If you’ve looked into becoming a financial advisor or stockbroker, chances are you’ve wondered about the exam you have to take to earn those job titles.
Lots of professional exams have extremely low pass rates. Luckily, the pass rate for the Series 7 exam is estimated to be around 70%. So, while it’s difficult, it’s doable!
In this guide, I’ll walk you through everything you need to know about the Series 7 exam, from exam format and structure to the topics you’ll have to study. By the end, I hope you’ll know exactly whether taking the Series 7 exam is right for you.
Key Takeaways
- Broad Content Scope: The Series 7 Exam tests foundational and applied knowledge, including basic securities industry information and investment company products.
- Registration Requirement: To obtain full general securities registration, candidates must successfully complete both the Securities Industry Essentials (SIE) Exam and the Series 7 Exam.
- Job Functions Tested: The exam assesses critical major job functions, such as evaluating customers’ financial profiles, recommending suitable investments, and verifying customer transactions.
- Challenging but Achievable: With preparation and focus on areas like customer accounts, sales instructions, and regulatory agencies, success is within reach.
- Career Advancement Opportunity: Passing the Series 7 Exam unlocks diverse securities sales roles and builds a strong foundation for a finance career.
What is the Series 7 Exam?
The Series 7 Exam legally qualifies professionals to do certain things for their clients, such as selling securities products and offering investment advice. In the exam, candidates will have to tackle questions about making sound recommendations to their clients, managing customer accounts, and staying compliant with the law.
To be eligible to sit for the exam, candidates must first earn a passing score on the Securities Industry Essentials (SIE) exam, which covers basic securities industry information. Together, these exams ensure that professionals like financial advisors and stockbrokers can effectively and ethically serve their customers.
Exam Format and Structure
Let’s cover the basics about Series 7 you need to know. Here’s a quick breakdown:
- Number of Questions: 125 multiple-choice questions.
- Duration: 3 hours and 45 minutes.
- Passing Score: 72% (90 of the 125 questions answered correctly)
- Question Format: Multiple-choice questions with four possible answer options
What Topics Are a Part of the Series 7 Exam?
The Series 7 Exam covers four job functions you’ll perform in your finance career after the exam. The exact topics you’ll cover include:
(F1) Seeks Business for the Broker-Dealer from Customers and Potential Customers
- Understanding Client Needs: Learn about clients’ financial goals and risk tolerance.
- Prospecting: Reach out to potential clients through calls, emails, or meetings, following legal guidelines.
- Effective Communication: Clearly explain investment options to build trust.
- Marketing Strategies: Develop creative ways to attract and retain clients for the broker-dealer.
(F2) Opens Accounts after Obtaining and Evaluating Customers’ Financial Profiles and Investment Objectives
- Collecting Client Information: Gather details on income, savings, goals, and risk comfort levels.
- Selecting Account Types: Assist clients in choosing individual, joint, retirement, or margin accounts.
- Regulatory Compliance: Follow regulations like Know Your Customer (KYC) and Anti-Money Laundering (AML) to ensure lawful and ethical practices.
- Aligning Investments with Client Profiles: Recommend strategies that fit clients’ financial situations.
(F3) Provides Customers with Information about Investments, Makes Recommendations, Transfers Assets, and Maintains Appropriate Records
- Explaining Investment Products: Break down options like stocks, bonds, mutual funds, and direct participation programs.
- Making Suitable Recommendations: Suggest investments that align with clients’ goals and risk tolerance.
- Facilitating Asset Transfers: Assist clients in moving funds or investments smoothly.
- Maintaining Accurate Records: Keep detailed records of communications, transactions, and agreements for compliance.
(F4) Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions
- Executing Trades: Ensure buy/sell orders are processed accurately and promptly.
- Verifying Client Instructions: Confirm clients’ intentions and obtain necessary approvals.
- Completing Transactions: Oversee the settlement of trades and the delivery of securities or funds.
- Providing Trade Confirmations: Send clients clear, detailed confirmations of their transactions.
How Hard is the Series 7 Exam?
The Series 7 Exam isn’t easy by any means. However, a surprising amount of professional exams in the finance world have rock-bottom pass rates, some, like the CFA Level I, averaging around 45%. Meanwhile, the pass rate for the Series 7 exam is much more approachable, with around 70% of people passing.
Here are a few factors that make passing the exam a challenge despite its less intimidating pass rate:
- Extensive Content: The exam tests various topics, from basic securities industry information to complex investment company products.
- Scenario-Based Questions: Candidates must access their expertise to make accurate, helpful recommendations and complete critical job tasks in realistic scenarios.
- Time Pressure: With 125 questions in under 4 hours, time management is essential.
Who Needs the Series 7 Exam?
The Series 7 Exam is ideal for financial advisors and stockbrokers, but in general, if you’re a professional who offers investment advice, you probably need to pass the Series 7 exam. Here’s a quick list of everything earning your Series 7 license lets you do:
- Corporate Securities: Stocks, bonds, rights, and warrants
- Funds: Mutual funds, money market funds, unit investment trusts (UITs), and exchange-traded funds (ETFs)
- Real Estate Investments: Real estate investment trusts (REITs)
- Government Securities: Options on mortgage-backed securities, repos, and certificates of accrual on government securities
- Specialized Investments: Direct participation programs, venture capital, municipal securities, and hedge funds
With such a wide spectrum of products and services, you’ll be able to offer your clients the Series 7, which is a no-brainer for finance industry professionals.
Final Thoughts
If you’ve made it this far, you now know the importance of the Series 7 exam. You’ll unlock a wealth of new investment products and services to offer your clients and, as a result, a more robust ability to help them reach their financial goals.
The Series 7 is tough, but it could be a lot tougher. As far as professional exams go, you’re getting off easy, relatively speaking—but that doesn’t mean you can pass without putting in the effort. Get studying, master the material, and you’ll have your Series 7 license in no time.
FAQs
The Series 7 allows you to sell securities like stocks, mutual funds, municipal securities, government securities, and more as a General Securities Representative.
Yes, Series 7 is challenging due to its broad content. To prepare, you need a 72% passing score and typically 80–100 hours of study.
Series 7 focuses on selling investment products, while the CFP emphasizes financial planning and client-focused personal finance strategies.
The Series 7 is essential for careers in the securities industry. It proves that you can sell and advise on investment products while meeting regulatory standards.
The Series 7 is a FINRA licensing exam that qualifies individuals to buy, sell, and advise on a wide range of securities products.
Series 7 is more comprehensive, covering securities products and trading, while Series 63 focuses solely on state securities laws. Ultimately, with Series 63 vs Series 7, the latter requires broader industry knowledge.
The SIE is an entry-level exam covering basic industry knowledge, while the Series 7 is more advanced, focusing on securities products and transactions. For SIE vs. Series 7, the former is a prerequisite, and the latter licenses you to trade.
