Whether you want to act as a registered representative (RR) or an investment advisor, the first step is obtaining the proper securities license. Determined by several factors, the required license depends on which investments are to be sold, the method of compensation, and the scope of services that will be provided.
Key Takeaways
- To market and sell investments, an individual must obtain a securities license.
- What license you need is determined by what kinds of products you sell, the type of compensation, and what kind of services you provide.
- The Series 7 license has the broadest reach, allowing holders to sell various securities.
- FINRA licenses include Series 6 and Series 7.
- The North American Securities Administrators Association (NASAA) oversees the licensing of Series 63, Series 65, and Series 66.
FINRA Licensing
The Financial Industry Regulatory Authority (FINRA) oversees all securities licensing procedures and requirements and performs disciplinary and record-keeping functions. This self-regulatory organization administers many exams for representatives and supervisors to become licensed financial professionals.
Each license corresponds to a type of business or investment, and three general licenses are commonly obtained:
Series 6
The Series 6 license is the limited-investment securities license. It allows its holders to sell "packaged" investment products such as mutual funds, variable annuities, and unit investment trusts (UITs). The Series 6 exam is 90 minutes long and covers information regarding packaged investments, securities regulations, and ethics.
This license is also required for insurance agents that sell variable investment products.Principals who supervise representatives holding a Series 6 license must obtain the Series 26 license in addition to the Series 6.
Series 7
The Series 7 license is the general securities representative (GS) license. Those who carry this license are officially listed as "registered representatives" by FINRA and referred to as stockbrokers. Many insurance agents and financial planners also hold the Series 7 license to facilitate transactions inherent in their businesses. Principals of general representatives must also obtain the Series 24 license.
Series 7 authorizes licensees to sell any individual security, including common and preferred stocks, call and put options, bonds, and other fixed-income investments.The only types of securities or investments that Series 7 licensees are not authorized to sell are commodities futures, real estate, and life insurance. The Series 7 exam is the longest and most difficult, covering all aspects of stock and bond quotes, put and call options, spreads and straddles, ethics, margin, and related regulations.
Series 3
The Series 3 license authorizes representatives to sell commodity futures contracts, considered the riskiest publicly traded investments. Representatives that carry the Series 3 license specialize in commodities. The Series 3 exam is approximately 150 minutes long and covers all commodities transactions, options, hedging, margin requirements, and other regulations. An offshoot of this license is the Series 31 license, which allows representatives to sell managed futures (pooled groups of commodities futures similar to mutual funds).
Exam Comparison
| Series 6 vs. Series 7 vs. Series 3 | |||||
|---|---|---|---|---|---|
| Exam | Purpose | Time Limit | Questions | Passing Grade | Cost |
| Series 6 | Investment Company and Variable Contracts Products Representative Exam | 1 hour 30 minutes | 50 | 70% | $75 |
| Series 7 | General Securities Representative Exam | 3 hours 45 minutes | 125 | 72% | $300 |
| Series 3 | National Commodities Futures Exam | 2 hours 30 minutes | 120 | 70% | $140 |
The Securities Industry Essentials(SIE) Exam is a FINRA exam for prospective securities industry professionals. To obtain a license following the SIE, the individual must be associated with a member firm to take licensing exams.
NASAA Licensing
Not all securities licenses are administered by FINRA. The North American Securities Administrators Association (NASAA) oversees the licensing requirements of three:
Series 63
The Series 63 license, known as the Uniform Securities Agent license, is required by each state where licensees conduct business. All Series 6 and Series 7 licensees must carry this license. The provisions of the Uniform Securities Act are included in the 75-minute exam.
Series 65
The Series 65 license is required for individuals providing financial advice on a non-commission basis. Financial planners, advisors, stockbrokers, and other registered representatives that provide investment advice for an hourly fee fall into this category. The exam is a 180-minute test covering the rules and regulations for registered investment advisors and various investment vehicles and disciplines, economics, ethics, and analysis.
Series 66
This Series 66 is the newest exam offered by NASAA. It combines the Series 63 and 65 exams into one 150-minute exam. This test contains no investment material, as the Series 66 license is only available to candidates already Series 7 licensed.
Exam Comparison
| Series 63 vs. Series 65 vs. Series 66 | |||||
|---|---|---|---|---|---|
| Exam | Purpose | Time Limit | Questions | Passing Grade | Cost |
| Series 63 | Uniform Securities Agent State Law Exam | 1 hour 15 minutes | 60 | 43% | $147 |
| Series 65 | Uniform Investment Adviser Law Exam | 3 hours | 130 | 92% | $187 |
| Series 66 | Uniform Combined State Law Exam | 2 hours 30 minutes | 100 | 73% | $177 |
Salary and Job Advancement
Securities, commodities, and financial services sales agents connect buyers with sellers. According to the U.S. Bureau of Labor Statistics, the median annual salary for these individuals was $76,900 as of May 2023 and this sector is projected to grow 7% from 2022 to 2032. Candidates commonly register their securities licenses with an approved broker-dealer, who holds licenses and oversees transactions, commonly in return for a portion of commission income.
Personal financial advisors help individuals manage theirmoney and plan their financial future. The median annual salary for personal financial advisors was $99,580 as of May 2023 with employment projected to grow 13 percent from 2022 to 2032.
Licensed professionals may work with or for registered investment advisors (RIAs). A registered investment advisor (RIA) isany person or firm that is registered with the U.S. Securities and Exchange Commission (SEC) or a state securities authority. The location of the RIA's principal office, as well as the number of assets under management, determine whether the RIA must register with the SEC.
How Do You Get a Securities License?
The Securities Industry Essentials(SIE) Exam is a FINRA exam for prospective securities industry professionals. To obtain a license following the SIE, the individual must be associated with a member firm to take a qualification 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 individual securities, including common and preferred stocks, call and put options, bonds, and other fixed income.
Do You Need a College Degree To Get Series 7?
A college degree is not required to obtain a Series 7 license, however, a sponsoring company may have educational requirements.
What Jobs Can You Get With a Securities License?
A securities license allows you to market and sell investments. Depending on the license you obtain, you might have a job as a registered representative, stockbroker, or investment advisor.
The Bottom Line
The majority of financial and investment companies that hire or train new advisors have a mandatory licensing program included in the training package. The company commonly mandates which licenses must be obtained to sell products and services.
