Series 6 Exam vs. Series 7 Exam: An Overview
The Financial Industry Regulatory Authority (FINRA) offers a variety of licenses that must be obtained by passing examinations before registered representatives or investment advisors can conduct business. Two of the most popular are the Series 6 and Series 7 exams. The Series 6 license allows a representative to sell only a limited set of investment products, whereas the Series 7 license allows a registered representative to sell a wider variety of securities.
Series 6 Exam
The Series 6 exam—officially, the Investment Company and Variable Contracts Products Representative Qualification Examination—is a multiple-choice test with 50 items. 70% or better is required to pass. Upon successful completion of the exam, representatives are qualified to solicit, purchase, and sell certain security products.
- A self-regulatory organization or a FINRA-member firm—such as a brokerage—must sponsor a candidate who wants to take these exams.
- To schedule an exam, the sponsoring firm files the Uniform Application for Securities Industry Registration or Form U-4 with FINRA, acting as Appropriate Signatory.
- Exam applications without sponsorship are rejected.
- The SIE exam includes questions common to the Series 6 and Series 7.
- Upon passing the exams and registering with FINRA through the sponsoring firm, the candidate is granted a license and becomes a registered representative.
Candidates must be affiliated with and have sponsorship from a FINRA member firm before registering for the exam. Series 6 questions are broken down into four sections related to job functions.
- Function 1 deals with regulatory fundamentals and business development and is allocated 12 questions.
- Function 2 has 8 questions and focuses on evaluating customers' financial information, identifying investment objectives, providing information on investment products, and making suitable recommendations.
- With 25 questions, Function 3 concentrates on opening, maintaining, closing and transferring accounts and retaining appropriate account records.
- Function 4 has 5 questions that center around obtaining, verifying, and confirming customer purchase and sale instructions.
After successful completion of the exam, Series 6 licensed representative can recommend open-end mutual funds, variable annuities, variable life insurance, unit investment trusts, and municipal fund securities—products commonly sold by financial planners. However, holders of the Series 6 license are not permitted to sell corporate or municipal securities, direct participation programs, stocks, or options.
To conduct business in annuity or insurance products, a representative must also pass a state life insurance examination. Common jobs utilizing the Series 6 license include financial advisors, retirement plan specialists, investment advisors, and private bankers.
Series 7 Exam
The Series 7 is officially called the General Securities Representative Qualification Examination. It is a multiple-choice exam, with 125 items, and lasting 3 hours and 45 minutes. The passing grade for the Series 7 exam is 72% or higher. Like the Series 6, it includes four functions:
- Function 1 pertains to seeking business for a brokerage firm from customers and potential customers.
- The second function relates to opening accounts after assessing a customer's financial background.
- Function 3 covers information about investments, suitable recommendations, transfers of assets, and record keeping.
- The fourth function relates to doing transactions.
The Series 7 license allows financial advisors to engage in buying and selling virtually all securities-related investment products. In addition to everything covered under the Series 6 exam, products include common and preferred stock, stock options, and bonds. It is the examination required for stockbrokers and is a prerequisite for many other securities licenses.