Posted By: Kaplan Financial Education
Updated: October 2, 2018
What is a Series 7 license? Known as the General Securities Registered Representative license, this license allows you to sell a broad range of securities. A holder is allowed to sell corporate stocks and bonds, municipal bonds, mutual funds, variable annuities, options, direct participation program (DPP) partnerships, and packaged securities (i.e., collateralized mortgage obligations).
The Series 7 is generally preferred by banks and broker dealers for new recruits coming directly into the financial services industry. Those who get this license are officially listed as registered representatives by FINRA, but are more commonly referred to as stockbrokers.
Here are the steps to follow to earn your license.
The SIE exam tests common topics such as fundamentals, regulatory agencies and their functions, product knowledge, and acceptable and unacceptable practices. You can take the SIE exam before being sponsored by a firm and even while you are still in school. You have a four-year window in which to take and pass any of the representative level top-off exams, like Series 7, after passing the SIE exam. Note that FINRA says that the SIE and Series 7 exams are "corequisites," which does not mean you have to take them at the same time. What FINRA means is that you have to pass both to get your license, but you can take them in any order.
To take the Series 7 exam, you must be sponsored by a FINRA member firm or a self-regulatory organization (SRO). Firms apply for candidates to take the exam by filing a Uniform Application for Security Industry Registration or Transfer (Form U4). There is also an exam fee that is commonly covered by the sponsoring firm.
Once you secure your sponsorship, you can take the top-off exam for the Series 7 license. Most candidates also choose to take the SIE before they take the Series 7, but you can take it first if you prefer and the SIE afterwards.
The licensing exam is not exactly a walk in the park. You need to study with purpose and planning. To help you out, many retail brokerage firms have an in-house training program or, in some cases, they have an agreement with an external training provider. Exam preparation and review courses go a long way toward helping you pass your Series 7 exam the first time.
The exam consists of 125 multiple-choice questions, and you have 3 hours and 45 minutes to complete it.
The following table shows the major job functions covered by the exam (1 through 4) with the associated number of questions:
|Function Description||% of Exam||# of Questions|
|1 - Seeks Business for the Broker Dealer from Customers and Potential Customers||7%|
|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
|4 - Obtains and Verifies Customers’ Purchase and Sales|
Instructions and Agreements; Processes, Completes
and Confirms Transactions
Additional strategies for passing the Series 7 exam are covered in this article.
FINRA makes it easy to enroll for your exams, because they also administer the exams for your NASAA licenses. Simply visit this page.
The passing score for the exam is 72%. For more in-depth coverage of these functions and how the exam is set up, check out this article. Once you pass the exam, you have your license.
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.