The first step for anyone who wants to have a career in finance is to acquire a Series 7 license. This license is necessary if the person’s goal is to become a stock broker’s general representative, for instance. Those who aspire to this position need to complete series 7 license exam training to enable them to pass the Series 7 exam and become licensed.
It is obvious to anyone watching the news that the finance field creates jobs with futures. To prepare to take the exam and start a career in financial planning and investments, a few key points should be considered concerning passing the exam and becoming licensed.
What is a Series 7 License?
It is never too early to begin studying to pass the Series 7 exam if you wish to have a career in the stock exchanges. After you pass the exam and are licensed, you are permitted to sell all types of securities, but it does not include futures and commodities. It does include options, direct participations, municipal and corporate securities and variable contracts. The licenses are issued by the FINRA—Financial Industry Regulatory Authority.
The Series 7 Exam
The main themes of the exam relate to interacting with clients and investment products. The questions on investments concern equity instruments, security packages, risks and retirement plans. The applicants’ ability to manage clients’ accounts is also tested. FINRA owns and administers the tests.
> In early 2012 it cost $265 to register for the Series 7 Exam. Only when you are sure that you are able to pass the exam should you register and pay the fee. Be certain that you have studied the areas that will be tested, such as those listed below.
> The exam takes six hours total, divided into two parts with each lasting three hours. 260 questions must be answered during the six hours. 250 of the questions are counted for the final exam score.
> A variety of subjects are covered by the test questions and they are of varying depth. The questions cover mainly bonds, stocks and similar financial products. Concepts such as different kinds of funds and limited partnerships are covered in the questions as well.
The ability of the applicant to provide information on investments to his or her clients is analyzed in the bulk of the questions. The aspiring broker is also presented with questions on making appropriate recommendations in certain cases. This topic is covered in a total of seventy questions.
Seeking potential customers is addressed in sixty-eight questions, which represents 27% of the entire test. That portion is the second largest part of the test.
The 58 questions that follow make up the next largest portion and involve securing a sales order and closing a customer’s purchase. After that, twenty-seven questions are concerned with evaluating the other holdings of customers and their tax status, as well. These latter questions combine with the two parts in the beginning of the test. All together, they show that most of the questions focus on whether the applicant has enough knowledge to handle customers correctly and properly address their needs.
The applicant then has twenty-seven more questions on transferring assets and opening accounts. The questions also address the applicant’s ability to keep accurate records. Every job in the financial field entails proper management of data as a critical part of a person’s duties. The exam questions overall are designed as much to protect the public as they are to test the applicant’s knowledge. FINRA wants to ensure that applicants have enough knowledge in handling clients. Passing the test nearly guarantees that proper and professional conduct will occur between agents and clients and will be of help to investors.
> A score of 72% must be attained in order to pass the exam, with the average nationwide score close to 73%. Of those who take the test, about two-thirds make the passing grade. For someone aspiring to become a broker, however, passing the exam is only the first step. The Series 7 exam is only a pre-requisite for more FINRA examinations. In addition, in order to work as a broker in some states, other licenses must be acquired, known as Series 66 or Series 63. When an applicant passes the Series 7 exam, however, FINRA will award the person with a General Securities Series 7 license.
> There are two choices in how to study for the exam. An outline of the contents of the test is provided to applicants by FINRA. To increase the chance of passing the test the first time, some applicants enroll in series 7 license exam training provided by third parties. They offer paid coaching to train and administer a pre-test to check the person’s progress. The training includes how to focus on the most important questions and stay focused throughout the test.
> When the Series 7 exam is passed, applicants receive their licenses to work as brokers. Their states of residence, however, may require further licensing. Having the comprehensive Series 7 license allows agents to advise clients on making investments and planning their finances.
> Anyone who has passed certain exams overseas may apply to become a United States broker. In these cases, FINRA requires a shorter version of the exam.
In order to apply for the Series 7 exam, the applicant must have a sponsor that is a financial company and FINRA member. The exam is the first step in becoming a finance broker.