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Updated on Thursday, March 18, 2021
The Series 7 is a type of investment license for financial professionals and is a requirement for people who sell investments like stocks, bonds, mutual funds and other securities. To qualify for a Series 7 license, an individual must pass an exam that is administered by the Financial Industry Regulatory Authority (FINRA), a government organization.
This article explains the requirements and rights given under a FINRA Series 7 license, along with how it compares to other types of securities licenses.
- What’s a Series 7 (General Securities Registered Representative) license?
- How to get a Series 7 license
- What is the Series 7 exam?
- Other common financial securities licenses
What’s a Series 7 (General Securities Registered Representative) license?
The Series 7 license, also known as a General Securities Registered Representative license, is overseen by FINRA. Anyone who wants to sell securities to others needs to first obtain a license from the government. The type of license someone holds determines what types of securities they can sell, which then qualifies the license holder for different roles in the financial services industry (including a stockbroker or financial advisor).
The FINRA Series 7 license authorizes someone to sell most investment products including stocks, bonds, mutual funds, exchange-traded funds (ETFs), options and real estate investment trusts (REITs.) The Series 7 does not allow you to sell commodities futures, real estate and life insurance as these products require different licenses.
There are a few common jobs that require a Series 7. Stockbrokers, for example, need the Series 7 license in order to handle trades and sell securities to their clients. Financial advisors may also get this license if they want to sell investments directly to their clients to go along with their advice, versus asking the clients to buy the investments on their own. Life insurance agents may also get this license if they want to sell securities to go with their other business lines.
Basically, anyone who wants to sell the range of securities approved for Series 7 need this license.
How to get a Series 7 license
One of the Series 7 license requirements is that you must be employed and sponsored by a FINRA member firm or a self-regulatory organization (SRO) before applying. That means you cannot apply for this license, even if you’re a self-employed financial advisor, unless you’re affiliated with a broker-dealer.
If you find a job application that requires a Series 7 license, the company may agree to sponsor you as part of the hiring process, provided you are willing to do the necessary work to pass the test.
When a firm sponsors you, it will ask you to complete a Form U4 (Uniform Application for Security Industry Registration or Transfer), which it will file to the government. This form asks:
- Your personal information and addresses over the past five years
- Your employment history over the past 10 years
- Your professional designations
- Whether you’ve faced any liens, bankruptcies or other financial issues
- Whether you’ve faced any criminal, regulatory or civil litigation
- The exams you’d like to take
You could be disqualified from applying to sit for the Series 7, if over the past 10 years, you had any type of felony charges or any misdemeanor charges that dealt with cash or securities. Alternatively, the sponsoring firm could ask for a waiver of these disqualifying events, in exchange for agreeing to provide more supervision of your work. Your personal financial issues, like bankruptcies, don’t disqualify you from getting Series 7 license certification.
There are no education requirements to take the Series 7 exam and receive the license. The only work requirement is that you must work for your sponsoring employer for at least four months before filing the U4.
To obtain your license from FINRA for the Series 7, you must pass an exam. And once you have the license, you must take continuing education classes from FINRA two years after receiving your license, and then every three years after that.
What is the Series 7 exam?
Once your employer has sponsored you to take the Series 7 exam, you can enroll and schedule an exam date through FINRA’s website. They host exams remotely and in-person at local test centers.
The Series 7 exam tests your investment knowledge to make sure you have the relevant skills to sell securities. The exam has 125 multiple choice questions, spread across the four major job functions of a securities professional. According to FINRA, the test breakdown is as follows:
|Breakdown of Series 7 Exam Questions|
Series 7 job functions
Number of exam questions
|Seeks business for the broker-dealer from customers and potential customers||9 questions|
|Opens accounts after obtaining and evaluating customers’ financial profile and investment objectives||11 questions|
|Provides customers with information about investments, makes recommendations, transfers assets and maintains appropriate records||91 questions|
|Obtains and verifies customers’ purchase and sales instructions and agreements; processes, completes and confirms transactions||14 questions|
The Series 7 exam cost is $245, and you have three hours and 45 minutes to complete all of the questions. You must answer at least 72% of the questions correctly to pass the Series 7 exam.
You must also pass the Securities Industry Essentials (SIE) exam, another 75 question multiple-choice test from FINRA. This is a requirement for any type of FINRA securities license, including the Series 7. The order in which you take the tests doesn’t matter and it’s up to you whether you’d like to take the Series 7 or SIE exam first.
Other common financial securities licenses
The Series 7 is just one of numerous securities licenses offered by the government. Some alternative licenses allow you to sell a different set of investment products, while others meet state requirements and need to be combined with a Series 7 to sell securities. Finally, there are exams for people who want to move up into a supervisory role, known as a principal, to oversee securities representatives.
It is possible for a financial professional to hold several of these licenses to expand their services and to meet state requirements. Of these exams, the Series 7 is one of the longest and most expensive. Let’s see how it compares to some of the others.
Series 6 vs. Series 7
The Series 6 is a more limited securities license than the Series 7. It’s a much shorter and less expensive exam, and someone who only has a Series 6 can sell fewer types of products. With the Series 6 license, you can only sell packaged investment products like mutual funds, variable annuities, variable life insurance and unit investment trusts (UITs). A Series 6 license does not allow you to sell stocks, bonds and other individual securities.
Series 63 vs. Series 7
The Series 63 license is a state law test. Nearly every state government requires that in order for someone to sell securities in that state, the person needs to pass that state’s Series 63 exam on top of also having the Series 7 license. The Series 63 exam scope is different from the Series 7, and covers state securities regulations, ethical practices and fiduciary obligations.
While FINRA hosts the Series 63 exams, the requirements and questions are put together by the North American Securities Administrators Association (NASAA), which also oversees the Series 65 and Series 66 exams.
Series 65 vs. Series 7
The Series 65 license is a requirement for someone who wants to be an investment advisor and charge for their advice. That’s different from the Series 7, which allows someone to charge a commission on the sale of securities. Some advisors prefer not to charge commissions on products, known as a fee-only arrangement. That way they can avoid conflicts of interest when recommending investments.
Series 66 vs. Series 7
The Series 66 is a joint license combining the Series 63 and the Series 65 licenses. Rather than taking two separate licensing exams, you could sit for one, longer Series 66 exam to get the rights of both. Before sitting for the Series 66 exam, you must already have your Series 7 license.
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