If you’re just starting on your path into the financial services industry and have scheduled a registered representative qualification examination (e.g., Series 6 or Series 7), you should understand that there’s one additional exam on the horizon—the Series 63.
After taking and passing the Securities Industry Essentials (SIE) Exam and one of the registered representative exams, you’re not quite finished. You’re also required to become registered as an agent in your home state as well as any other state in which you will have clients. To become an agent at the state level, the North American Securities Administrators Association (NASAA) requires you to pass the Series 63 Exam.
Many firms are registered as both a broker-dealer and an investment adviser, which allows them to collect commissions for executing securities trades, but also receive fees for providing advice on different products and services. If you’re interested in providing both types of services to your clients, you can do so by passing both the Series 7 Exam and the Series 66 Exam. With these exam designations, you would be qualified you as an agent of the broker-dealer and investment adviser representative for the investment adviser.
What’s a Series 63 License?
The Series 63 license (also referred to as the Series 63 registration) allows you to become registered as an agent in the states in which you will have clients. In this role, you’re able to recommend and execute trades on specific products based on which securities registration examination you’ve passed. For example, if you’ve passed the Series 6 Exam, you can offer mutual funds and variable products to your customers. However, if you’ve passed the Series 7, you can offer your customers mutual funds and variable products, but also a wider range of investments including stocks, bonds (corporate, municipal, and government), options, alternative investments, etc.
Why You Need a Series 63 License
A Series 63 license is required to start your career in the financial services industry by becoming registered as an agent. The Series 63 Exam will test your understanding of state securities regulation that are covered in the Uniform Securities Act as well as amendments that have been adopted by NASAA.
Reasons to Take the Series 63 Exam
Taking the Series 63 Exam is required to start your career and complete your registration as a General Securities Registered Representative (Series 7) or Limited Representative (Series 6). The top four reasons include:
1 – Career Advancement: In order to recommend and execute securities transactions, you must be registered in the states in which you intend to operate. By passing the SIE Exam, the appropriate qualification representative examination, and the Series 63, you’re then considered to be registered as an agent at the state level.
2 – Increased Earning Potential: The Series 63 allows you to earn commissions on trades that you execute for your customers.
3 – Expanded Client Services: If you’ve passed the 65 Exam, registered in your state as an Investment Adviser Representative, recommending various investment products and strategies for a fee, and now wish to be compensated for trades for clients not suitable for fee-based accounts, you would need to take a registered representative exam and the Series 63. This would allow you to offer both fee-based and transaction-based business to your customers.
4 – Professional Credibility: Passing the Series 6, Series 7, or other representative examination doesn’t automatically allow you to recommend or execute transactions for your clients. You still must pass the Series 63 Exam to become registered as an agent at the state level. After passing all of your exams, you will be able to hold yourself out as a financial services professional.
Before Taking Series 63 Exam
The Series 63 Exam is unique in that NASAA doesn’t require you to be sponsored by a firm to sit for the exam. Instead, you can simply open an exam enrollment window and sit for the exam. Typically, the Series 63 is taken as a corequisite after the completion of the SIE Exam and the appropriate representative examination. Thereafter, you’re considered to be registered as an agent of a broker-dealer.
Preparing for the Series 63 Exam
Successfully completing the exam is not just a formality; it requires effort and preparation. The average student studies for approximately 25 to 30 hours before taking the test. This involves understanding the state securities laws and important terms that are covered in NASAA’s Series 63 Content Outline.
How to Obtain a Series 63 License
The Series 63 Exam is administered through FINRA and is a multiple-choice exam that has 65 questions (60 scored and 5 unscored). You’re given 75 minutes (1 hour and 15 minutes) to complete the exam and the cost of the exam is $147. To pass, you need to achieve a minimum score of 72% (i.e., correctly answer a minimum of 43 questions). The Series 63 Exam is comprised of the following topics:
1 – Regulation of State-Registered and Federal Covered Advisers (covers 5% of the exam, 3 questions): This section covers the definition and activities of investment advisers.
2 – Regulation of Investment Adviser Representatives (covers 5% of the exam, 3 questions): This section covers the definition and activities of investment adviser representatives.
3 – Regulation of Broker-Dealers (covers 12% of the exam, 7 questions): This section covers the definition, requirements, and activities of broker-dealers.
4 – Regulation of Agents of Broker-Dealers (covers 13% of the exam, 8 questions): This section covers the definition, requirements, and activities of broker-dealer agents.
5 – Regulation of Securities and Issuers (covers 9% of the exam, 5 questions): This section defines securities and issuers, examines registration and post-registration requirements, exemptions, and state enforcement authority.
6 – Remedies and Administrative Provisions (covers 11% of the exam, 7 questions): This section identifies the authority of state securities Administrators, administrative actions, as well as other penalties and liabilities.
7 – Communication with Customers and Prospects (covers 20% of the exam, 12 questions): This section covers disclosure requirements, unlawful representations concerning registrations, performance guarantees, customer agreements, as well as correspondence and advertising.
8 – Ethical Practices and Obligations (covers 25% of the exam, 15 questions): This section covers compensation, customer funds and securities, conflicts of interest, criminal activities, ethical issues, as well as cyber security and data protection.
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 63 Exam, you should contact Prometric – the testing vendor that’s used by FINRA.
How Long is a Series 63 License Valid?
The Series 63 license is valid for the duration of your employment as long as you remain registered and in good standing. If your Series 63 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 63 license? STC has everything you need to gain the knowledge and skills necessary to pass your exam and achieve a successful career as a broker-dealer agent. STC’s Pass Guarantee will prepare you to advance your career!
