Series 65 Overview
The Series 65 license is known as the Uniform Investment Advisor Law license. This license is required for individuals to be considered investment advisor representatives in the securities industry. The Series 65 tests an individual's financial acumen in order to provide advice and charge a fee to the customer.
The four key components to the exam are:
- Economic factors and business information
- Investment vehicle characteristics
- Customer investment recommendations and strategies
- Laws, regulations, and guidelines including prohibition of unethical business practices
A major part of the exam focuses on the last component and is where a lot of the memorization is required. This exam to built to be a testament of the rules and regulations of the industry so be sure to spend time on them. It is important for the individual to check periodically for any updates FINRA issues on the components of the examination.
Who is the Series 65 license for?
The Series 65 license is for an individual who wants to charge a fee for providing investment advice to customers. Investment advisor representatives are required to have either a Series 66 or 65 license. The Series 65 license does not carry all the requirements needed for a registered representative for the state. If an individual wants to provide all the products and services of both a registered representative and investment advisor representative, the Series 66 is required.
An investment advisor representative gives recommendations or investment advice on securities, manages accounts of clients, decides which recommendation should be given, and provides investment advice. They also receive compensation to solicit and negotiate the selling of investment advice or supervise employees who perform those tasks.
This definition above is normally known as a 'fee-based account' in the industry. This type of customer account does not trade on commissions but on an annual percentage fee an advisor manages at their discretion. Most states allow exemptions if the individual holds certain professional designations such as a Chartered Financial Analyst (CFA®) or Certified Financial Planner (CFP®) or experience of 20 years or more. The exemption must be filed with the state and approved on a one-on-one basis.
Steps to Obtain a Series 65 License
- Pass the Securities Industry Essentials (SIE) Exam
As of 2018, new members entering the financial services industry are required to first pass the Securities Industry Essentials (SIE) examination. This exam introduces key concepts, definitions, and acceptable and unacceptable sales practices.
- Find a Sponsorship or Self-Register
An individual must find a sponsor firm in order to register for any FINRA exam except for the Series 65 and SIE exam. Firms sponsor an individual by submitting Form U4, also known as the Uniform Application for Security Industry Registration. This form initiates the appropriate background checks, including fingerprinting, and registration filing of the individual with FINRA and its member firm.
If a person does not obtain a sponsor, they may still sit for the Series 65 exam. However, they will have to file Form U10 with FINRA and pay the appropriate fee.
- Study for the Exam
The Series 65 exam is built to be both a regulatory and financial competence test. Be prepared to memorize both law and regulation requirements but also preform calculations on various topics. There have been recent updates over the years to include topics such as cyber-security, social media, and anti-money laundering. It is highly recommended to take an educational course to learn the appropriate information.
This type of course can be found on the Study.com website under Financial Securities Courses. Plan on taking practice exams before the real thing. It is recommended to take at least two but possibly more if your practice scores are not above the passing rate or it takes you longer than the required time restraint.
- Pass the Exam
The exam consists of 130 multiple choice questions and must be completed in 3 hours. An individual must get at least a 94/130, or just over 72%, to pass the Series 65 examination.
Series 65 Exam Resources
The two main resources an individual should reference is the FINRA website, www.finra.org and a study prep website such as Study.com. First start by reading what FINRA publishes on their website in the event any updates or notice is posted about updates to rules or the exam. It is also important to start with the organization that is producing the exam as you can also find the specific laws, requirements, and legal documentation of the industry.
Second, reference a study prep website, such as Study.com. This is the best place to find best practices, educational resources, and practice problems. This type of website is best because it translates the legal documents into educational pieces and typically makes it easier to learn. They also produce information from industry professionals who have passed the exams and direct you to the important topics to focus on.