You'll need to earn several specialized licenses to work legally as a financial counselor in your state. In the financial services business, advisers authorized to sell a wide range of investment products are the best-qualified and most experienced. Higher-paying jobs and greater control over corporate operations may be possible. In this article, you'll learn about what it takes to become a successful financial adviser, what licenses you'll need to do so, and how to get started with the process.
What is a Financial Advisor?
Working with individuals, financial advisers try to help them accomplish their long and short-term financial objectives. To assist their customers in making informed choices about their financial future, these professionals analyze their clients' current financial situation and identify potential areas of concern.
Regulation of Financial Advisors
Financial advisers may be obliged to obtain specific licenses depending on the goods or services they offer and their compensation. Advisers can earn one or more of the following:
Series 6 license
Packaged securities or investment products like variable annuities and mutual funds can be sold by financial advisers who hold the Series 6 license, often known as the securities license. Registration with the Financial Industry Regulatory Authority (FINRA) and passing a 100-question test are prerequisites for advisers seeking a Series 6 license. Essential work functions, company growth, rules and regulations, account administration, and providing client suggestions are covered in this test.
Series 7 license
Financial advisers can sell all types of investments with the Series 7 license, also known as a General Securities license. In this case, we're talking about selling securities like stocks, bonds, futures, and options. FINRA's 250-question Series 7 test is the only way to become a licensed Series 7 adviser. Financial advisers take the Series 7 exam in three-hour blocks, which they usually study for ahead of time.
Series 63 license
Licensed financial advisers must have the Series 63 license to conduct business in a particular state. Advisors need to pass a test and answer questions regarding specific state rules and regulations to earn a Series 63 license. The FINRA test is 60 questions long. To practice as a financial advisor in the United States, one must hold a Series 6 or 7 license and a Series 63 license.
Series 65 license
Financial advisers must have a Series 65 license to practice in their state if they are paid fees rather than commissions for their services. Exams on numerous financial rules and regulations are required to get the Series 65 license, the same as the Series 63 test. This test has 140 questions on general investing concepts, management, principles, and recommendations for unethical corporate practices.
Series 3 license
Financial advisers can offer real estate, life insurance, and commodities with the Series 3 license, also known as the National Commodities Futures Examination. FINRA administers the 120-question Series 3 licensure test.
How to Fulfill The Requirements For Obtaining a License
The following are the stages that financial advisers must accomplish to obtain specialized licenses:
Take the SIE test
Take the FINRA-administered Securities Industry Essentials (SIE) test to get started. Because you don't need a sponsor to pass this test, newcomers to the sector often begin with the SIE. The Series 6 and 7 tests provide a good foundation for this one. It is possible to obtain a sponsor for the next steps in the licensing procedure after passing the SIE test.
Find a Series 6/7 sponsor
FINRA-affiliated firms and self-regulatory organizations sponsor candidates for the Series 6 and 7 licensure tests (SRO). Find out if any broker-dealers in your network are willing to support you by reaching out to them. To show potential sponsors that you're qualified, you should pass the SIE test if you're new to the industry or have little prior expertise.
Consider Series 3 license
A Series 3 license from FINRA is required if you want to market real estate, life insurance, or commodities. Additional examinations are required to obtain a Series 3 license since the laws and regulations change based on your selling products. Examine this option if it's relevant before moving on to the next series of tests.
Take the Series 63/65 examinations
Next, take the North American Securities Administrators Association (NASAA) and FINRA-administered Series 63 or Series 65 licensing tests. The Series 65 licensure test, albeit comparable, focuses on basic financial proficiency and is necessary for fee-based financial advisers.
Bottom Line
There is no legal requirement to obtain credentials like CFA or CFP. A client's confidence in an advisor's expertise in financial planning can be bolstered by bringing specific credentials. Additional certifications might also help an adviser target a more narrowly defined audience. A financial adviser with qualifications isn't required, but it's still a good idea to learn about the meaning of various certifications before choosing a particular financial advisor.
