Series 7 Exam

It assesses an entry-level representative's ability to do their job as a general securities representative.

Author: Elliot Meade
Elliot Meade
Elliot Meade
Private Equity | Investment Banking

Elliot currently works as a Private Equity Associate at Greenridge Investment Partners, a middle market fund based in Austin, TX. He was previously an Analyst in Piper Jaffray's Leveraged Finance group, working across all industry verticals on LBOs, acquisition financings, refinancings, and recapitalizations. Prior to Piper Jaffray, he spent 2 years at Citi in the Leveraged Finance Credit Portfolio group focused on origination and ongoing credit monitoring of outstanding loans and was also a member of the Columbia recruiting committee for the Investment Banking Division for incoming summer and full-time analysts.

Elliot has a Bachelor of Arts in Business Management from Columbia University.

Reviewed By: Hassan Saab
Hassan Saab
Hassan Saab
Investment Banking | Corporate Finance

Prior to becoming a Founder for Curiocity, Hassan worked for Houlihan Lokey as an Investment Banking Analyst focusing on sellside and buyside M&A, restructurings, financings and strategic advisory engagements across industry groups.

Hassan holds a BS from the University of Pennsylvania in Economics.

Last Updated:October 19, 2023

What is the Series 7 Exam?

The Series 7 exam is a General Securities Representative Qualification Examination (GS) that assesses an entry-level representative's ability to do their job as a general securities representative.

The exam assesses each candidate's knowledge of the essential functions of a general securities representative, such as sales of municipal securitiescorporate securities, investment company securities, direct participation programs, variable annuities, options, and government securities.

To earn a General Securities Representative registration, candidates must first pass the Securities Industry Essentials (SIE) exam and then the Series 7 exam.

The Financial Industry Regulatory Authority (FINRA) administers the Series 7 test.

Stockbrokers must pass this exam to earn a trading license in the United States. The entry-level exam assesses applicants' core knowledge and concepts for working in the securities sector.

Passing the Series 7 test allows candidates to trade a wide range of securities, including stocks, mutual funds, options, municipal securities, and variable contracts. 

However, stockbrokers are not permitted to market real estate or life insurance products under the Series 7 license.

Candidates must pass this exam and get a Series 63 license, which is necessary for several states. The Uniform Securities Agent State Law exam is another name for the Series 63 exam.

Content outline of the series 7 exam

These topics may be covered throughout the exam, and the level of knowledge required to pass it. A general securities representative has four essential work tasks.

These are some examples:

Content Outline
Major Job Function: Number of exam items
F1 - Seeks Business for the Broker-Dealer from Customers and Potential Customers 9
F2 - Opens Accounts after Obtaining and Evaluating Customers’ Financial Profiles and Investment Objectives 11
F3 - Provides Customers with Information about Investments, Makes Recommendations, Transfers Assets, and Maintains Appropriate Records 91
F4 - Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions 14
Total 125

It consists of 125 multiple-choice questions designed to examine the candidate on the four key responsibilities described above. 

The exam will last 225 minutes (3 hours 45 minutes) and cost $245. The passing mark for the exam is 72 percent, which means the candidate must correctly answer at least 90 questions. 

FINRA will not issue a tangible certificate to the candidate upon exam completion. Instead, present or prospective employers who want to view the proof of completion will do so through FINRA's Central Registration Depository (CRD).

Series 7 Exam Requirements

There are various qualifications for a candidate to take this exam. 

According to FINRA, an applicant must be eligible for the following:

  1. In addition, candidates for the exam must be sponsored by a FINRA member firm or another eligible self-regulatory organization (SRO) member firm. 
  2. For the candidate to be registered for the licensing exam, the FINRA member organization must file Form U4 (Uniform Application for Securities Industry Registration or Transfer form). 
  3. Non-FINRA members should register for the exam using the Test Enrollment Services System (TESS)
  4. FINRA will govern the activities of securities firms and registered brokers, ensuring that anyone who sells securities products is qualified and tested. 

Series 7 & Permitted activities

Obtaining a Series 7 license qualifies the individual to advise, purchase, and/or sell all securities products.

