advisor representative, but 15 to 20 years of experience in the field might be necessary. It is important to note that you must be in good standing with the regulatory body and it is always necessary to check with the state regulations to ensure you are eligible for exemption. (For more one which designation is best for your career, read CFP, CLU Or ChFC - Which Is Best?)

Eligibility
You do not need to be employed by or sponsored by a Financial Industry Regulatory Authority (FINRA) member firm in order to register and take the series 65 exam. It will affect what form you need to fill out for registering. If you are sponsored by such a firm a Form U4 needs to be filled out and submitted. But if you are not employed by a member firm, you need to fill out a Form U10 to register. This exam is one of the more basic exams and does not require any other prerequisites to be eligible to write the exam.

Once registered you have 120 days to write the exam before you need to register again, this is called your exam window. If you fail, you can retake the exam after waiting 30 days. But if you fail three times you need to wait 180 days, after which you can register again. There is no limit to the amount of exams a candidate can take.

The Series 65 Exam Content
The exam is closed book and covers topics such as:

  • Economics and Business Information (14%): Economic cycles, financial reporting and types of risk
  • Investment Vehicle Characteristics (24%): Types of investments including fixed income, equity and other securities, and valuing these
  • Client Investment Recommendations and Strategies (31%): Types of clients, tax considerations, developing a client profile and applying your understanding of risk, and portfolio theory
  • Laws, Regulations, and Guidelines (31%): Federal Securities Acts, regulations, ethical behavior

Requirements and Passing
Again, the Series 65 exam is one of the few exams which does not require sponsorship by a FINRA member in order to take it. This is especially helpful when attempting to start your career in finance and investing or for building your resume.

Before the exam can be taken the individual candidate can file the Form U10 in order to register with the administering body (FINRA). Alternatively a candidate's firm can file a Form U4. Both can be done electronically on FINRA's website:http://www.finra.org.

The candidate answers 130 questions plus 10 pretest questions and has 180 min as a time limit. It is done electronically and the score is presented right after the exam, with a break down of the scoring in each section. To be considered a pass the candidate needs 72% correct which is 94 correct answers out of 130.

Bottom Line
The Series 65 Uniform Investment Adviser Law Examination is one of the exams required by many states in order to charge a fee for investment advice and services. It is meant to qualify the candidate to become an investment adviser representative. Other more advanced designations could be considered adequate, but this exam prepares you for working one on one with clients, and for getting into the financial industry. (To help you provide you with more direction, on your financial career path, check out Find Your Niche In The Financial Industry.)

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