Break the financial securities license

Therefore, you have decided to sell your investment. Whether you want to become a registered representative (RR) or investment adviser, the first step in any process is to obtain the appropriate securities license. The required license depends on many factors, such as the type of investment to be sold, the method of compensation, and the range of services to be provided. In this article, we will study the different types of licenses and show you how to determine which license is right for you.

Key points

  • In order to market and sell investments professionally, individuals must obtain a securities license.
  • What kind of license you need depends on what kind of products you want to sell, how you want to be compensated, and what kind of services you want to be able to provide.
  • The Series 7 license, also known as the General Securities Representative (GS) license, has the broadest coverage and allows the holder to sell almost all types of securities.
  • Other common licenses managed by FINRA include Series 6 and Series 3.
  • The North American Securities Administrators Association (NASAA) oversees the licensing of Series 63, Series 65, and Series 66.

FINRA license details

The Financial Industry Regulatory Authority (FINRA) is responsible for overseeing all securities licensing procedures and requirements. This self-regulatory organization administers many of the exams that must be passed to become a licensed financial professional. It also performs all related disciplinary and record keeping functions.

FINRA provides several different types of licenses required by representatives and regulators. Each license corresponds to a specific type of business or investment. Although there are several licenses for specific types of securities, most representatives and consultants usually obtain three general licenses:

The Financial Industry Regulatory Authority (FINRA) oversees all securities licensing procedures and requirements, and administers many of the exams required to obtain licenses.

Series 6

Series 6 licenses are called limited investment securities licenses. It allows its holders to sell “packaged” investment products such as mutual funds, variable annuities and unit investment trusts (UIT). The Series 6 exam is 135 minutes long and covers basic information about packaged investments, securities laws and ethics.

Insurance agents who sell any kind of variable products also need to obtain this license, because securities constitute the underlying investment in these products. In addition to having obtained the Series 6 license, the representative responsible for overseeing the Series 6 license must also obtain the Series 26 license.

Series 7

The Series 7 license is called the General Securities Representative (GS) license. It authorizes licensees to sell almost any type of personal securities. This includes common stock and preferred stock; call and put options; bonds and other personal fixed income investments; and all forms of packaged products (except products that require a life insurance license to sell). Series 7 The only major types of securities or investments that the licensee is not entitled to sell are commodity futures, real estate and life insurance.

The Series 7 exam is by far the longest and most difficult exam of all securities exams. The duration is 225 minutes, covering all aspects of stock and bond quotations and transactions; put options and call options; spreads and straddles; ethics; margin and other account holder requirements; and other related regulations.

Those holding this license are officially listed as “registered representatives” by FINRA, but they are usually referred to as stockbrokers. Many insurance agents and other types of financial planners and consultants also hold Series 7 licenses to facilitate certain types of transactions inherent in their businesses. The person in charge of the general representative must also obtain a Series 24 license.

Series 3

The Series 3 license authorizes the sale of commodity futures contracts, which are generally considered the riskiest publicly traded investments. Representatives with Series 3 licenses tend to focus on commodities and usually do little or no other business of any kind.

The Series 3 exam is approximately 150 minutes long and covers all forms of commodity trading, options, hedging, margin requirements and other regulations. One branch of this license is the Series 31 license, which allows representatives to sell managed futures (similar to a collective group of commodity futures for mutual funds).

NASAA license details

Not all securities licenses are managed by FINRA. The North American Securities Administrators Association (NASAA) oversees the licensing requirements for three key licenses:

63 series

The Series 63 license, called the Unified Securities Agency License, is required by every state and authorizes the licensee to conduct business in that state. All Series 6 and Series 7 licensees must also hold this license. The provisions of the Uniform Securities Law are tested in a 75-minute exam.

Although the test is much shorter and covers less material than the FINRA exam, it is known to ask “technical” questions, forcing candidates to clearly distinguish which transactions and circumstances are permitted and which are required by the rules. The test also contains some experimental questions that NASAA uses to measure future relevance.

65 series

Anyone who intends to provide any type of financial advice or services on a non-commission basis needs a Series 65 license. Financial planners and consultants who provide investment advice on an hourly fee fall into this category, as do stockbrokers or other registered representatives who handle managing capital accounts.

The examination time for this license is 180 minutes and covers the rules and regulations related to registered investment advisors, as well as various investment tools and disciplines, economics, ethics, and analysis. The Series 7 exam also covers most of the materials, because many consultants who take this exam do not have, and may never get a Series 7 license, so you need to be exposed to the investment materials covered in it.

66 series

The 66 series are the latest exams offered by NASAA. Essentially, it combines the series 63 and 65 exams into one 150-minute exam. This test does not include investment materials, as the Series 66 license is only available to candidates who have obtained a Series 7 license.

Get results

Most securities exams administered by FINRA and NASAA have a passing score of 70%, but series 7, 63, and 65 have a passing score of 72%, and series 66 have a passing score of 73%. Now, all exams are conducted through computers at approved invigilator exam locations.

Broker sponsorship and RIA requirements

Once all relevant securities tests are completed and the passing grade is obtained, the licensee must register its securities license with an approved broker-dealer, which will hold its license and supervise its business (in exchange for part of the commission income). Generally speaking, if they have less than $25 million in assets under management, those who intend to present themselves to the public as a Registered Investment Advisor (RIA) must be registered in the state in which they do business. The location of RIA’s main office and the number of assets under management determine whether RIA must be registered with the SEC. The registered investment adviser does not need to be associated with the broker-dealer.

Frequently Asked Questions about Securities Licenses

What is a securities license?

Anyone who wants to market and sell investments needs a securities license. The specific type of license depends on the type of investment the person wants to sell, how they expect to be paid, and the level of service they want to be able to provide customers.

How do you obtain a securities license?

To obtain a license, an individual first needs to pass the Securities Industry Fundamentals (SIE) exam through FINRA. Next, you need to get sponsorship from a FINRA member company. Some companies will pay for courses and exams. Then, you must register, study and pass the FINRA license exam.

What is a series 7 securities license?

The Series 7 license or General Securities Representative (GS) license allows the holder to sell almost all personal securities, including common stock and preferred stock, call and put options, bonds and other fixed income. Exclusion list: commodity futures, real estate and life insurance.

What is the cost of obtaining a securities license?

The fee for the SIE exam is $60.In order to obtain any securities license, one must pass the SIE. The exam fee for Series 6 is US$40; Series 7 is priced at US$245; Series 63 is priced at US$135; Series 65 is priced at US$175; and Series 66 is priced at US$165.There are other costs associated with obtaining a license, such as the cost of study courses to prepare for the exam.

What kind of job can I find if I hold a securities license?

The securities license allows you to promote and sell investments. Depending on the license you hold, you may work as a registered representative or investment consultant.

Bottom line

Most financial and investment companies that hire or train new consultants will include a mandatory licensing program in their training packages. In most cases, the company will mandate which licenses must be obtained in order to sell the company’s products and services. Those who decide to start their own business still need to meet the licensing requirements of their chosen profession; the only real freedom of choice lies in choosing a profession.


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