The financial services industry is heavily regulated.  In order to enter into the industry and sell securities, you must first prove that you have the competence.  In order to showcase your competency, the Financial Industry Regulatory Authority (“FINRA”) requires that you take the Series 7 exam, also known as the General Securities Registered Representative Qualification Exam.  In order to take the exam, you must be sponsored by a FINRA member firm.

Currently, the Series 7 is broken down into two three-hour segments.  The exam has 250 questions that are scored and an additional 10 questions that are pretested.  The questions focus on the main job functions of a general securities principal.  The job functions tested on the exam include the following:

  • Seeks business for broker-dealer through customers and potential customers
  • Evaluates customers other security holdings, financial situation and needs, financial status, tax status, and investment objective
  • Open accounts, transfer assets and maintains appropriate account records
  • Provides customer with information on investments and makes suitable recommendations
  • Obtains and verifies customers’ purchases and sales instructions, enters orders, and follows up

If you pass the Series 7, you will be permitted to trade all securities including, but not limited to, corporate stocks and bonds, rights, warrants, real estate investment trust (REITs), collateralized mortgage obligations, and municipal securities.

In 2018, it is expected that the structure of the Series 7 exam will drastically change.  Currently, the Series 7 does not have a prerequisite exam.  During the 4th quarter of 2018, FINRA plans to implement the Securities Industries Essentials Exam (“SIE”).  The SIE will replace portions of all the existing exams including the Series 6, Series 7, Series 22, Series 55/56, Series 79, Series 82, Series 86/87, and Series 99.  As a result, the Series 7, among the other exams, will shrink and become top-off exams that are focused on the specialized knowledge that is needed for that particular qualification.  In order to take the Series 7, you will need to pass the SIE.

Although an additional exam will be required to enter into the industry, there is good news for those interested.  The SIE does not require sponsorship from a FINRA member firm.  Therefore, you can take the exam whenever you are ready.  If you pass the SIE, you will have a four year window to find a firm to sponsor you for the Series 7.