The Series 7 Exam and Why You Should Take It

If you have looked into a career in the Securities Sector, you may have been surprised at how many exams and licenses there are available. Thankfully, not all of the exams must be taken. Determining where you want to go in your career will decide what exams and path you will need to take.

As a financial representative just entering the industry, the Series 7 Exam is one to become familiar with. As you may already know, you need to obtain certain licenses to perform specific duties, and the Series 7 Exam is a test that can give you the license you need for the next step in your career.

A Series 7 license used to be thought of as the “Stockbroker Exam”. But it is widely used for much more. It will allow you to work with all securities products, including corporate securities, municipal fund securities, options, direct participation programs, investment company products and variable contracts.

What is the Series 7 Exam?

The Series 7 Exam is also known as the General Securities Representative Examination. It is a test that audits your ability as an entry-level representative to perform your regular day-to-day duties, like how to handle sales of corporate securities, investment company securities, options, variable annuities, government securities, and more.

What is on the Exam?

Investopedia considers this to be the hardest of the securities exams. Previously, the exam was almost 8 hours with 250 questions. It has been pared down, with the SIE Exam taking on some the topics no longer covered. The exam is now made-up of 125 multiple-choice questions. When testing, you will have 3 hours and 45 minutes to complete the exam.

The Series 7 Exam has four sections relating to the four major job functions of a general securities representative:

  1. Seeking business from potential and existing customers (9 questions)
  2. Opening accounts after gathering and examining a client’s profile and investment goals and objectives (11 questions)
  3. Providing clients with the proper information regarding investments and then making recommendations, transferring assets, and lastly, maintaining the appropriate paperwork and records (91 questions)
  4. Gathering and verifying the client’s purchase and sell instructions and agreements, and then processing, completing, and confirming the proper transactions (14 questions)

This exam requires a 72% minimum score to pass.

Now, passing this exam doesn’t exactly give you the license right away. In fact, this test has a corequisite test, the SIE Exam, also known as the Securities Industry Essentials Exam. SIE is different in the fact it does not require a sponsor. This course may be taken before the Series 7. A passing score on both exams is a requirement for obtaining the Series 7 license.

How to Take the Exam

Before you can take the exam, you need to have a sponsoring company that is a member of FINRA. Any firm that sells securities must be a member of FINRA and be in good standing.

Tests may be taken remotely or at a local test center. Both of these options go through Prometric. More than one exam may be taken at a time. For example, you can take your SIE and Series 7 on the same day.

If you do not pass on your first try, you will need to wait 30 days and then you may try again.

Why You Should Take the Series 7 Exam

Anyone interested in becoming an entry-level registered representative, financial advisor, stockbroker, investment manager, or any sort of trader should take the Series 7 Exam. The Series 7 license is required to sell most financial securities and perform day-to-day tasks as a financial representative. There are many people who hold this license, especially because it is one of the first stepping stones to a career as a financial representative. In fact, according to Financial Industry Regulatory Industry (FINRA) statistics, there are 612,457 registered representatives in the industry.

After passing the exam and becoming a registered representative, you are qualified to solicit, purchase, and sell all securities products. Those products may include:

  • Corporate securities
  • Options
  • Municipal fund securities
  • Investment company products
  • Government securities
  • Venture capital
  • Hedge funds
  • Money market funds
  • Mutual funds
  • Exchange-traded funds

How Long is a Series 7 License Valid?

After passing your exam and having the license for two years, you must take continuing education (CE) classes. The number of classes varies by state. This ensures you stay up-to-date on new regulations and in compliance with any new regulatory requirements that have happened in the past two years.

Tips for Passing the Series 7 Exam

Because this is a hard exam, with an average passing rate of 65%, it’s essential to study and prepare for it properly and effectively. Most providers recommend studying for 80-100 hours or 4-6 weeks.

Before you test

  • Establish a study routine. Give yourself enough time to study.
  • Take practice exams often to test your knowledge.
  • Have a productive study space, like one that is organized, bright with light, and rid of distractions.
  • Get up and take breaks regularly during study sessions.
  • Drink water and snack on food that will help you think clearly, like nuts, yogurt, berries, and fish.
  • Prepare for exam day, like getting enough rest the night before, eating a good meal before testing, and being prepared with the identification and testing materials you need.

Don’t let the difficulty of this test scare you away from the Securities Field. The Series 7 Exam can open up new opportunities for career advancement, increase your earning potential, and enhance your professional credibility.

To learn more about the Series 7 exam, what is on the exam, or to find the best ways to prepare, contact STC today. STC helps students like you not only properly prepare for the upcoming exam, but also help them pass their exam on the first try. STC even offers a Pass Guarantee!

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