Objective
The objective of this article is to provide test takers with the must know information about FINRA, NASAA pre licensing exams. Once read you will have a better understanding of how the exams are administered, the testing procedures and how to prepare for your exam.
History
Industry mandated licensing requirements established by FINRA, NASAA and the NFA dictate which exams must be taken by financial professionals. While the licensing requirements are mandated by industry rules based on the role of the agent or principal, there are no mandated requirements for how the candidates prepare for the exams
The creation of the Securities industry Essentials exam as a general knowledge entry level exam allowed test-takers to self sponsor and sit for the SIE exam. However, the SIE exam will not allow an individual to conduct any business does not provide them with a Securities license. Successfully passing the SIE exam give the test taker 4 years to complete the required top off exam to become fully registered. All of the FINRA top off exams require that a FINRA member firm sponsor the candidate for the exam. A firm such as Merrill Lynch or Morgan Stanley must submit form U4 on behalf of the test taker to request that a window be opened for the candidate to sit for the requested exam. Form U4 will be submitted by the firm via the web CRD system. This system provides internet access to member firms to the central registration depository (CRD) where detailed registration information is maintained by FINRA. Opening a window usually takes 24-72 hours depending on how quickly the firm’s registration manager can submit the information. Once the window is open the candidate has 120 days to sit for the exam. Candidates who do not pass the exam will be required to wait 30 days until they are allowed to retest. The firm will request another examination for the candidate and must pay another testing fee. A candidate who is unsuccessful after a second attempt will be required to wait another 30 days to retest. A candidate who fails an exam three times must wait 6 months to retest. The North American Securities Administrators Association or NASAA is composed of the securities administrators from each state. It is the role of the state securities administrator to enforce the rules of the Uniform Securities Act within their state. NASAA also writes the exam material for the series 63, 65 and 66 exams. An individual may self-sponsor for these NASAA exams. However, only the series 65 will allow a candidate to conduct business without passing a FINRA exam which requires the candidate to be sponsored. The series 3 is a National Futures Association or NFA exam and does not require a candidate to be sponsored. FINRA will impose a cancellation fee on all test takers who want to cancel or reschedule their exams if the exam is cancelled or rescheduled with less than 11 business days remaining. The cancellation fees will be imposed as follows:
To better understand how to avoid paying the cancelation fee please note the following.
| Appointment is scheduled for | To avoid late cancellation/reschedule fee (within two business days of appointment), appointment must be cancelled or rescheduled by midnight, Eastern Time (ET), on: | To avoid three – 10 business day cancel/reschedule fee, appointment must be cancelled or rescheduled by midnight, ET, on: |
| Sunday, Monday | Wednesday of the preceding week | Sunday two weeks before |
| Tuesday | Thursday of the preceding week | Monday two weeks before |
| Wednesday | Sunday of the same week | Tuesday two weeks before |
| Thursday | Monday of the same week | Wednesday two weeks before |
| Friday | Tuesday of the same week | Thursday two weeks before |
| Saturday | Wednesday of the same week | Friday two weeks before |
2. Knowledge and Skill Required to Pass an Exam
In order to pass a FINRA, NASAA or NFA exam all candidates must demonstrate a complete understanding of the knowledge being tested. However, having a complete understanding of the knowledge in and of itself is usually not enough to get a student passed the exam. In addition to having the required knowledge, all students must be able to apply that knowledge in the way the exam wants the knowledge to be applied. Being able to identify what the question is asking and to apply your knowledge effectively is key to passing your exam.
3. Learning Products Required to Prepare to Pass Your Exam
The textbook is the absolute foundation of every student’s preparation. This is true for students who attend a class as well as for students who pursue self-study options. The textbooks are designed to provide students with the knowledge required to pass the exam. The exam preparation software is designed to help students master the application of the knowledge in a simulated exam environment. Neither the textbook nor the exam prep software alone are sufficient to prepare a student to pass the exam. A comprehensive textbook combined with a robust test bank and full featured software program are essential learning tools. Live instructor led classes presented in both traditional and webinar formats as well as recorded video classes help students clarify their understanding and fine tune the application of challenging concepts.
4. You Must Have a Study Plan
While everyone learns in a different way, everyone must start by reading a professional quality textbook published by a large professional level publisher. You should find a place that is quiet where you will not be interrupted by work, family or social obligations. (Yes that means turning your phone off). We recommend breaking down your reading into 60- 90 minute sessions. Do not do monster “cram sessions”, take breaks, put the book down for a while, rest, get something to eat, go to the gym, whatever you want to do just to give your mind a rest.
