Those who are interested in a career as a securities trader must take and pass the series 6 and 63 license exam. The series 6 license is the minimum requirement for brokers to sell annuities and mutual funds. The larger Wall Street banks require that all of their brokers a series 6 license at a minimum. However, the larger firms also require their brokers to hold the series 7 license in combination with the series 6. This license allows brokers to sell individual stocks along with mutual funds and variable annuities.
The series 63 exam tests an individual’s knowledge with relation to securities regulations, compliance issues, ethical business practices and how a brokerage operation is required to operate based on the rules set forth by the Securities and Exchange Commission. Most states in U.S. require bank employees to hold this license if they are selling any type of security. The license is used to demonstrate the employee’s competence when it comes to best business practices.
It is important to understand who is required to hold a license and who does not need a license. Individuals who wish to purchase securities through a brokerage house or online stock trading company are not required to hold any license. They may purchase equities however they see fit. The actual trader who executes the transaction is the person who is required to hold the license based on the type of transaction. If a customer is looking to purchase a large block of mutual fund shares, the trader who works for the brokerage house must hold a series 6 license. The same holds true for customers wishing to purchase individual stock, the trader who executes the transaction must hold a series 7 license. It is often times very confusing for individual investors who believe they need a license in order to execute a purchase. The fact is, individuals who are not employed by a broker/dealer do not need a license to execute trades.
One final note of very high importance, any individual wishing to obtain any type of license must be employed and sponsored by the brokerage house. Individuals cannot take the exams unless the company that they work for gives them a sponsorship. Therefore, individuals who are looking to obtain a license, but do not work for a registered broker are unable to take the exam. The National Association of Securities Dealers provides valuable information on the guidelines behind the series 6 and 63 license exam.
The insurance and financial securities industry requires licensing for several reasons. Most importantly, it is for the protection of the customer and the prevention of scams run on vulnerable people. Licensing includes financial guidelines and ethical standards that are regulated by FINRA. There are quite a few licenses available covering all the specific areas in insurance and financial securities. Training is available for all these licenses. Securities license training is available and very accessible to help you move toward your financial services goals.
However, it is important to determine what license you need based on your area of expertise. Some securities licenses require you to be sponsored by your employer or potential employer in order to obtain your license. How do you get this training?
Training is offered in one of three ways. Online courses, self-study or a classroom setting are the three options available to you. The choice is based on your individual situation. If you are a person with a good amount of self-discipline and have few distractions, self-study is a great option. If you need some type of structure, the online class is an option. Or, if you need the structure from the classroom setting, this is the third option.
For companies that have several employees that require licensing, custom training is available. This would fall under the classroom setting. Training centers are also available for the classroom training.
The licenses being offered have pre-requisites for each license number. Those pre-requisites need to be reviewed to make that all your bases are covered before you obtain the training. The series of licenses are as follows:
- Series 3–4, 6-7, 9-11
- Series 24, 26–28
- Series 31-32, 37–38
- Series 51, 53, 55, 56
- Series 62-63, 65-66
- Series 79, 82, 99
Each series has a specific knowledge base in the financial securities arena. You can review the information online to find out more information in the area that interests you. You can also search the official FINRA site for even more detailed information.
The license requirement establishes all financial securities agents as authorized to do business in this arena. The regulations offer the public security and reassurance that there are standards to be followed when others are responsible for investing their money. The regulations and standards for licensing offer agents and brokers the guidelines that must be kept for them to work in the arena. This lets the public know that the law protects their investments.
For employer sponsorship, it is important to keep in mind that if the company is paying for the training, there may be terms of commitment once you receive your license. Should you break that commitment, you may be responsible for repayment to the company for the training.
The options available to obtain your securities license training are plentiful. They provide flexibility for those who need it as well as a study guide for the final exam. With these choices, you can move forward with your goal to obtain the license and further your career.
