Series 7 Exam: Everything You Need To Know

The series 7 exam is the General Securities Registered Representative exam. The test is administered by FINRA. It is the most widely taken Top off exam. When passed in connection with the SIE exam, a candidate is licensed to represent a broker dealer. Series 7 lciensed agents may conduct business in all general securities.

The majority of people who get the Series 7 license are required to pass the exam by their employer. Oftentimes, it is a condition of employment. Most individuals must  obtain a Series 7 license to function in their job. The Series 7 top off exam is for those who want to act as a financial adviser or stock broker. Many other positions also require a series 7 license.

A Series 7 license will allow you to conduct business in all general securities products. Including:

• Stocks
• Bonds
• Options
• Rights and warrants
• Open and closed-end investment company shares
• ETFs
• Real estate investment trusts (REITS)
• Direct Participation Programs
• Initial public offerings (IPOS)

Series 7 registered agents may earn commissions on securities transactions.

The Series 7 Exam consists of 125 scored multiple-choice questions. You must answer every question. There is no “skip button”. The exam has a time limit of 3 hours and 45 minutes.  Each series 7 exam will contain 10 experimental questions. As a result, the total number of questions will be 135. These questions are not identified during the test. Nor do they count towards the candidate’s final score. Each exam provides more time for test takers to answer these questions.

The passing grade for the series 7 exam is 72%. Test takers must answer at least 90 of the 125 questions correctly.

The Series 7 Exam tests the candidates’ knowledge of critical functions.  These are the functions a registered representative must perform. The questions will cover a variety of investment vehicles. Including:

• Equities
• Debt securities
• Mutual funds
• Investment company securities
• Real estate investment trusts (REITS)
• Annuities
• Municipal bonds
• Government securities
• Direct participation programs
• Options

The exam will also contain many questions on the following:

• Understanding Customers’ financial profile and investment objectives

• Verifying customer purchase and sales instructions and confirming transactions 

• Handling and servicing customer accounts

• Contacting customers and potential customers

• Investment banking, issuing securities and initial public offerings

• Securities industry rules and regulations and prohibited practices

• Taxation and retirement plans

FINRA’s official series 7 exam outline is broken down into the following critical functions 

The test provides enough time for candidates to answer each question presented. The 3 hour and 45 minute time limit translates into 1.8 minutes per question. Test takers who have challenges interpreting questions, may find themselves pressed for time. Rushing to answer every question has a negative impact on performance. Ensure you have the ability to complete the test in the time allotted. To do this you must take 125-question practice tests. Taking series 7 practice exams is a big part of any candidate’s exam preparation. The questions presented are challenging. Students must have a deep understanding of the critical information required to pass.

Passing the Series 7 exams is a significant challenge. Obtaining a Series 7 license takes focus and dedication.  Students should not take this test lightly. You must prepare to take the exam and should make it a top priority. 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. Watch each video class that corresponds to the chapters in the book. This will provide you with more information on the concepts covered in each chapter. You must clear your schedule, shut off your phone and focus. In addition to the knowledge required,  you must master the application. Do this by taking thousands of practice questions. We recommend at least 80 – 100 hours of study time. This should ensure you pass your Series 7 exam and become licensed to represent your broker dealer.

Every candidate has their own strengths and weaknesses.  So we will list several of the areas on the series 7 exam many students find to be the hardest.

#1 Options

Options questions tend to be the area students find the hardest. These questions are also the area where many students use too much time. The math calculations and option concepts must be committed to memory. To answer these questions quickly, we have designed a course that makes this easy. Our course contains more than 3 hours of video training for options. After reading our textbook and watching the videos, most students become option masters. In fact, our option secrets make it, so students never need to remember any option formulas.

# 2 Municipal Securities

The issuance, trading and tax considerations, cause students to struggle with municipal securities.  Many seem to find municipal securities to be one of the harder sections on the exam. There is confusion between the issuance of municipal bonds compared to corporate securities. This is one of the reasons. students struggle.   Ensure you commit the unique features of municipal securities to memory. It will help you succeed on exam day. 

