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Series 26 Exam Prep
Series 26 License Frequently asked questions / FAQs
Most candidates who seek to become a series 26 licensed principal are looking to move their financial services career to the next level. Many of these candidates want to become a supervisor or a department manager at their firm. A series 26 license will also be required if a candidate wants to be the manager of an Office of supervisory jurisdiction. Many management roles will require a person to pass the series 26 exam. Employers as a condition of employment or promotion, require these individuals to obtain the series 26 license to function in their new job. You may be joining your firm as a branch manager, department head or in some other capacity and as a result you must pass the series 26 exam. Your firm’s compliance department, home office or HR will notify individuals directly or through their managers as to the time frame for taking the exam
A series 26 license will allow you to move up the corporate ladder and to supervise business in variable contracts and open end investment companies at a FINRA member firm. Once you have obtained a series 26 license, you may supervise registered persons who transact business with the public. Registered persons who make recommendations in redeemable securities at a limited broker dealer must be supervised by a person with a series 26 license. A series 26 license will also allow you to earn additional compensation in the form of overrides on the production of the agents you supervise. As a series 26 licensed limited principal you will be licensed to review and approve retail communication, new accounts and orders. Passing the series 26 exam and becoming series 26 licensed is a significant accomplishment .
The series 26 exam is a challenging exam. The information tested goes way beyond that which was covered on the series 6 exam. Many people who sit for the series 26 license, took their series 6 many years ago and are not in “test mode”. As such most people will need to relearn a lot of the information from the series 6 in addition to a significant amount of new and unfamiliar material . Passing the series 26 exam is a significant challenge and obtaining a series 26 license takes focus and dedication to the exam preparation process. Students should not take this test lightly. You must thoroughly prepare to take the exam and should make it a top priority. The series 26 exam covers areas many people are never exposed to in their careers. Many people who take the series 26 exam are not working in a compliance department. As such many have never had any experience dealing with areas of sales supervision and the financial and recordkeeping requirements of a broker dealer. These two areas are heavily tested on the exam. You should prepare for the exam by reading a textbook completely with a highlighter. You must read the book, there are no shortcuts and students need to understand this. You must clear your schedule, shut off your phone and focus. In addition to obtaining the knowledge required by the exam , you must master the application of the information by taking as many practice questions as you can. . We recommend at least 60 – 70 hours of preparation to ensure you pass your series 26 exam and become licensed as an investment company and variable contract principal.
If you are not sure of the answer to this question now, you will be once you prepare for the exam. The answer is that while it feels like your series 26 license is indeed transferable, in actuality it is not. If you want to change firms, your series 26 registration / license along with all of your other registrations must be terminated by your current FINRA member firm. Your former employer / the firm that you are leaving will fill out and submit a Form U5 to FINRA. This will terminate your employment and your registration with that firm. When you arrive at your new firm you must fill out and submit a new Form U4. This will begin your registration with your new firm and your series 26 license will become active at your new firm upon receiving notice from FINRA and the states where you conduct business. As a series 26 licensed professional it may indeed be part of your job description to sign and submit U4s and U5s to FINRA.
Obtaining a series 26 license will require many people to make an investment in their professional development. Your series 26 license will qualify you as a limited securities principal and allow you to supervise a broker dealer’s investment company and variable contract business. Many people who obtain a series 26 license manage offices and enjoy lucrative and successful careers. The good news is, for those who have to pay for it out of pocket, the costs are relatively low when compared to other types of training, certification and college expenses. Some employers pick up or reimburse the costs of training and the testing and registration fees. Even for these people many obtain additional resources such as additional test questions, books or videos to ensure they pass their exam and become licensed. For those who have to pay all of the expenses out of pocket, it usually only costs a few hundred dollars for the testing fees and quality training materials. . Since many people who take the series 26 are already fairly well established, the costs are affordable. You will find that obtaining a series 26 license opens many doors for you throughout your career.
Once you have obtained your series 26 license you will be required to meet certain continuing educational requirements.. You will find that this works much in the same way you were required to take continuing education for your series 6 license. Each year your employing FINRA member will distribute a questionnaire known as a “needs analysis” to each of its registered personnel. Based on the response to the that questionnaire each registered person will be assigned continuing education courses to complete. As a series 26 licensed individual, your course assignments will now change. Your firm may have you attend a seminar, webinar or take an online course to satisfy the firm element continuing education requirement. You will also be required to complete the regulatory continuing education requirement which is administered by FINRA. As a licensed principal you will now be required to be required to complete the principal level continuing education requirement by successfully completing the S201 course based on your date of association with a FINRA member. Your date of association for most people will be the date you passed your exam. You will be required to complete the S201 on the second anniversary of passing your exam and every three years thereafter. The S201 course may be completed at an approved facility or on FINRA’s continuing education portal. You will only be required to complete the S201 continuing education course. You will no longer be required to complete the S106 registered representative course.
Your series 26 license is in addition to those licenses you have already obtained. The series 6 license is a prerequisite to take the series 26 exam and by the time you sit for the series 26 exam chances are you have completed all of your other licensing requirements We hope that this answers many of your frequently asked questions about the series 26 license. If you have any additional questions please call or email us.
Good luck on your exam.
The Securities Institute of America, Inc
Series 26 Important Concepts
Member firms will seek to increase their business and exposure through the use of both retail and institutional communications. There are strict regulations in place in order to ensure all communications with the public adhere to industry guidelines. Some communications with the public are available to a general audience and include:
Other types of communications are offered to a targeted audience. These communications include:
Read moreGuidelines for the practices that a brokerage firm uses to conduct the operation of its daily business are regulated by industry, state, and federal regulators. These guidelines are the foundation for the way that the firm handles all business, from hiring a new agent to executing a customer’s order. All candidates must have a full understanding of a brokerage firm’s operations and procedures to successfully complete the exam.
A registered principal of a firm will be the individual who interviews and screens potential new employees. They will be required to make a thorough investigation into the candidate’s professional and personal backgrounds. With few exceptions other than clerical personnel, all new employees will be required to become registered as an associated person with the firm. The new employee will begin their registration process by filling out and submitting a Uniform Application for Securities Industry Registration, also known as Form U4. The Form U4 is used to collect the applicant’s personal and professional history including:
Read moreAll broker dealers are required to prepare and maintain reports and records according to industry regulations. The content and timing of the reports depends on the nature of the report. SEC Rules 17 a-3 and 17 a-4 set forth the requirements for broker dealer reporting, timing, content, and retention. Records subject to these rules must be maintained anywhere from three years to the life of the firm.
Under SEC Rule 17a-3 a significant number of records must be filed and maintained by broker dealers. The following is a list of those records and their definitions:
Blotters are records of original entry and must reflect transactions as of the trade date. Blotters must be prepared no later than the following business day, or T + 1. This would include a historical account of all the daily transactions, such as:
Read moreAll members are required to have a policy and procedures manual that outlines the supervisory structure of the firm and designates a principal to be responsible for each area of supervision. All firms are required to have a written policy and procedures manual to ensure compliance with the firm’s rules as well as the rules of the industry. The manual must be updated to reflect the adoption of new policies, a change in personnel, or new industry rules.
Prior to any firm being admitted as a member of FINRA, they must have a least two principals to supervise the activities of the firm. At a minimum, one must be a principal to supervise employees and the other must be a financial operations principal, or FINOP, to supervise the financial and operational activities of the firm. It is the principal’s responsibility to ensure that all rules in the policy and procedures manual are followed by the firm’s employees. It is the responsibility of the principal to review and approve all of the following:
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