As a financial professional, you have many options – and some requirements – when it comes to services that you offer. You may be content with being an insurance professional, or perhaps you want to offer investment products to your clients. The thing is, you can’t just wake up one day and decide to do these things – they require specialized licenses and exams. If you’re several years out of college, your study habits may be a little rusty. That’s why we’ve put together these study tips for financial advisors and agents, so you can expand your horizons with less stress about passing.
Different Exams & Licenses
Before you sign up for any cram sessions or tutoring lessons, it’s important to understand the distinctions between each exam and the license it awards. Consider your goals and what services you would like to provide for your clients, and then pursue the license(s) that will allow you to do so. In this post, we’ll be talking about four of the most common licenses: series 6, series 7, series 63, and series 65.
Series 6 License
The Series 6 license allows individuals to offer certain investment products, like mutual funds and variable annuities, to their clients. Professionals holding only the Series 6 license are not able to offer individual stocks or bonds. You must be sponsored by a registered member of FINRA to take the Series 6 exam, and as of October 2018, you must also pass the Securities Industry Essentials (SIE) exam to obtain your Series 6 license. Upon passing the exam and affiliating with a FINRA member firm, the Series 6 license remains active as long as you remain affiliated with a FINRA-registered firm (and a two year grace period to re-register upon leaving a firm without retesting) and comes with a few continuing education requirements.
Series 7 License
Like the Series 6, the Series 7 license is a corequisite of the SIE exam and requires a sponsor. The Series 7 exam is also known as the General Securities Representative Qualification Exam (GS) It is administrated by FINRA. The Series 7 license is more comprehensive than the Series 6, and it allows individuals to offer various investment products, including mutual funds and variable annuities (even if they do not already hold a Series 6). This does not include commodities, some municipal securities, or life insurance. Because it covers more ground, the Series 7 is considered by some more difficult to obtain.
Series 63 License
Before an individual can test for their Series 63 license, they must first obtain their Series 6 or 7 license. The Series 63 is required by most states for any financial advisors/representatives who want to do business within their borders. The series 63 was created by the North American Securities Administrators Association, or NASAA.
Series 65 License
Finally, the Series 65 is another license to offer fee-based products (as opposed to commission based products). It covers things such as economic factors, investment vehicle characteristics and recommendations, and current laws and regulations. Upon passing affiliated your the Series 65 license you would then be considered an Investment Advisor Representative. You do not need a member-firm sponsor to take the Series 65 or 63 exams. Some CPAs and CFPs may be eligible to have their exam requirement waived.
Study Tips & Test Prep
There are many resources out there for those preparing to take a licensing exam. For example, NASAA offers study guides for the Series 63 and 65 exams (and the Series 66), and FINRA offers similar resources, including practice tests.
Perhaps the most important step you can take is making a plan. Decide when you want to take the exam and create a study schedule to help you reach that target date. Once you’ve decided on your study plan, hold yourself to that routine. It’s like going to the gym – once you get in the habit of sitting down to study at a certain time every day, it gets easier to actually do it.
Once you’ve worked out when to study, it’s time to focus on what to study.
Most experts suggest that, rather than trying to memorize questions and answers, you should dedicate your efforts to really digesting the material. Understanding the concepts on a deeper level will help the information stick longer, so you can apply it to your practice down the road.
It’s also important that you prepare yourself for the actual test taking. Each of these exams requires a substantial sitting time – remember the SATs? You need to be ready to spend several hours on the exam and make the most of every minute. If you finish early, go back over the questions you were less confident in.
These are just some general tips for studying, no matter what you’re studying for. If you feel that you’ll need additional help (and many aspiring advisors do), check out some of these tools.
1) Kaplan Financial Education
Kaplan is considered by many to be the premiere licensing exam preparation tool. They offer study guides, practice exams, and other resources for all sorts of securities and insurance licenses. The practice tests and question bank can help you get a more concrete idea of what specific topics the exams will address, so you can better prepare yourself. (Note: Impact currently offers a discount for qualifying financial professionals.)
2) Pass Perfect
Similar to Kaplan, Pass Perfect is a preparation platform offering classes for different securities licenses, including the SIE.
YouTube is often an under-utilized study tool. It may surprise you, but a 2018 study by Pew showed that 51% of users say they visit YouTube to learn new things, like how to tie a tie, recipes, even car maintenance. There are hundreds of videos to help individuals prepare for licensing exams. Video content can help make the material easier to understand, and it can give you a new, less technical perspective on confusing concepts.
Becoming a financial professional is serious business, and the licensing exams and requirements should be taken just as seriously. Each exam takes legitimate and diligent preparation, but with a little effort, you’ll be on the road to success.