Corporate securities, municipal fund securities, options, direct participation programs, investment firm products, and variable contracts are all examples of what the licensed financial advisor can do. 

According to FINRA (2022), a qualified applicant can do the following actions and provide the following products:

  • Public offerings and/or private placements of corporate securities (stocks and bonds)
  • Rights
  • Warrants
  • Mutual Funds 
  • Money Market Funds
  • Unit Investment Trusts (UITs)
  • Exchange-traded Funds (ETFs)
  • Real Estate Investment Trusts r (REITs)
  • Options on mortgage-backed securities 
  • Government Securities 
  • Repos and Certificates of Accrual on Government Securities 
  • Direct Participation Programs 
  • Venture Capital 
  • Sale of Municipal Securities 
  • Hedge Funds 

If you are working with someone with a Series 7 license, you can expect them to know the following areas: 

Series 7 licensed financial advisors also have expertise in building diverse, risk-assessed investment portfolios for their clients. This is due to the Series 7 exam's emphasis on portfolio construction and asset allocation techniques.

When contemplating a significant investment or retirement plan, contacting a Series 7 licensed financial advisor is essential.

The importance of Series 7 licensing exams

Compared to unlicensed advisers, these tests prepare future financial advisors with considerable industry knowledge to deliver to clients. 

FINRA imposes stringent rules for Series 7-licensed professionals to keep their positions and serve their clients to the best of their abilities.

This is illustrated by the need for candidates to first pass the SIE exam, which assesses the candidates' fundamental knowledge of the securities business. The SIE exam has a pass rate of 74 percent for first-time takers and an overall pass rate of 82 percent. 

On the other hand, the questions on the Series 7 exam are specific and connected to stockbrokers' day-to-day operations, duties, and job tasks. As a result, it may be considered a complicated exam. 

FINRA examinations are difficult because the organization is dedicated to protecting investors and maintaining market integrity in a way that promotes thriving capital markets. This is done to ensure that investors can invest with confidence.

Some of their basic principles include: 

  • Investors should receive investor protection during the sale process, understanding complex products, a compensation fund, and a financial dispute/resolution center.
  • Financial advisors who sell a securities product will have been through the Series 7 exam to ensure they are qualified and licensed. 
  • The information in advertisements for securities products should be truthful to avoid misleading investors.
  • Investors should receive a recommended securities product that is suitable and fits their needs.
  • Before purchasing an investment product, investors are given full transparency about it.

FINRA regulates approximately 624,000 brokers across the country and analyzes billions of market occurrences.

Study Tips For Series 7 Exam

  1. Put the time in - The recommended prep time for the exam is around 80-100 hours. In addition, it is recommended that you practice at least 1000 questions before the exam. 
  2. Think concepts, not questions - passing the exam is less about memorizing answers and more about grasping the material's concepts. This is because learning the idea will enable you to solve more complicated issues that depend not on memorization but on application.
  3. Set a routine early - a consistent, regular practice plan can assist you in getting into the rhythm of preparing for the exam. This will aid in recalling the material learned and help you prepare for the exam. 
  4. Don't waste time on technical subjects - don't spend too much on the corporate bond section because these two topics account for only 20% of the exam. The new Series 7 exam emphasizes clients and portfolio construction for them. This usually necessitates more practical understanding than technical knowledge. 
  5. Know the bell curve rule - the first and last 25 questions are typically the easiest. As a result, don't be alarmed if the central questions seem more difficult. 
  6. Train for what you are getting into - remember to practice within the time limit of 225 minutes so you're more familiar with the test structure and won't be as stressed during the exam. The more you practice for this exam, the easier it will get.
  7. Go above and beyond - while only 72 percent is required to pass the Series 7 exam, you should aim for at least 80 percent when practicing. In this manner, you may go into the exam knowing you'll pass, giving you more confidence in yourself. 

These are just a few pointers to get started if you consider taking the exam. If you want more personalized and flexible assistance, consider taking the WSO Series 7 exam prep course.

Series 7 Exam FAQs

Researched and authored by Freida Lee | LinkedIn

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