When a person is preparing to enter the financial services industry as a registered representative or investment advisor representative, they must take—and pass— certain qualification examinations. Firm’s must also understand registration requirements to properly advise employees and ensure licenses are held properly. Failure to do so can result in an investment professional re-taking an exam. Below are frequently asked questions related to the state licensing requirements.
What are Series 63, Series 65 and Series 66?
The securities industry is composed of licensing requirements at both the federal and state level. Based on the type of business of the Firm, an investment professional must take and pass certain licensing exams to become federally qualified to offer and sale securities and/or charge a fee to provide advice on investment products. The Series 63, Series 65, and Series 66 are the licenses required by securities administrators in most states.
Is there a difference between the Series 63, Series 65 and Series 66?
The Series 65 or Uniform Investment Advisor Law Exam is a state license for investment professionals looking to charge a fee to provide investment advice as an IAR (investment advisor representative). It was the first exam created by NASAA (” North American Securities Administrators Association”). Once an IAR passes the required exam (or meets an exception) and receives registration approval, no additional exams are required if solely acting in an IAR capacity. Some states provide exceptions to professionals who have active certifications for the following:
- ChFC – Chartered Financial Consultant
- PFS – Personal Financial Specialist
- CFA – Chartered Financial Analyst
- CFP – Certified Financial Planner CIC – Chartered Investment Counselor
Investment professionals should inform their Firm’s registration department if they have any of the certifications mentioned so that the Firm can properly complete registration paperwork. Failure to do so may inadvertently open an exam window.
The Series 63, formally known as the Uniform Securities Agent State Law Examination is required for broker-dealer agents to make an offer or sell securities to residents in most states. Unlike the Series 65 where no additional exams are required if solely acting in an IAR capacity, a broker-dealer agent must also take and pass additional securities exams including but not limited to the SIE (“Securities Industry Essentials”) Series 6 or Series 7 before a candidate can apply to register with a state as a broker-dealer agent. The agent can take the Series 63 prior or following completion of the SIE and the Series 7 or 6 exams, but all corequisites must be completed prior to conducting business. Individuals living or working only in CO, D.C., FL, LA, MD, or Puerto Rico are not required by those jurisdictions to obtain a Series 63 license however if an agent plans to solicit business in states outside of those mentioned, then they must take the exam.
The Series 66 is a combination of Series 63 and Series 65 and allows securities industry professionals seeking to transact securities business as a broker-dealer agent and provide investment advice for a fee as an investment adviser representative. Since the FINRA SIE and either a Series 6 or Series 7 exams are also required exams that must be successfully completed with the Series 63 exam for a broker-dealer agent, the Series 66 does not include the product, analysis, and strategy questions that are a large part of the Series 65.
Does an investment professional have to take the exam each time they register in a state?
No. The exams are national exams, so they do not have to take the exam each time they register in a state.
How long do they remain active?
Once the exam is passed, a Firm must properly hold the registration to avoid a lapse. Investment professionals can review their active registrations through FINRA BrokerCheck or FinPro (“FINRA’s Financial Professional Gateway). Registrations will lapse (or expire) two years from the date an investment professional passed the exam if not held by the Firm. This also includes each side of the Series 66 (remember that the Series 66 is a combination of the Series 63 and Series 66 license). If the Firm is only a Registered Investment Advisor and not a Broker-Dealer, then the professional’s Series 63 portion of the Series 66 license will lapse and they will be required to retake the exam if they move to a Firm where they need to become a broker-dealer agent.
Who administers the exams?
The Series 63, Series 65 and Series 66 are state exams developed by the NASAA (“North American Securities Administrators Association”). The NASAA is a representative body made up of securities regulators from the fifty states and the territories of the United States. This association handles creating, updating, and maintaining the Series 63, 65, and 66 state licensing exams. Although the exam was developed by the NASAA, it is a national exam administered by FINRA (Financial Regulatory Authority).
Where can I go for more information?
If you would like to learn more about how we can assist your Firm in building a solid registration and licensing program, please contact our office.