If you’re just starting on your path into the financial services industry or considering expanding your opportunities in the financial services industry, you may wonder which direction you should take. Is there another registration that will enhance your career and, if so, which one?
Before taking another exam, you should first determine the path you want to take in your career. Which financial services do you want to provide to your clients? Do you want to offer a full array of security and insurance products and earn commissions on their sale, or do you want to be able to charge a fee for your advice?
You may already have a license to sell securities, but your firm may also offer products that provide for fee-based compensation. You’ll need to become a financial planner or investment adviser representative to share in any fee-based compensation.
If you already have the General Securities Registered Representative registration (i.e., Series 7) and want to provide advice to clients and receive compensation in the form of fees paid by these clients, you’re a perfect candidate to obtain your Series 66 license.
In fact, the Series 66 Exam can only be taken if you have taken, or will be taking, the Series 7 Exam. The Series 66 Exam is formally referred to as the Uniform Combined State Law Examination and was created by the North American Securities Administrators Association (NASAA).
What is a Series 66 License?
The Series 66 license (also referred to as the Series 66 registration or qualification) is a combination of the Series 63 (Uniform Agent State Law Examination) and Series 65 (Uniform Investment Adviser Law Examination) that allows you to become a financial firm’s securities agent and investment adviser representative (IAR). In this role, you’re able to provide investment advice on specific securities products, including stocks, bonds (corporate, municipal and government bonds), shares of mutual funds, variable products (e.g., annuities and life insurance), unit investment trusts, and municipal fund securities (e.g., 529 plans).
With both a Series 66 license and a Series 7 license, you will have dual status as an investment adviser representative and a registered representative. This means that you’re in a position to provide advice on various investments and strategies but also sell securities products and execute securities transactions.
Why You Need a Series 66 License
A Series 66 license may be used to enhance your career in the financial services industry by allowing you to offer securities-related investment advice in return for a fee. The Series 66 Exam will test your understanding of state and federal securities laws as well as the products and strategies that may be offered to clients.
Reasons to Take the Series 66 Exam
Taking the Series 66 Exam can be a valuable investment in your career in the financial industry. The top four reasons include:
1 – Career Advancement: In addition to executing securities trades for their customers, many broker-dealers offer fee-based products and charge fees for investment advice and portfolio management. If you’re already licensed to execute trades for customers and now want to offer fee-based services to your clients, you’ll need to pass the Series 66 Exam. This allows you to provide your clients with a wide array of services and thereby reduce the risk of them seeking these diversified services at another firm.
2 – Increased Earning Potential: The Series 66 license allows you to charge fees for providing investment advice. This can be linked to certain products, overall portfolio management, or both. Therefore, passing the exam can increase your earning potential in the industry.
3 – Expanded Client Services: Passing the Series 66 Exam allows you to recommend various investment products and strategies individuals may consider placing/utilizing in their portfolios. This can offer you the opportunity to provide clients with investment advice and be compensated without the need to execute trades.
4 – Professional Credibility: Holding a Series 66 license can enhance your professional credibility with clients and colleagues. Investment advisers are often considered to be offering clients a more valuable service when they evaluate entire client portfolios, rather than simply recommending specific securities. This exam is a great enhancement if you’re already Series 7 registered.
Before Taking Series 66 Exam
The Series 66 Exam is unique in that NASAA doesn’t require you to be sponsored by a firm to sit for the exam. Instead, you can open an exam enrollment window and sit for the exam. However, the Series 7 Exam is a corequisite, and both must be passed before registering with the state, and you must satisfy any other requirements that your state regulator imposes.
Preparing for the Series 66 Exam
Successfully completing the exam is not just a formality; it requires effort and preparation. The average student studies for approximately 75 to 85 hours before taking the test. This involves understanding the topics that are covered in NASAA’s Series 66 Content Outline.
How to Obtain a Series 66 License
The Series 66 Exam is administered through FINRA and is a multiple-choice exam that has 110 questions (100 scored and 10 unscored). You’re given 150 minutes (2.5 hours) to complete the Series 66 Exam and the cost of the exam is $177. To pass the exam, you need to achieve a minimum score of 73% (i.e., correctly answer a minimum of 73 questions). The Series 66 Exam is comprised of the following four topics:
1 – Economic Factors and Business Information (covers 8% of the exam, 8 questions): This section consists of Analytical Methods, which include Descriptive Statistics, Financial Ratio Interpretation, and Valuation Factors.
2 – Investment Vehicle Characteristics (covers 17% of the exam, 17 questions): This section consists of Types and Characteristics of Cash and Cash Equivalents, Valuation Factors of Fixed Income Securities, Types and Valuation Factors of Equity Securities, Characteristics of Equity Securities, Equity Public Offerings, Types and Characteristics of Pooled Investments, Futures and Options, Characteristics, Risks, and Application of Alternative Investments, Insurance-Based Products, and Other Assets.
3 – Client/Customer Investment Recommendations and Strategies (covers 30% of the exam, 30 questions): This section consists of Type of Client/Customer, Client/Customer Profile, Capital Market Theory, Portfolio Management Strategies, Styles, and Techniques, Tax Considerations, Retirement Plans, ERISA Issues, Special Types of Accounts, Ownership and Estate Planning Techniques, Trading Securities, and Portfolio Performance Measures.
4 – Laws, Regulations, and Guidelines Including Prohibition on Unethical Business Practices (covers 45% of the exam, 45 questions): This section consists of Regulation of State-Registered and Federal Covered Investment Advisers, Regulation of Investment Adviser Representatives, Regulation of Broker-Dealers and Agents, Regulation of Securities and Issuers, Remedies and Administrative Provisions, Communication with Clients and Prospects, and Ethical Practices and Fiduciary Obligations.
If you don’t pass on your first attempt, you must wait 30 days before taking the test again. If you don’t pass on the second attempt, you must wait another 30 days. If you don’t pass on your third attempt, you must wait 180 days.
To find the closest testing center and to schedule your Series 66 Exam, you should contact Prometric – the testing vendor that’s used by FINRA.
How Long is a Series 66 License Valid?
The Series 66 license is valid for the duration of your employment as long as you remain registered and in good standing. If your Series 66 registration is terminated, your state registration is terminated as well. After termination, you then have two years to become re-registered (rejoin a firm) without being required to retake the exam.
Are you ready to obtain your Series 66 license? STC has everything you need to gain the knowledge and skills necessary to pass your exam and achieve a successful career as an investment adviser representative.
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