Anyone wanting to become a stockbroker in the United States is required to obtain a NASD Series 7 license. This is obtained by taking and passing the Series 7 Exam, or the General Securities Representative Exam. Although there are numerous licenses available, the Series 7 is the most comprehensive of them all allowing the recipient to trade in all manner of financial securities products. For brokers to provide advice on security investments for a fee, they must pass the Series 7. Some states require the passing of the 63 or 66 license test as well. A candidate’s particular state requirements should be researched before attempting to take the exam.
Before the Series 7 exam can be taken, recipients must first obtain sponsorship from a member firm in good standing with the Financial Industry Regulatory Authority (FINRA) or some other SRO (Self Regulatory Organization). Once Series 7 licensing has been obtained through passing the exam, recipients must then register with FINRA, complete requirements for continued education, and maintain a position of good standing in order to remain in good standing.
There is a current registration fee of $305 for Series 7 tests and a passing score of 72 percent is required. There are 250 countable questions and 10 non-countable pre-test questions on the exam. The exam tests a candidate’s knowledge on a variety of interrelated subjects such as rules and statements, tasks and functions.
The Series 7 Exam can be scheduled for and taken on any day of the workweek at any approved exam center in the U.S. or internationally. Candidates are given six hours in which to complete the exam and the session is divided into three testing hours in the morning, followed by a one hour break and then a resumption of three testing hours in the afternoon. The Series 7 consists of five test divisions that deal with requirements for customer evaluation, accounts and assets, rules and regulations, advice and recommendation, order processing, and customer follow up all related to financial securities sales and service.
Upon passing the exam, candidates are granted Series 7 licensing and are able to provide a broad range of sales, advice and services governing stocks, options, bonds, investment company products, and limited partnerships. Most of those seeking to become a broker-dealer analysts and account managers, as well as those in other financial securities executive positions, choose to obtain a Series 7 securities license. The only products which cannot be sold under this license are life insurance, real estate, and commodities futures.
Series 7 tests require an extensive knowledge of various aspects of the securities industry. Therefore, it is prudent to obtain Series 7 study guides and partake in extensive Series 7 practice before attempting to take the exam. Sufficient time of one month or longer should be allowed for proper study of the content covered in the exam. A Series 7 prep course is recommended as is a follow up review class to ensure that as much knowledge is gained as possible.
Effective October 1, 2018, candidates must pass both the Securities Industry Essentials (SIE) exam and a revised Series 7 exam to obtain the General Securities Representative registration. Learn everything you need to know about the SIE exam here.
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