Read the textbook when you are alert! For each person that is a different time of day. Some of us are morning people, others are night owls. Only you know when you are the most alert and capable of absorbing the material.
Organizing your study time into a manageable schedule will improve your retention of the information and help prevent fatigue and burnout. Most exams can be passed with 4-6 weeks of diligent studying several hours per day. Yes, people do pass the exam by doing a 2 week monster cram session, but statistically people who prepare in this way pass the exam at a much lower rate.
5. You Must Make Your Exam a Top Priority
Passing your exam must be one of your top priorities. You are taking the exam to either start or advance your career and professionally there should not be many things more important. If you are just starting out or are in the process of obtaining your first securities license this should be your absolute top priority. Many test takers who are preparing for principal level exams who are actively engaged in the business and making money find taking these exams to be a distraction. Many of these test takers approach the exam with a “why do I have to do this ? “ attitude and can even be somewhat annoyed at the whole process. Well the reason you are taking the exam is because it is required either by your employer or by industry regulations and without it you will not get that promotion or be able to continue acting in your current capacity.
6. You Must Read The Entire Textbook
It is amazing how many times we hear people ask if they can just do the practice questions and pass the exam. Even worse, is how many times we hear that someone has failed the exam because all they did was take practice questions or maybe just “skimmed” though the book. Just taking practice questions will NOT prepare you well enough to pass any FINRA, NASAA or NFA exam. There are no short cuts to reading the book and putting in the required time to prepare for the exam. It does not matter how long you have been in the business or how well educated you are. You are not using the knowledge required on the exam in your REAL Life! Firm rules are often very different from the rules and regulations being tested. Firms often have rules in place that are far stricter than the minimum level required by FINRA, NASAA or the NFA. Many exams require you to have a complete understanding of material you have never used and will never use. Just taking practice questions and not fully reading the textbook is the number one reason people fail their exams
7. You Must Read The Entire Question
When the question appears on the screen during your exam your first objective is not to try to answer the question. Your first objective is to try to understand what the questions is asking you. Many of the questions you will see on your exam are packed with distractors. A distractor is a piece of information that is not relevant to answering the question. The purpose of this information is to test your ability to determine what is important in any given situation. It is only there to try to trip you up. Reading the full question will help you determine what items in the question are important to the question and what items are extraneous. We recommend that you read the question fully without trying to answer it. The last sentence in the question is the key to the question or the punch line and it will tell you what the question wants from you. Once you have read the last line of the question you are now able to go back and reread the question to determine what is relevant and can now answer the question.
8. Don’t Change Your Answers
The cardinal rule in taking the exam is Don’t Change Your Answers. If you have taken your time, read the full question, used process of elimination, and made a decision; do not second guess yourself. Statistically, when you change an answer, you change it to the wrong answer more often than not, so stick with your gut! The exam will not give you a lot of information that you can go back and use to answer a question better the second time.
9. Here is How You Skip a Question
Leave the ones that cause you grief for last. Makes sense right? But here’s the rub: you need to answer each question in order for the computer to generate the next one; there is no “skip” button. So here’s how we skip questions on the exam: First, read the full question. If the question is confusing or asking about an area that you are unfamiliar with (really, whatever the reason, its ok) pick an answer, and click on “record and review”. The write down the question number on your scratch paper or dry erase tablet under questions I skipped. The computer will then bring up the next question on your exam. When you are done with all the questions, the computer will show you the questions you clicked record and review on. These are the ones you skipped. Now you can answer those questions. Since you didn’t answer them earlier, you chose a random answer, you don’t have to worry about the statistics of changing your answers, and you’ll have plenty of time to work on the difficult questions. FINRA, NASAA and NFA exams are not a speeded tests. A speeded test is one that is designed so that only the brightest students will have enough time to finish. These exams are designed to provide enough time for all students to complete each question on the exam.
10. Eliminate Any Additional Stress
Taking any of these exams is stressful enough so it is important to do all that you can to eliminate any additional stress that could negatively impact your performance on the exam. One of the best things to do here is to know exactly where your exam center is located. If you are going to be driving to the center, take a practice run so you know the route. Look for parking and go inside the building. Find out exactly how to get to the center once inside the building. If you live an hour away consider getting a hotel room nearby and go there the night before your exam so you do not have the added stress of the commute. Do not stay up all night cramming the evening before your exam. You should review your notes and highlighted portions of your textbook and perhaps do a few more practice questions , but do not do exam after exam until you are too tired to see straight. Go to bed at your normal hour and get a good night’s rest. When you wake up in the morning have a good breakfast and head to the center to pass your exam !
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Good luck on your exam!
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