The financial planning industry is full of regulatory requirements advisers and brokers must meet before they begin offering services to clients. For most, those requirements include some sort of regulatory exam.
Today, we’re walking through the most common Series 7 exam questions to help you better prepare for your upcoming exam and pass your test with confidence.
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1. What is the Series 7 licensing exam?
A Series 7 license allows an individual to sell securities products to clients, with the exception of commodities and futures. The license is given to stockbrokers who successfully pass the Series 7 exam (also known as the General Securities Representative Qualification Examination), which is administered by the Financial Industry Regulatory Authority (“FINRA”).
Related: Does FINRA Regulate Registered Investment Adviser (RIA) Firms?
A few other key pieces of information about the exam include:
- It is considered a necessity for entry-level brokers.
- The license does not cover selling real estate or life insurance packages.
- Most states require that the Series 7 license be obtained in conjunction with a Series 63 license.
Brokers must also pass the Securities Industry Essentials® (SIE®) exam to receive their General Securities Representative registration.
Note: The Series 63 licensing exam is similar to the Series 7 but covers state-level information on selling securities. It’s important to note that these laws, referred to as “blue-sky laws,” vary by state.
2. What is the difference between Series 66, Series 65 and Series 7?
The Series 66 license combines both the Series 65 and Series 63 licenses.
The Series 65 exam allows investment adviser representatives to offer investment advice but not sell securities. As stated above, the Series 63 covers the sale of securities at a state level. If you pass the Series 66 exam, you receive both of these licenses.
In contrast, the Series 7 focuses specifically on federal laws surrounding the sale of securities.
Related: The Complete Guide to Passing Your Series 7 Exam
It should be noted, both the Series 7 and the Series 66 licensing are required to become an IAR in lieu of the Series 65. Additionally, several states have added the Securities Industry Essentials (SIE) examination to their requirements for IAR registration when using the Series 7 and Series 66 in lieu of the Series 65.
3. What should I expect in the Series 7 exam questions?
According to FINRA, the exam covers:
“…the knowledge needed to perform the critical functions of a general securities representative, including sales of corporate securities, municipal securities, investment company securities, variable annuities, direct participation programs, options and government securities.”
The license does not permit brokers to sell commodities or futures, including real estate or insurance products.
The test is 125 questions long in a multiple-choice format, and you will have a maximum of three hours and 45 minutes to complete the test.
Related: FINRA’s Examination Findings Highlight Both Suitability Concerns and Best Practices
4. How do I register for and take the exam?
To begin with, you’ll need a FINRA-recognized sponsor to register for the exam (you can find more information on sponsorship and registration requirements here).
Once you successfully register with your sponsor, FINRA will email you instructions for registering for exams.
Note: Those wishing to take the exam remotely will need to have an approved accommodation as of June 2023.
5. How can I study for the Series 7 exam?
There are several study tools available for you to prepare for the exam. While we do not endorse any specific study tools, some of the most popular include:
Each study package has a different price tag and comes with different material, but each should cover the basic topics expected on the Series 7 exam, which can be found in FINRA’s Series 7 exam content outline.
As you can see from the above chart, the majority of the exam’s content falls under category (F3), which covers:
- Providing customers with information about investments
- Making recommendations
- Transferring assets
- Maintaining proper records
If you find yourself short on study time, this is a great place to focus your efforts.
Related: Series 7 Exam Prep Tutorial – FINRA Rules & Regulations
6. How do you pass the Series 7 exam? Is there an option to retake?
To pass the exam, you must score at least 72%, which translates to at least 90 correctly answered questions of the 125 total. The multiple-choice exam does not include penalties for guessing, so test-takers would benefit from answering each question – even if they’re not confident in the answer.
Note: There are also 10 pretest questions at the beginning of each Series 7 exam, which are not counted toward the final score.
If you fail to pass with 72% or higher, you’re not completely out of luck – candidates can retake the exam as many times as they like. However, you’ll have to wait for 30 days between your first three attempts; after that the allotted waiting time is bumped up to 60 days.
Keep in mind that for each exam, you’ll have to pay the registration fee again.
7. How much does it cost to take the test?
The Series 7 exam is one of the most expensive FINRA exams available, clocking in at $300 per attempt.
With a thorough understanding of exam content and structure, you’re more prepared to pass the exam and successfully attain your Series 7 licensing.
Ready to take the next step in your registration? Reach out today
Licensing is only one aspect of your journey in the financial advisory market. It’s important to register your practice and implement proper compliance solutions. Click here to connect with a member of our team and get started today.