The financial industry is a vital pillar supporting the US as well as world economy. Trades worth trillions of dollars are transacted every day. There is need for supervisory regulation to ensure corporate clients and individuals do not lose investments in dubious schemes. This is why the Financial Industry Regulatory Authority (FINRA) was set up to address these challenges. A securities license is the key that will open the investments door. It is not a straightforward affair as there are factors which determine the type of license required. The following guide will take you through the importance of securing a securities license and how to get one.
Importance of Licensure
To begin with, you will be able to handle financial instruments as a broker or dealer. Without licensure it would be impossible to get an opening in the financial industry. The securities license shows that you have extensive knowledge of security markets operations, securities laws, as well as financial products. An individual with such knowledge is capable of handling investments properly. This means being able to analyze financial market fundamentals and investment risk factors. Some of the investment tools you will be handling include stocks, open-end funds, options, and bonds. There are many brokerages and security firms ready to employ individuals with the right skills in addition to licensing. Salaries for new entrants hover around $50,000 every year. The annual pay package if you stick around for several years can be as high as $175,000.
How to Get a Securities License
You can only get a securities license by way of sponsorship from a broker-dealer. In addition to the sponsorship, you will have to undergo rigorous preparation before sitting for the licensing exam. Even after acquiring the license, it is advisable to keep up to date with continuous education. The majority of employers fall into two broad categories, retail and independent. Licensing requirements differ with independent broker-dealers taking a more liberal approach. FINRA oversees the administration of exams and licensing procedures. There are three main licenses that every person working with financial instruments must obtain. These are the limited-investment securities license (series 6), the general securities representative license (series 7), and series 3 license. You should also take note that FINRA does not administer all licenses. The North American Securities Administrators Association (NASAA) also offers some key licenses. These are the uniform securities agent license (series 63), series 65, and series 66 licenses. You must achieve a score of 70 percent in both FINRA and NASAA examinations to be licensed. However, the pass rate for series 63, 65 and 66 is a little bit higher. You will have to score 72 percent, 72 percent and 75 percent respectively to have any chance of receiving licensure. After passing the requisite exams, you have to register the securities license with an approved a broker-dealer.
The Series 6 license is a credential in the financial and investment industries. It allows individuals to sell mutual funds, variable annuities, and insurance products. This expertise helps people to invest their money wisely and to save money for retirement. A person with the Series 6 license is an investment professional who works in a variety of companies.
Passing the Exam
The official name of the Series 6 license is the Investment Company/Variable Contracts Products Limited Representative license. For individuals who want take the licensing exam, they have to have a sponsor. In most cases the sponsoring company is the individual’s employer.
There are many ways to study for the exam. There are books, DVDs, online courses, and classroom instruction. Many sponsoring companies offer on-site training for employees scheduled to take the exam. Topics covered in the coursework are mutual funds, retirement planning, variable annuities, insurance products and taxation law. FINRA (Financial Industry Regulatory Authority) administers the exam through testing centers. The exam consists of 100 questions. A passing score is 70. Once a person passes the exam, he registers with FINRA as a limited representative. As a limited representative he is limited in what he can sell. Unlike a stockbroker, a limited representative cannot sell stocks, bonds or other securities.
A person with a Series 6 license has several job opportunities available. Since he needs a FINRA-member company to sponsor the exam, his first job as a licensed investment professional is with the company he is already working for. However, once a person has the license, he has many more options.
After studying for the exam, a representative has a better idea of what types of investments he prefers to deal with. It may be mutual funds, annuities or insurance products. The limited representative can then look for jobs that allow him to focus on selling these investment instruments.
There are several hundred mutual fund companies available. There is also a large number of insurance companies. Financial planners may employee those with a Series 6 license. Large brokerage houses that sell mutual fund or annuities are another choice. For representatives who enjoy writing, there are many investment publications that prefer to hire writers with licenses. Book publishers also seek writers with expertise to ghostwrite entire books or chapters of books.
For individuals with a Series 6 license, there are many career paths available. Many companies want licensed professionals who are knowledgeable and trained in mutual funds, annuities and insurance products.
