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 investment advisors can conduct business.
Two of the most popular are the Series 6 and Series 7 multiple-choice exams. The Series 6 license allows a representative to sell only a limited set of investment products, whereas the Series 7 license allows a 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 135 minutes long and carries a passing grade of 70%. The 100 scored exam questions are broken into for section called functions.
- Function 1 deals with regulatory fundamentals and business development and is allocated 22 questions.
- Function 2 has 47 questions and focuses on evaluating customers' financial information, identifying investment objectives, providing information on investment products and making suitable recommendations.
- With 21 questions, Function 3 concentrates on opening, maintaining, closing and transferring accounts and retaining appropriate account records.
- Function 4 has 10 questions that center around obtaining, verifying, and confirming customer purchase and sale instructions.
Upon successful completion of the exam, representatives are qualified to solicit, purchase and sell certain security products. These products include open-end mutual funds, variable annuities, variable life insurance, unit investment trusts, and municipal fund securities—products commonly sold by financial planners.
Holders of the Series 6 license are not permitted to sell corporate or municipal securities, direct participation programs, and 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 broken into two, three-hour segments and contains 260 questions, of which 250 will count toward the final score. The passing grade for the Series 7 exam is 72%.
The Series 7 license enables financial advisors to engage in buying and selling virtually all securities-related investment products. These products include common and preferred stock, stock options, and government and corporate bonds. This examination is the license required for stockbrokers.
The Series 7 exam is intended to set a common competency level by which all registered stock brokers in the industry conduct business. Completion of the Series 7 exam is a prerequisite for many other securities licenses.
- 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.
- However, beginning in October 2018, unsponsored individuals will be able to take the new Securities Industry Essentials Exam (SIE).
- 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.