Posted by: Kaplan Financial Education
Published: July 10, 2018
To solicit, purchase, and sell all securities products (e.g., corporate securities, municipal fund securities, options, direct participation programs, investment company products, and variable contracts), you need a Series 7 license. To be eligible to earn that license, you need to have (1) passed the Securities Industry Essentials Exam (SIE) and (2) secured sponsorship from a member firm or self-regulatory agency (SRO) that has also registered you with FINRA. If you’ve met these requirements, you can enroll with FINRA and schedule your exam with Prometric up to 120 days after you’ve been registered.
With all that out of the way, you’re now ready to prepare for the exam. To ensure you have the best chance of passing the Series 7 FINRA qualifications exam, you need good strategies. Here are seven that can help you pass.
You need to spend 80-100 hours studying for the FINRA Series 7 exam if you have a finance background and about 150 if you don’t. The first thing you should do is lay out a study plan that ensures you put those hours in. Give yourself enough time to take breaks from study to let concepts percolate. If you have test anxiety, there are things you can do for that. We strongly recommend including a Series 7 preparation package as part of your plan. Most web sources say the Series 7 pass rate is 65% (FINRA doesn’t release the pass rates), but in a recent Kaplan survey of Kaplan Series 7 students, 85% reported passing the Series 7 qualification exam.
Set your study routine as soon as possible. A steady, regular study method will increase your retention dramatically compared to frantic cramming at the end. Balance your studying between manuals and practice questions so you don’t burn out on either. Be sure to take a day off to rest your mind when you need to. And, speaking of routines, in the last weeks before the exam, try to get in a good sleep pattern. Anxiety can make sleeping difficult, but having a set sleep schedule some time before will keep you rested.
The Series 7 exam consists of 125 multiple-choice questions and takes 225 minutes. It focuses on the nature of various securities and financial instruments such as equities, bonds, options, and municipal securities. Almost 75% percent of the questions relate to providing customers with investment information, making suitable recommendations, transferring assets, and maintaining appropriate records. If you’re tempted to focus only on memorizing formulas related to these topics, don’t. Instead, be sure to learn the concepts; they are more important than formulas. A number of the questions will test how you incorporate all your knowledge to make suitable recommendations for a hypothetical client.
Because there are different types of questions on the exam, practice questions are your secret weapon for Series 7 exam success. Plan to invest a significant amount of time answering questions to get a better understanding of where your strong and weak points are, and where you need to focus more attention. If your exam prep provider provides a question bank database, take advantage of this valuable study asset as much as you can.
One of the best ways to improve your chance of passing is to take practice exams. Practice exams are different from practice questions because they closely replicate the real exam in terms of degree of difficulty, weighting, and format. Most are updated to address the latest regulations, and you receive a score with diagnostic feedback. The better you perform on these exams, the greater your likelihood of passing the Series 7 exam.
Plan to arrive at the testing center more than 30 minutes beforehand. That gives you plenty of time to check in, find where you are supposed to go, and collect your thoughts before the exam starts. During the exam, take the questions one at a time. Everything you need to answer a question correctly is always right there, so you don’t have to second-guess yourself. Nor should you think about how many questions lie ahead—focus on the one at hand, answer it, and move on.
Our last strategy is one that’s often overlooked because it seems so obvious. But, interestingly, you’d be surprised at how many people don’t read the whole question. That’s because most of us are conditioned to skim through information to find the one little nugget we are looking for as we simultaneously worry about how much time we have. If you approach Series 7 exam questions this way, you are likely to miss something important. So, be sure to read the entire question and all the answer choices. Then read the last sentence of the question again before starting to eliminate answers. Here’s another valuable tip: if you have read the question thoroughly, and there are at least two answer choices you cannot eliminate, consider choosing “all of the above” if it’s an option.
As of October 1, 2018, candidates who want to earn a Series 7 securities license and do not already hold a different active securities license must first pass a new entry-level exam called the Securities Industry Essentials (SIE) exam before sitting for the Series 7 exam. With the introduction of this new exam, the format of the Series 7 and the topics tested have also changed. To cover all of your exam format questions, we’ve also broken down the details of how the Series 7 has changed.