What Is the Series 6?
The Series 6 is a securities license entitling the holder to register as a company's representative and sell certain types of mutual funds, variable annuities, and insurance. Holders of the Series 6 license are not authorized to sell corporate or municipal securities, direct participation programs, and options. With Series 6, an individual can purchase or sell certain types of mutual funds, variable life insurance, municipal fund securities, variable annuities, and unit investment trusts.
- The Series 6 is a securities license entitling the holder to register as a company's representative and sell certain types of mutual funds, variable annuities, and insurance.
- Candidates must pass the Series 6 exam to obtain a Series 6 license, and the Securities Industry Essentials (SIE) exam is a corequisite for the Series 6 exam.
- Candidates must be sponsored by a member of FINRA or a self-regulatory organization (SRO) to take the exam.
- Series 6 exams were traditionally taken in person at test centers, but FINRA began offering them online in 2020.
- The greatest disadvantage of a Series 6 license is that holders are not authorized to sell exchange traded funds (ETFs).
Understanding Series 6
The Series 6 is a license sought by professionals in the financial services industry. Jobs utilizing the Series 6 license include financial advisors, retirement plan specialists, investment advisors, and private bankers. In order to obtain the Series 6 license, candidates must pass the Investment Company/Variable Contracts Products Limited Representative (Series 6) exam. The Securities Industry Essentials (SIE) exam is a corequisite for the Series 6 exam. The SIE does not require firm sponsorship.
The Financial Industry Regulatory Authority (FINRA) administers the Series 6 exam. It covers topics such as mutual funds, variable annuities, securities, tax regulations, retirement plans, and insurance products. A passing grade is achieved by correctly answering at least 35 of 50 questions within 90 minutes. Five additional questions are unscored for a total of 55 questions. The test costs $40, and it is administered via computer with no reference material allowed.
Candidates traditionally took Series 6 exams in person at Prometric test centers. However, FINRA began offering tests, including the Series 6 exam, online in 2020. Prometric also administered the online tests. However, candidates or their employers had to install specialized software on their computers and provide cameras. Note, however, that a Series 6 expires two years after employment unless under special circumstances such a military deployment.
Advantages and Disadvantages of Series 6
The Series 6 exam is often compared to the Series 7 exam. The Series 6 costs substantially less money and has a shorter test covering less material. However, a Series 6 license is all that some financial advisors, investment advisors, and retirement planners need. Such advisors may only need a Series 6 license if they just sell insurance, annuities, and certain types of mutual funds, not individual stocks.
The greatest disadvantage of a Series 6 is that holders are not authorized to sell exchange-traded funds (ETFs), or stocks and bonds, as they are considered corporate securities. That is a significant drawback because ETFs generally offer lower fees and are increasingly replacing mutual funds as the preferred investment vehicles among retail investors. Advisors and retirement planners who want to sell ETFs must obtain a Series 7 license, which requires taking a longer and more comprehensive exam that costs more money.
Requirements for Series 6
Candidates must be sponsored by a member of FINRA or a self-regulatory organization (SRO) to take the exam. There is no prerequisite for the exam, but the Securities Industry Essentials (SIE) exam is a corequisite for Series 6. Before Oct. 2018, the exam was 100 questions and didn't have the SIE corequisite.
Upon receiving a passing grade, candidates must then register with FINRA through their sponsoring firm in order to transact authorized securities. Holders of the Series 6 are considered limited representatives of their sponsoring firm. As a limited representative, they can sell certain types of mutual funds, variable annuities, and variable life insurance.
Series 6 Exam
As outlined by FINRA, the Series 6 exam covers four specific sections.
- "Seeks Business for the Broker-dealer from Customers and Potential Customers," which is 12 questions—covering 24% of the exam.
- "Opens Accounts After Obtaining and Evaluating Customers' Financial Profile and Investment Objectives" is eight questions—covering 16% of the exam.
- "Provides Customers with Information About Investments, Makes Suitable Recommendations, Transfers Assets, and Maintains Appropriate Records" is half the exam at 25 questions—covering 50% of the exam.
- "Obtains and Verifies Customers' Purchase and Sales Instructions; Processes, Completes, and Confirms Transactions" is five questions—covering 10% of the exam.
Licensees must fulfill continuing education requirements and receive sponsorship from a FINRA registered company to keep their Series 6 licenses.
FINRA’s continuing education program includes two elements: a regulatory element and a firm element. On the regulatory side, FINRA requires licensees to complete a computer-based training session within 120 days of the second anniversary of registration. FINRA also requires a computer-based training session every three years after that. The firm element requires broker-dealers to establish and maintain a continuing education program.