Big changes are coming to the qualification tests for a variety of occupations in the financial services industry, formerly known as the Series exams. Back in 2015, Financial Industry Regulatory Authority (FINRA) took a look at its testing structure and decided to streamline by consolidating the fundamental knowledge shared across several of the Series exams into a single Securities Industry Essentials Exam (SIE). Candidates will then take an additional "top-off" exam related to the specific field they hope to enter.

How the Securities Industries Essentials Exam (SIE) Changes Qualification

The SIE has major structural impact on the qualification exams. The SIE will replace portions of all the existing exams, including the Series 6, Series 7, Series 22, Series 55/56 (now replaced by Series 57), Series 79, Series 82, Series 86/87 and Series 99. These exams will shrink in turn, becoming top-off exams that focus on the specialized knowledge that is needed for that particular qualification. Overall, this is clearly an effort to remove some of the duplicated information in the tests, but it also opens the door to a much more important change to the process of qualification, which is that you do not have to be associated with a FINRA member firm to take the SIE.

Under the current FINRA rules, you generally need to be employed or otherwise sponsored by a FINRA member in order to take the exams. The SIE removes this requirement, although you still have to be associated with a FINRA member firm to take the top-off exams. This means that, for the first time ever, an individual can choose to start on the path towards a FINRA qualification on their own. There is a lot of speculation as to how this will affect people looking to get into the financial industry, but it is safe to say that passing your SIE prior to looking for a job may give you an edge as the prospective employer then only needs to sponsor the top-off exam to get you qualified for a particular role. (For further reading, check out Financial Career Options For Professionals.)

Top-off exams will be offered for all of the following representative categories:

  • Investment Company and Variable Contracts Products Representative (Series 6)
  • General Securities Representative (Series 7)
  • Direct Participation Programs Representative (Series 22)
  • Equity Trader (Series 7, Series 62 and Series 57)
  • Investment Banking Representative (Series 79)
  • Private Securities Offerings Representative (Series 82)
  • Research Analyst (Series 7, Series 86, Series 87)
  • Operations Professional (Series 99)

FINRA appears to be supportive of the idea that recent graduates and people looking to get into the industry should take the SIE on their own. They’ve made it more attractive by extending the validity of the SIE to four years, giving a generous window for people to then find a firm to sponsor the top-off exams. FINRA member firms will be able to see who has passed the exam via the Central Registration Depository (CRD).

When Will the SIE and Top Off-Exams Replace the Current Exams?

FINRA is in the process of getting Securities and Exchange Commission approval for the proposed changes. In their original SEC filings, FINRA targeted fall of 2016 to early 2017 for a rollout for their highest volume exams. This proved to be a bit optimistic. There have been several shifts in the scheduling, the most recent one resulting from requests from member firms and industry associations for more time to set their own processes in accordance with the new structure. The SIE and top-off exam rollout is now scheduled to take place October 1, 2018, and will be accompanied by the retirement of some of the low volume exams like the Series 62 and Series 42. FINRA will set the dates for the changeover to the SIE model in a further regulatory notice. (SEE: Finra Files Plan to Change Series 7 to the SIE.)

Originally, March 2018 was targeted for the implementation of the SIE and top-offs for Series 6, 7 and 79. As mentioned above, October 1, 2018, is now the date for the complete overhaul rather than a phased in approach. Adding to some of the confusion as part of this ongoing attempt to modernize, the Series 55 has been replaced by the Series 57 although it appears in the original notice for the SIE updates. That update is just a standard part of FINRA reviewing and tweaking curriculum rather than a part of this overhaul of the core knowledge.

With the caveat that things are still not entirely confirmed, here is a tentative timeline with details on the expected changes and the number of questions on the exams:

Exam

Date for Integration

Proposed Exam Structure

Total Number of Questions

Series 6

October 1, 2018

SIE and Series 6 Top Off

SIE (75) + Series 6 Top Off (50)

Series 7

October 1, 2018

SIE and Series 7 Top Off

SIE (75) + Series 7 Top Off (125)

Series 22

October 1, 2018

SIE and Series 22 Top Off

SIE (75) + Series 22 Top Off (50)

Series 55 (Series 57)

October 1, 2018

SIE and Series 55 (57) Top Off

SIE (75) + Series 57 Top Off (50)

Series 79

October 1, 2018

SIE and Series 79 Top Off

SIE (75) + Series 79 Top Off (75)

Series 82

October 1, 2018

SIE and Series 82 Top Off

SIE (75) + Series 82 Top Off (50)

Series 86 and 87 (Research Analyst)

October 1, 2018

SIE and Series 86 and 87 Top Offs

SIE (75) + Series 86 (100) and 87 Top Off (50)

Series 99

October 1, 2018

SIE and Series 99 Top Off

SIE (75) + Series 99 Top Off (50)

How Does the SIE Affect Me?

If you already passed one of the FINRA exams and are currently registered as a representative, you will be considered to have passed the SIE already. If you passed one of the exams and are not currently registered, you may need to take the SIE depending on how many years elapse between now and your next registration. And, of course, if you passed the exam but your registration has lapsed, you will need to take the SIE and the new top off for that qualification before being reregistered. This is pretty much the same as it has always been except you would be taking two exams instead of one. In fact, the exams are being designed to take the same total time as previously. For example, the SIE and Series 7 top off exam will take the same amount of time as the current Series 7 exam. (Also see: Should You Add A Securities License To Your Qualifications?)

For member firms, the cost of the top-off exams is expected to be less than the current exams because content is being shifted to the SIE. So if an individual has passed the SIE prior to joining the firm, it is a good indication that the person already has the basic aptitude and wherewithal to pass a top-off exam. And, of course, the cost of getting that individual registered is reduced because he or she paid out of pocket for the SIE. All of which will likely help to make a candidate more attractive to the firm.

Bottom Line

If you are already sponsored to take one of the qualification exams, go for it. These changes won't impact you at all. If you expect to be sponsored in the future, the overall content you need to master won’t change even though you have to do it in two chunks. If, however, you are not currently sponsored or in the industry, the SIE will open the door for you to start down the path of a financial career without having to associate with a member firm first. This change gives you a choice you didn’t have before.

FAQs

If I had a Series 7 and it lapsed, do I have to take the new SIE or am I grandfathered?

Right now, if your license lapsed—if two years passed since you were last registered—you have to retake the Series 7. In the future, you would only need to retake the SIE if four years elapsed since you last passed it or were last registered. The Series 7 top-off exam would still lapse after two.

Is there an order for taking the SIE and the top off? Should I take them together or separately?

The SIE is designed to come first, but the SIE and its associated top-off exams can also be completed over the same time period. In fact, you can take SIE and Series 7 top off on the same day just like the current Series 7.

Can I become a registered representative without a corporate sponsor, or just take the SIE Exam?

You can only take (and hopefully pass) the SIE. You need to take a top-off exam in order to become a registered representative, and you cannot take a top-off exam without a corporate sponsor.

Will the new SIE be harder or easier than the old Series 7?

The overall content covered over the two tests—the SIE and the Series 7 top off exam —will be nearly identical to the current Series 7.

How long is the SIE valid and does it have to be renewed?

The SIE is valid for four years. It needs to be renewed if four years have passed since you were last registered.

What is the wait time if I fail?

The wait time is 30 days for the first and second attempts, six months if you fail a third attempt.

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