There are a number of benefits to becoming an independent contractor for an investment banking firm. For most investment bankers considering this option, the appeal is that they can retain their trade names while continuing to operate their businesses. Independent contractor work, in general, comes with its own risks and pitfalls, but generally speaking, it can be a way in which investment bankers who otherwise would have struggled with keeping their businesses afloat can maintain their careers. With roughly 70% of all small businesses currently in debt right now, we are living in tough financial times and all options must be considered.

But investment bankers cannot simply become independent contractors for investment banking firms on a whim. They must retain a FINRA investment banking license. FINRA is the Financial Industry Regulating Authority, and there are actually different FINRA exams available for different purposes. Different FINRA exams essentially expand a representative’s abilities and therefore make the representative more appealing to different investment banking firms. Below are some of the factors that should be considered before considering a FINRA investment banking license further.

1. Understand The Exams You Need

As previously mentioned, there are multiple FINRA exams available, and they all serve different purposes. The actual Investment Banking Representative Qualification Examination is the series 79 exam, which will essentially test your ability to become an investment banking representative. It’s an important hoop for potential investment bankers to jump through and tests not only your knowledge but your skills and ethics as well. The series 79 will test an individual’s knowledge of mergers, acquisitions, financial restructuring, buyouts, public investment banking, and refinancing. Another important exam for beginners is the series 82 exam, which assesses an entry-level individual’s competency to become a private securities offerings representative. These exams can be fairly comprehensive in terms of their scope but will not test an individual beyond the level at which they should be. In other words, they’re fair and are important steps to attaining a FINRA investment baking license.

2. Understand Sponsorship

A FINRA exam is not like the GED, which an individual can just take whenever they wish. There are certain protocols to follow in terms of these exams, which shouldn’t be surprising considering the sensitive materials that they involve. Certain FINRA licensing exams, though not all of them, require that securities professionals are sponsored by members of the FINRA. This means that if you’re considering either of the above exams, you must look into series 79 sponsorship and series 82 sponsorship. FINRA exam sponsorship is not a mere formality, and you must work to attain it. You must essentially be backed by an active firm, which will submit your application on your behalf. Once that application is submitted, you have a full 120 days to sit for the exams for which you’re being sponsored. If you let the window lapse, you will likely need to pay for a second filing, but if you pass the exams, the sponsoring firm will then proceed to help register you, as they will take responsibility for supervising your activities after you obtain your FINRA investment banking license.

3. Studying Is Key

As with any exam, studying is key to passing a FINRA exam; but in some ways, it’s even more important, considering the risks that stand if you do fail the exam. This exam is not meant to certify whether or not you know all of the information; it’s mean to certify whether or not you’re able to practice as an investment banker and receive your FINRA investment banking license at all. They are not easy. The series 79 exam, for example, will have 175 questions that will focus on data, underwriting, general security industry rules, and more.

It’s crucial that you begin working early not only to study for your exam, but to ensure that you are as prepared for the exam as possible in terms of sponsorship. These exams are not easy, but they are worth it.