Posted by: Kaplan Financial Education
Published: March 19, 2019
This article answers the most frequently asked questions about the Series 7 top-off exam and license, equipping you with the information you need to plan for this next step in your career.
Also known as the General Securities Registered Representative license, the Series 7 license is administered by FINRA. FINRA is the governing body that ensures that anyone who sells securities products is qualified and tested. If you hold this license, you can sell corporate stocks and bonds, municipal bonds, mutual funds, variable annuities, options, direct participation program partnerships, collateralized mortgage obligations, and more. The benefit of the Series 7 license is that it permits you to sell several types of securities products, except commodities and futures.
The Series 7 license is good for the entire period that you work for a FINRA-member firm or self-regulatory organization (SRO). It only expires if you are terminated or leave a firm and do not find employment within two years at another FINRA-member firm or SRO. You do have to maintain it with continuing education, however. FINRA explains this in an article about firm and regulatory requirements.
If you hold a Series 6 license, you’re called a limited representative, and you can only sell mutual funds, variable annuities, and insurance premiums. For example, if a CPA wants to offer annuities and retirement planning services to clients, the CPA may only have to take the Series 6 exam. You’re a lot more restricted to what you can sell with a Series 6 license as opposed to a Series 7 license, which permits you to sell many more types of securities. Both serve specific needs and are appropriate for financial professionals who want to offer certain capabilities to their clients.
Those who get this license are officially listed as registered representatives by FINRA but are more commonly referred to as stockbrokers. The majority of jobs will be with brokerages, investment firms, and banks. If you’re planning to focus on employment in the financial services industry after graduating from college, the Series 7 license is what banks and brokerages prefer.
Earning a Series 7 license involves four key steps:
As part of implementing the Securities Industry Essentials (SIE) exam, FINRA restructured their examination programs. As part of this restructuring, FINRA has created a tailored top-off examination for earning the Series 7 license.
You should take the Series 7 top-off exam if you want to be licensed to sell a broad range of securities in a brokerage or bank.
To take the Series 7 exam, you need a FINRA-member firm or SRO to sponsor you. After you’ve worked for them for four months or more, they can file a Form U4 (Uniform Application for Securities Industry Registration), which registers you for the exam. Fortunately, most firms that hire or train you will have a mandatory Series 7 licensing program included in their training package.
There are no education requirements to sit for the Series 7 exam, although most candidates have a college degree in a finance-related field, and many choose to complete a Series 7 exam prep package prior to sitting for the exam.
Yes, although the more natural progression is to take the SIE exam first, mainly because you don’t have to be sponsored to take it. The SIE and Series 7 top-off exams are “co-requisites,” which means you can take and pass them in any order. Of course, you have to pass both to earn your Series 7 license.
If you’d like to be a stockbroker who sells virtually any type of securities, the answer is yes. Basically, the Series 7 license is what you need to sell everything except commodities futures, real estate, and life insurance.
Like all other securities qualification exams, the Series 7 exam is administered by computer at a Prometric testing center.
The Series 7 exam topics include Investment risk, taxation, equity and debt instruments, packaged securities, options, retirement plans, and interactions with clients. The focus of the exam is the nature of these securities and financial instruments, and it tests knowledge relevant to the day-to-day activities, responsibilities, and job functions of general securities representatives.
The exam consists of 125 multiple-choice questions, and each question has four answer choices. There are also ten additional unidentified and unscored pretest questions that do not contribute to your score that are randomly distributed throughout the exam.
|Sections||% of Exam||# of Exam Questions|
|1 - Seeks Business for the Broker Dealer from Customers and Potential Customers||7%||9|
|2 - Opens Accounts after Obtaining and Evaluating Customers' Financial Profile and Investment Objectives||9%||11|
|3 - Provides Customers with Information About Investments, Makes Suitable Recommendations, Transfers Assets and Maintains Appropriate Records||73%||91|
|4 - Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes and Confirms Transactions||11%||14|
Most candidates spend 80–100 hours studying for the FINRA Series 7 exam if they have a finance background and about 150 if they don’t.
The Series 7 top-off exam expects candidates to be able to apply their knowledge of securities concepts to specific scenarios. The questions are detailed and related to the day-to-day activities, responsibilities, and job functions of representatives. Therefore, candidates should expect it to be challenging.
The exam cost is $245.
The passing score for the exam is 72%. Because the Series 7 top-off exam just went live in October 2018, a pass rate has not been announced.
Candidates who do not pass the top-off exam must wait 30 days before taking it again. However, if you fail it three times in succession, you must wait 180 days.
We hope this article answers all of your questions about the Series 7 top-off exam and license. If you’re interested in taking the exam, we have Series 7 exam preparation packages. Or if you’re just getting started, check out our SIE packages and our SIE and Series 7 combo series.
After identifying nine series exams with common content (6, 7, 22, 57, 79, 82, 86/87, 99), FINRA has decided to restructure their licensing process next year. The common content will be tested in the new Securities Industry Essentials (SIE) exam. Download this free guide to learn more about how the new securities licensing process will work, the rationale for the change, proposed SIE exam content, and how it could change hiring and recruiting practices.