When Tricia Rosen was ready to restart her financial services career, she was happy to see the industry had changed for the better.
“Now that my children are older I wanted to reenter the workforce, and it was great to see that comprehensive financial planning is now valued and more accessible due to technology advances,” Rosen says. She founded Access Financial Planning, a registered investment advisory firm in Andover, Massachusetts, that focuses on families who have someone with special needs.
“Since I had waited so long to start my dream job, I wanted to make sure my work aligned well with my values, so I decided to launch my own RIA,” she says.
Among her other credentials and preparations for launching the firm, Rosen passed the Series 65 exam, a ticket to entry for those joining or launching a fee-only RIA. The exam’s formal name is the Uniform Investment Adviser Law Examination, but it’s typically referred to as the Series 65.
The process for becoming an investment advisor representative differs from a career at a broker-dealer, which works on a commission basis. In the latter case, a candidate would generally pass the Series 7 exam, along with either a Series 63 or Series 66.
When taking the Series 65 to join an RIA, candidates must complete the exam within 180 minutes. A passing score is 72%, which translates to correctly answering 94 of the 130 scored questions. The Financial Industry Regulatory Authority, which administers the exam, does not release Series 65 pass rates.
The test covers financial industry regulation, securities law, ethics, investments and economics. All these topics factor into a financial advisor’s day-to-day work. Most candidates devote considerable time to studying for the Series 65.
How to Study for the Series 65 Exam
Advisors travel different paths toward the exam. Sue Hickey and her husband, David Hickey, founded Your Own Retirement, an advisory firm in Cranberry Township, Pennsylvania. She has an insurance license, but wanted to expand her skill set.
Hickey began asking herself about the future of the firm if something happened to her husband, who holds a Series 65 license. His license allowed the firm to manage assets as an RIA. She knew it was time to pass the exam herself.
She had to face some fear about the process. “I swore for years, ‘No way. I couldn’t possibly.’ Then I realized I had better do it, and now,” she says. “I dedicated two to three hours each morning at home before the office for several months. I was a nervous wreck, but I told everyone, to make sure I couldn’t back out.”
She says making the time to study was crucial, as was being methodical. “Taking those hours, writing things out and placing on the calendar all the pieces from quizzes to tests was a big help and motivation,” she says. “It was probably my proudest moment in a long time when I passed!”
Anyone who’s taken a standardized test of any kind is probably familiar with test preparation courses and training.
“In my experience, Series 65 candidates that fail on their first or subsequent exam attempts struggle with managing the study process more than the content,” says Marcia Larson, head of partnerships and a faculty member at Knopman Marks Financial Training in New York.
“It’s definitely a challenging test, but allocating time while trying to run a commission-based business and seeing clients is often the hardest part,” she says.
Larson adds that attempting to shortcut the study process doesn’t work. “Many of these candidates haven’t taken a standardized test recently, and getting back into an effective study groove isn’t easy,” she says. “Candidates need to prioritize more than 100 hours of quality, consistent study time and follow a clear process so they know they are ready to test.”
Putting in the hours is key, Larson notes. She recommends working through about 2,000 practice questions. It’s also important to score above average on practice tests. Candidates who take those steps, she says, should perform well.
How to Become an IAR
State requirements for becoming an investor advisor representative can differ. Lyndsey Monahan, a financial professional at WealthWave in Plano, Texas, was able to sidestep the Series 65 exam. She became an IAR by completing coursework on the Chartered Financial Consultant credential, a path allowed in Texas. Several other states allow those with a credential, such as certified financial planner or chartered financial analyst, to become an IAR without taking the Series 65.
Tony Liddle, CEO of Prosper Wealth Management in Madison, Wisconsin, also wanted to change careers within financial services. He was a corporate financial analyst before becoming a financial advisor for individuals and families. Once he decided to make the shift, he focused on passing the Series 65 exam quickly. Within 18 months, he was able to purchase the firm from his employer.
In a somewhat unusual situation, Liddle got his Series 7 after passing the 65. His situation illustrates the often-convoluted reality of securities licensing and business structures.
“I got the 65 so I could charge a fee instead of commissions for managing money, then went back and got my 7 in order to service the new clients I inherited, who had specific products only a series 7 can help with,” he says.
Liddle says putting in the hours helped him pass the Series 65 exam quickly. “I learn by repetition, so taking the practice exams over and over again helped me learn not only what would be on the test, but the way questions would be worded,” he says.
He adds that the most challenging aspect was investment advisory law. “I knew what was right and what was wrong, but to identify the specific law every time was a challenge,” he says.
Rosen points out that the Series 65 exam, unlike broker-dealer exams, requires no company sponsor.
That makes it easier for candidates to start the process without waiting for an employer’s OK. In fact, candidates can take the Series 65 exam if they are not currently working at a financial advisory firm. Passing the exam and being licensed can make a candidate more attractive to an employer.
“My suggestion would be to start studying, and take the test if being an IAR is something you are interested in doing,” Rosen says. “It’s a good way to see if the topics are interesting to you, and it’s a great credential to have to create opportunities for yourself.”
For someone who has a Series 7, she adds: “The 65 would be more general in scope, so it may be helpful. But if I were working in a job with a Series 7 and I wanted to do more comprehensive financial planning, I would go the Certified Financial Planner route instead. It’s a much harder and longer path, but ultimately will be a much more beneficial credential to have.”
When it comes to the traits necessary for passing Series 65, Larson has some advice as a test-prep instructor. “Sometimes my most important role is building a candidate’s confidence and inspiring them to stay on task,” she says. “It’s like running a marathon: It’s hard work, but those who train properly will get over the finish line.”
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