With as many as 70% of small businesses in debt throughout the nation, the need for financial professionals is clear. Broker dealers, in particular, are able to buy or sell financial securities on behalf of their clients, as well as provide investment advice and raise capital for different companies. And if becoming a broker dealer is part of your career plan, you’ll have to plan on taking and passing FINRA licensing exams before you’re able to legally practice these financial services.
The Series 7 exam is just one of about eight FINRA licensing exams you can take during your journey to become a broker dealer — and it’s actually one of the longest and most important. In order to obtain your investment banking license, you may need to take the Series 7 exam along with other FINRA licensing exams. But what should you know about the Series 7 before you start? We’re answering some common questions in today’s post.
What Is the Series 7 Exam?
As mentioned above, the Series 7 is one of several FINRA licensing exams that may be required of prospective broker dealers. The Series 7 exam is used to test entry-level financial professionals on how well they understand the most vital features of what a broker or general securities representative does. Upon passing this exam, you can obtain your General Securities Representative registration from FINRA, which can really give a boost to your career opportunities.
What Material Is Covered in These FINRA Licensing Exams?
FINRA, the Financial Industry Regulatory Authority, which administers these exams, describes the Series 7 thusly: “The exam measures the degree to which each candidate possesses the knowledge needed to perform the critical functions of a general securities representative, including sales of corporate securities, municipal securities, investment company securities, variable annuities, direct participation programs, options and government securities.”
That being said, there are four basic subjects covered by this exam. These subjects are based on the core job functions of a General Securities Representative, which are…
- Seeks Business For the Broker-Dealer From Current and New Customers: Covering mainly public communication and advertising material regulation
- Opens Accounts After Obtaining and Evaluating Customers’ Financial Profile and Investment Objectives: Covering the provision of account type, disclosure, and restriction information to customers, including how to open brokerage and advisory accounts, as well as how to create client profiles and acquire certain approvals
- Provides Customers With Information About Investments, Makes Recommendations, Transfers Assets, and Maintains Appropriate Records: Covering securities laws and regulatory data about product options, investment strategies, customer profiles, and record-keeping, this is arguably the most important section on the test
- Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions: Covering the execution and processing of client order and trades, the knowledge of transaction settlement regulatory requirements, the handling of client complaints, and other aspects of reporting and record-keeping
What’s the Format of the Series 7 Broker Dealer Exam?
This is the most expansive FINRA exam, lasting three hours and 45 minutes in length. It includes 125 multiple choice questions and 10 additional test questions (which are not scored and are inserted at random throughout the test). While the first, second, and fourth categories mentioned above each make up around 10% of the exam, the third category makes up the additional portion of questions.
Do I Need a Series 7 Sponsorship For the Series 7 Exam?
For almost all FINRA licensing exams, you’ll need a sponsorship from a FIRNA member firm or from a self-regulatory organization. For the Series 7 exam, you will need such a sponsorship from a qualifying firm (which not only takes care of the exam fee but will also submit your application on your behalf). Once you’re ready to take the Series 79 exam, you’ll need a Series 79 sponsorship for that, as well. The same goes for the Series 82 exam. You do not need a sponsor in order to take the Series 63 exam or the SIE (Securities Industry Essentials) exam.
Passing the Series 7 exam (or any other FINRA exam) isn’t easy, but it’s worth doing well. To learn more about the FINRA licensing exam sponsorships we offer to help you on your path to becoming a broker dealer, please contact us today.