The Series 7 license is a securities license which enables the holder to solicit, purchase and/or
sell most securities products, such as stocks, mutual funds, options, municipal securities,
and variable contracts. Holding the Series 7 license is a requirement for all U.S.
stockbrokers and is considered to be the gold standard of financial advisor licenses. The
Series 7 exam is administered by FINRA, which is the government-authorized, non-profit organization
responsible for administering all securities licensing procedures and requirements testing.
FINRA tests on behalf of the North American Securities Administrators Association
(NASAA)--the group of state and provincial regulators tasked with protecting investors.
In order to sit for the Series 7 exam, candidates for a Series 7 license
are required to have a sponsor from a FINRA-member firm or a self-regulatory
organization. Other exams you need a sponsor for include the following:
With a Series 7 license, covered activities and products
include all securities, except for commodities and futures.
In order to handle commodities and futures,
registered representatives will need a Series 3 license as well.
The purpose of the Series 7 license, and all series-specific exams, is to ensure a level
of competency for registered representatives in the securities industry. The Series 7 exam
is one of the more difficult exams to pass because of the scope of its content.
The following is a breakdown of the exam:
9 questions on acquiring new business for the broker-dealer
from customers and potential customers 11 questions on opening accounts
after obtaining and evaluating customers’ financial profile and investment objectives
91 questions on providing customers with information about investments,
making suitable recommendations, transferring assets, and maintaining appropriate records
14 questions on obtaining and verifying customers’ buying and selling instructions—processing,
completing and confirming transactions
Candidates for the Series 7 exam must also pass the co-requisite
Securities Industry Essentials (SIE) and Series 63 exams to be fully eligible
to buy and sell securities. The SIE exam covers concepts fundamental to
working in the industry and the Series 63 is a state-level exam which ensures brokers have
covered state securities regulations and rules prohibiting dishonest or unethical practices.
Kaplan, the publisher of the most widely adopted textbook on the Series 7 license,
recommends taking exams in the following order: first, pass the SIE prior to securing sponsorship
for top-off exams, then the Series 6 and/or Series 7, and finally the Series 63.
Let’s hear from you. Is the Series 7 license
necessary to become a well-rounded financial advisor? Leave a comment below.