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Series Licenses Breakdown: Series 6, Series 63, Series 65, and Series 7

Have you ever wanted to sell securities and bonds, or maybe even financial advice? Perhaps one of the biggest questions you'll face is: how to start? The Wolf of Wall Street is one of the best portrayals of a stockbroker gone rogue. While the movie ends with Jordan Belfort admitting to stock manipulation, it's nonetheless a motivational story for aspiring stockbrokers.


If you've recently graduated in finance and want to kickstart your career in the investment industry, getting the right licenses should be the first thing on your list. Since identifying the correct Series certificate for your favorite asset class is a part of this process, we have created this short guide to help you get started.


Choosing the right license to sell investments


Series 6

The Series 6 license or "limited investment securities license" is suitable for investment managers planning to sell packaged investment products to their clients. With Series 6 license, you'll be able to sell mutual funds, variable annuities, and UITs (unit investment trusts) to your customers. Additionally, once you climb the ladder to lead a team of investment professionals holding Series 6 license, you'll need a Series 26 license as per the regulatory requirements.

Series 6 Exam

50 multiple-choice questions

Duration: 1 Hour 30 minutes

Passing marks: 70 or higher


Series 7

The Series 7 license is popular among aspirants seeking a career in selling any kind of individual securities. You may have come across its otherwise popular name, the General Securities Representative (GS) license. With the Series 7 license, you can sell:

Common stocks

Preferred stocks

Fixed income products and bonds

Call or Put options

Packaged products, except life insurance.


Series 7 Exam

125 multiple-choice questions

Duration: 3 Hours 45 minutes

Passing marks: 72 or higher


Series 63

The Series 63 license comes under the authority of the North American Securities Administrators Association (NASAA). This license allows you to conduct business as a broker-dealer within multiple states, though some states do not recognize this certificate. If you are operating in any of the following states, you do not need to pass the Series 63 exam for licensure purposes:

Colorado

District of Columbia

Florida

Louisiana

Maryland

New Jersey

Puerto Rico

Ohio

Vermont


Series 63 Exam

60 multiple-choice questions

Duration: 75 minutes

Passing marks: 43 out of 60


Series 65

Are you aiming to become a financial planner instead? The Series 65 exam is suitable for professionals planning to work as a financial advisor/financial advisor representative. Advisors with the Series 65 license can provide professional investment advice on hourly-basis, non-commission based advice.

Series 65 Exam

130 multiple-choice questions

Duration: 180 minute

Passing marks: 94 or higher




How do RIA/IAR differ from Wall Street traders?

Since you're ready to take these exams, the next step is to get prepared for your first client. One of the most common questions registered investment advisors (RIAs) come across is how do they differ from broker-dealers or regular Wall Street traders.

Here is how you can answer them.


Who is a registered investment advisor (RIA)?

A registered investment advisor can be a firm or an individual holding the necessary qualifications as per the regulations of the SEC. RIAs, usually work with high net worth individuals (HNWIs), helping them manage and grow their wealth.


What separates RIAs from broker-dealers

RIAs are fiduciaries

One of the critical differences between RIAs and broker-dealers is that the former work as fiduciaries, therefore, obligated to put their client's interest first. The SEC is strict about professionals working as fiduciaries and requires them to follow specific standards.

Broker-dealers, on the contrary, do not have any such obligations. Their primary intent is to generate revenue, much like any other business.


RIAs work under a management-fee model

Most of the RIAs charge a percentage fee over the net asset under management. The general trend is to charge 1%, but clients, depending on the size of their portfolio, can negotiate lower fees. Some RIAs operate on an hourly basis or fixed charges.

Broker-dealers earn through commissions against the transactions they execute for their clients.





Who is a day trader?

Now that you're ready to go out there in the field, there is just one more thing that you should know: Who is a day trader?

Day traders are professionals who purchase and sell a security within a single trading day. Their primary intent is to earn money through small price movements. Day traders are financially educated and use high-leverage to boost their profits. They have a reasonably good idea of the markets.

The financial experts' community is split into two groups when it comes to day trading. One-half of the experts question the profitability of day trading, considering the brokerage or transaction costs. The other half insists that there is profit to be made in day trading.

Day traders use a variety of techniques to improve their margins, such as scalping, range-trading, and high-frequency trading.


The Bottom Line

Working as a financial advisor comes with its own set of challenges and benefits. The best thing you could do while starting your career is to be as prepared as you can initially, and learn as you grow.


If you have any questions, share them in the comments section. We'll be happy to answer!


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© 2019 by Jacob C Reeves, The Broke Broker.