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What Is a Registered Representative?


Registered representatives at work
By: Kaplan Financial Education
February 24, 2020

“Registered representative” is a term that describes someone who is licensed to buy and sell securities for clients and is sponsored by a firm registered with the Financial Industry Regulatory Authority (FINRA). Registered representatives are more commonly referred to as stockbrokers. This article explains what a registered representative does and details the difference between an investment adviser representative and a registered representative. You'll also learn the steps you need to take to become a registered representative.

What a Registered Representative Does

Registered representatives represent clients in the trading of investment products such as stocks, bonds, and mutual funds. Many handle complicated trades or complex products that are outside the capabilities of online trading. Well-versed in the markets, they search for the best securities and prices possible so they can advise clients on what to buy and sell, as well as the best times to trade. In return, they receive either a flat fee or a percentage of the transaction value as a commission. Therefore, a registered representative is adept at sales and working with people.

Registered representatives must follow standards and rules set by FINRA and the SEC, as well as the suitability standard. The suitability standard requires that a registered representative recommend only the securities that meet client requirements and goals and complement their portfolios. However, if a registered representative finds an investment product that will make the client money, they can recommend a trade, even if it doesn’t meet the client’s financial goals or appetite for risk.

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Registered Representative vs. Investment Adviser Representative

An investment adviser representative (IAR) is an individual who works for an investment advisory company or firm and provides investment-related advice for a fee. The advice IARs can provide is based on the licenses they hold. IARs are usually asset managers, investment counselors, investment managers, portfolio managers, and wealth managers. Many have Series 65 licenses.

By contrast, registered representatives work with broker-dealers or brokerage firms, buying and selling securities stocks, bonds, mutual funds and certain other investment products on behalf of customers or for their firm’s own accounts, or both. The securities licenses most commonly associated with registered representatives are Series 7 and Series 63.

How to Become a Registered Representative

Here are the steps to becoming a registered representative:

  1. Sit for and pass the SIE exam. This exam, which tests security industry essential concepts, gets you started on the path to earning your Series 7 and Series 63 licenses.
  2. Secure employment with and sponsorship from a FINRA-licensed firm.
  3. Register and prepare for the Series 7 exam. Your sponsoring broker is required to file an application for you through FINRA’s CRD system. FINRA’s approval of that application opens a 120-day testing window. You should schedule your exam as far in advance as possible to ensure adequate preparation time and to get your desired date.
  4. Sit for and pass the Series 7 exam.
  5. Register for, prepare for, sit for, and pass the Series 63 exam.

After you complete these steps, you will be licensed and sponsored to buy and trade securities for individual clients, your firm, or both.

Thinking of Becoming a Registered Representative?

A career as a registered representative is hard work, but it is satisfying and rewarding. Sitting for the SIE exam is a great way to start, and SIE exam preparation packages can increase your chances of passing. Another option is to enroll in an SIE and Series 7 exam preparation bundle, which will ultimately save you money in the long run.

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