# 3 Customer Recommendations and Suitability

Customer recommendations and suitability questions are challenging and need much effort. Series 7 candidates must understand the performance characteristics of various investment vehicles. Based on the investor profile, test takers must select the best investment for the client. Understanding client profiles, risk tolerance and objectives are key to answering these questions.

# 4 Handling and services customer account

Handling and services customer accounts is another area students struggle with. Some questions are straightforward memorization. Other questions need subjective reasoning. Students often narrow down the correct answers to two of the four choices. Not knowing how to select the most correct answer can eat up a lot of time. Our test taking tips and strategies help students identify the best answer

You will receive your result of the exam immediately upon completion. Your results are displayed on the screen. You will get a certified copy of the results from the exam center. The passing score for the series 7 exam is 72%. Candidates who pass will not receive a numerical score. The exam report only states that the student achieved a passing grade. This is evidence that the student passed the series 7 exam. Students who do not achieve a passing score receive a numeric score for the exam. A range of the performance in each scored section is included in the report.

Students who do not pass the exam must wait 30 days before retaking the exam. During this time it is crucial to maintain the current level of proficiency. Make a detailed account of the exam. Make notes on the entire experience, especially areas of difficulty. A second unsuccessful attempt will result in another 30 day waiting period. A third unsuccessful attempt results in a 6 month waiting period. 

All candidates must appear at an approved testing center to take the series 7 exam. Prometric test centers are available throughout the US. In fact, Prometric has more than 3,000 test centers.  Many exam centers are open 7 days a week. Students may schedule the exam at any location on any day that the center is open. To schedule an exam appointment, visit the prometric website.

For most registered representatives, it feels like your Series 7 license is transferable. In actuality, it is not. Your current registration must be terminated if you change employers.  Your Series 7 registration is 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 ends 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 begins your registration with your new firm. Your Series 7 license becomes active at your new firm upon receiving notice from FINRA. Your state registrations must also be terminated and renewed. This will be required in each state where you conduct business.

You must make an investment in your professional development. Your Series 7 license empowers you to conduct business in all general securities. Many Series 7 licensed representatives enjoy lucrative and successful careers. If you have to pay out of pocket, the costs are relatively low. This is true compared to other certifications and college expenses. Some employers pick up or reimburse the costs.  The cost to take the series 7 exam include:

• Training materials
• Testing fees
• Registration fees.

Our most comprehensive training package for the series 7 exam is $289. This comes with everything you need and includes free shipping. Other providers charge as much as $600 for similar packages.

The testing fee for the series 7 exam is $300. State registration fees vary by state and range from $50 – $250 per year.

Once you are Series 7 licensed, you must meet the continuing educational requirements. Every year your firm will send out a questionnaire. This is known as a “needs analysis”. It is sent to each  registered person. Every representative will be assigned continuing education courses to complete. Your firm may have you attend a seminar, webinar or take an online course. These must be completed to satisfy the firm element continuing education requirements.

Licensed agents must also complete annual regulatory continuing education training. These courses are  administered by FINRA. All registered individuals must complete this continuing education by December 31st. FINRA publishes the learning objectives for continuing education each October. The published courses are for the following calendar year. All courses completed  through FINRA’s continuing education portal. 

The series 7 exam is a top off exam. When combined with the SIE  exam, you will be licensed to represent a broker dealer.  Additionally, most states require agents to pass the series 63 license exam. The series 63  is needed to conduct business with state residents. Think of your Series 7 license as your product license. It is your license to represent your employing broker dealer. Your series 63 license is your license to transact business with your clients or with people. A life and health license is required to conduct business in variable products.  Variable annuities and variable life contracts are both securities and insurance products. Agents who wish to conduct business in variable contracts must pursue an insurance license. If they have not already done so.

Many Series 7 registered representatives opt to take the series 66 exam.  A series 7 & 66 license allows agents to represent both a broker dealer and an investment adviser.  A licensed Series 7 & 66 agent may receive  commission based and fee based compensation. When representing a broker, commissions are received for executing orders in securities. While fees are received for providing advice through an investment adviser.  These fees usually take the form of an asset-based fee such as 1 percent of the value of the account.