How to Pass a Finance Certification Exam

What Are Finance Certifications and Examinations?

There are two important distinctions in the financial services industry when it comes to passing exams. One makes you certified, and the other makes you licensed. They both serve similar roles for educating the person taking them; however, they have different functions from a regulatory perspective.

In the financial services industry, when you hear the term licensed, it is referring to the regulatory requirement of that person with a governing agency. Certification is referring to passing a series of exams to earn a designation in a specific function within the industry.

Types of Certifications and Exams

People who set out be 'certified' typically have experience in the industry and are looking to become experts in a particular field. Examples of the most popular financial certifications are:

  1. Certified Financial Planners (CFP®)
  2. Chartered Financial Consultants (ChFC®)
  3. Chartered Financial Analyst (CFA®)
  4. Chartered Alternative Investment Analyst (CAIA®)
  5. Chartered Life Underwriter (CLU®)

These certifications typically have advanced education, experience, and continuing education requirements. Another important note about certifications is that most of them are regulated and supervised by their own governing body. That governing body creates the standards the certificants must adhere to, provide disciplinary actions, and creates the exams that must be passed.

Finance exams are required for individuals to sell investment related products. These exams are furnished and overseen by FINRA. Depending on the investment product a person sells, it will require a specific license. The most popular FINRA license is the Series 7 which allows a person to sell most, not all, investment products on the market. Starting October 1, 2018, all individuals entering the financial services industry must first take and pass the Securities Industry Essentials (SIE) exam. This exam is an introduction to basic concepts, definitions, and registration requirements for the industry.

Examples of some of the popular finance exams are:

  1. FINRA Series 7 - General Securities Representative Exam
  2. FINRA Series 6 - Investment Company and Variable Contracts Products Representative Exam
  3. FINRA Series 65 - Uniform Investment Advisor Law Exam
  4. FINRA Series 66 - Uniformed Combined State Law Exam
  5. FINRA Series 63 - Uniformed Securities Agent State Law Exam

Career Paths for Certifications and Exams

The typical career path for someone in the financial services industry is to first become licensed with FINRA sponsored exams. This is because it is required to participate and gain experience within the industry. Experience is important because most certifications have experience requirements.

Individuals who are licensed persons are eligible to sell investment related products and act in other areas of the industry such as a supervisor. Therefore, no matter what area you hope to specialize in, if you sell an investment or oversee sells related matters, you must be licensed. The typical next step after participating in the industry while being licensed is to decide on a specialization.

These days, clients tend to look for certifications backed by the name of their financial advisors. The reason is that it shows that person is dedicated to their profession by pursing advanced training, their level of education is formalized, and they are typically held to a higher standard because of fiduciary duty. Fiduciary duty is the requirement to act in the best interest of another person. This duty is also found in some FINRA licenses such as the Series 65.

Preparing for the Exam

Depending on the examination or certification you are choosing to purse will determine the amount of information you must learn, and the analytical depth it requires. In general, it is best to read as much about the exam from their websites such as (www.finra.org and www.cfp.net) as well as study prep websites (www.study.com) to find the outlined topics of each exam.

For examinations, be prepared to focus on definitions, concepts, and regulatory requirements. For certifications, expand your knowledge and ability to include calculations. Depending on your level of experience and knowledge, taking core classes to strengthen your base may be a good idea. You can find similar courses on the Study.com website.

Continue reading: What is a FINRA Exam?

Interested in a career in the financial securities industries? Learn about the FINRA exams, including the difference between SIE and Series exams; and learn how you can prepare using Study.com.

Take the Financial Securities Exam with confidence
Try our test prep resources risk-free today and achieve the test score you want