To become a professional who markets and sells investments, professionally, you must obtain a securities license. The products you will sell determine the license you'll need, your future compensation and the services you're authorized to provide.
A Series 7 license, which is administered by the Financial Industry Regulatory Authority, or FINRA, is sometimes referred to as a general securities representative license. Due to its lack of specificity, it has a broad reach, meaning you'll be able to sell a wide variety of securities.
What Is the Purpose of the Series 7 Exam?
A Series 7 license authorizes an individual to sell different types of security products, with the exception of commodities and futures. In general, the Series 7 exam ensures an entry-level registered representative is capable of performing the tasks of the general securities representative role, such as the sale of corporate securities, municipal securities, investment company securities, variable annuities, direct participation programs, options and government securities.
To be licensed to trade securities, a candidate must sit for the General Securities Representative Qualification Examination, which is administered by the Financial Industry Regulatory Authority (FINRA). The Series 7 license confirms a registered representative's competence in regards to personal and interpersonal competencies.
Read More: FINRA Requirements to Maintain a Series 7 License
What Is the Focus of the Series 7 Exam?
The Series 7 exam assesses an entry-level finance professional's competency as it relates to the securities industry and selling and trading securities. The focus of the Series 7 exam is investment risk, debt instruments, packaged securities, equity and taxation as well as options, retirement plans and the interaction with clients.
Role of a Licensed Series 7 Representative
A licensed Series 7 Representative sells a wide range of securities with the exception of commodities and futures. Based on training the representative received in preparing for the Series 7 exam, she uses her knowledge of investment risk, taxation, retirement plans, and equity and debt instruments to guide a client's investment in certain securities. For instance, the representative will evaluate a customer's financial profile and investment objectives, make investment recommendations, transfer assets and maintains the appropriate records and process transactions according to the customer's instructions.
Selling real estate or life insurance products are not within the licensed Series 7 representatives professional purview. Depending on the state in which the representative resides, she may be required to pass the Series 63 Uniform Securities Agent State Law Exam as well.
Qualifying Requirements of the Series 7 Exam
The FINRA organization governs the operation of securities firms and the activities of registered brokers, a process that ensures that a person who sells securities is qualified to do so. For example, candidates for a Series 7 license must sit for the Securities Industry Essentials (SIE) exam first.
The Essentials exam assesses a candidate's knowledge of the securities industry, including types of security products and the risks associated with their purchase. Also tested is a candidate's grasp of the securities markets and regulatory agencies and their function.
Also, a FINRA member firm must sponsor candidates for the Series 7 exam. The sponsoring firm files a Form U4 to register the candidate for the exam.
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Billie Nordmeyer is an IT consultant of 25 years standing. As a senior technical consultant for SAP America and Deloitte Touche DRT Systems, a business analyst, senior staff, and independent consultant, Billie has worked across the retail, oil and gas, pharmaceutical, aeronautics and banking industries. Billie holds a BSBA accounting, MBA finance, MA international management as well as the Business Analyst and Software Project Management certificates from the Cockrell School of Engineering at the University of Texas at Austin.