One important benefit of a Series 6 license offers confidence in a knowledgeable representative who manages the investment monies of clients. A financial representative needs to know how the securities markets work. The SEC believes that financial representative have a duty to make the best decision for his or her clients.
This license serves not only to educate and train the fiduciary agent but also insures your funds are not mishandled. It is imperative to understand the inner workings of security trading on the various exchanges.
FINRA stands for the Financial Industry Regulatory Authority. This agency holds the responsibility for governing business between brokers, sellers and the public investors. This regulatory body is a combined agency of the National Association of Securities Dealers and the regulation committee of the New York Stock Exchange. FINRA issues the license for those interested in selling financial products such as mutual funds and variable annuities.
The license exam consists of 100 questions. The multiple-choice exam is 135 minutes. The test is given Monday through Saturday at Prometric Test Centers. The exam covers these topics:
- Mutual Funds
- Variable Annuities
- Retirement Plans
- Insurance Products
- Investment Policies
- Securities Markets and Regulations
- Customer Accounts and Orders
An advantage of holding the Series 6 license is detailed knowledge of the areas of marketing as well as operating and servicing customer accounts. Detailed knowledge of the financial products, securities and tax laws, securities markets and economics is imperative to ensure that a broker will handle investments properly.
An important fact to note is that a person must be sponsored by a financial company that is a member of FINRA in order to sit for the license. This means that clients are not subjected to just anyone who wants to sell financial products.
This license offers credibility, prestige and responsibility. The responsibility of analyzing and monitoring client funds has great rewards. The salary for someone new to the industry is over $50,000 per year. After several years, income can reach as high as $175,000 per year.
The Series 6 license is an important part of the securities industry that gives clients confidence in the financial professionals. While the integrity of any person is not guaranteed to be above board, this license does instill a level of confidence for clients who invest in financial products. Whether you are looking to take the exam or need information on what is required of those who sell financial products, the Series 6 license is very important.
To be licensed to sell mutual funds and variable annuities, you will need to take and pass the Series 6 and 63 exam. The first is mandatory; no matter what state you live in, you must take this test to be entitled to sell mutual funds and annuities. The series 63 exam is not mandatory in all states, but the common practice is that the company you work for will require you to do it.
In the series 6 course you will learn and be tested on stocks, investment banking, securities markets, taxes, retirement plans, debt securities, variable annuities, variable life insurance and Self-Regulatory Organizations. The exam itself is made of 100 multiple choice questions and has a passing score of 70%. You will be allowed 2 hours and 15 minutes to complete the exam. To take this exam you must be sponsored by a financial company that is a Self-Regulatory Organization or is a member of FINRA (Financial Industry Regulatory Authority).
To pass the series 63 exam, you must familiarize yourself with the Uniform Securities Act. You will also be required to be familiar with the Statements of Policy and Model Rules adopted by NASAA. You will have a total of 1 hour and 15 minutes to complete 65 questions of the Series 63 exam. It has a passing grade of 72%. Some states require you to take this exam in order for your Series 6 license to be activated.
When taking the exam, being careful not to make the simple mistakes could mean the difference between passing and having to take the exam again. Carefully read the questions. Be sure that you have understood what is being asked before going on to the multiple choices.
Practice, practice, practice. Take sample tests before you sit down for the real thing. With practice you will familiarize on the way the questions are structured. You will know what to look out for and how to answer the questions well.
As you study, make sure you pay the definitions close attention. Also, familiarize yourself with words that are new to you. And as you take the exam, remember not to pick an answer you have never heard of. The wording of the questions and the multiple choices can be tricky but with enough study, this should not be a problem for you.
Be wary of time. Some people are unable to finish their exam because they take too long to answer one question and leave little time to complete the rest. Time yourself as you do your practice tests.
To be entitled to sell mutual funds and variable annuities, you will be required to take the Series 6 and 63 exam. You can pass the exams the first time if you study well and practice as much as you can before the actual exam day. When you are sitting for the exam, go through the questions carefully and be mindful of how much time you have.