The Series 65 exam is a ticket to entry for aspiring investment advisor representatives who want to be able to give clients financial and investing advice.
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, or IAR, differs from a career at a broker-dealer, which has workers operate 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.
Here are some factors to consider before sitting for the Series 65 exam and some tips to help candidates pass:
— What is the Series 65 exam like?
— How to study for the Series 65 exam.
— How to become an investment advisor representative, or IAR.
— How long does the Series 65 license last?
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What Is the Series 65 Exam Like?
When taking the Series 65, 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.
The Series 65 exam is like most other FINRA exams, says Tricia Rosen, founder of Access Financial Planning, a registered investment advisory firm in Andover, Massachusetts. “If you put the time in to read the study materials and do the practice exams, you’ll be well prepared.”
She compares the Series 65 to the certified financial planner exam, saying the breadth of material covered for the CFP test is much greater and requires more synthesis of the information you learn. “Memorizing information is good enough to pass the Series 65, but it wouldn’t be good enough to pass the CFP exam,” she says.
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. Sue had an insurance license but wanted to expand her skill set.
She 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 a registered investment advisor, or 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.”
Folks who have taken a standardized test of any kind are probably familiar with test preparation courses and training.
“In my experience, devoting a set amount of time to studying each day is important,” says Jason Steeno, president of CoreCap Investments and CoreCap Advisors in Southfield, Michigan. “First, focus on reading the study material and taking the quiz at the end of each chapter. After all of the reading, start taking practice exams, check the answer after each question and read the explanation of the answer.”
Reading every explanation may sound tedious, but Steeno says it helps reinforce the topics and concepts.
“Once you start to obtain scores in the mid-to-high 80s, then move on to taking full practice exams without checking answers along the way,” he says. Keep taking full practice exams until you’re scoring in the high 80s to low 90s. Only then are you ready to take the actual exam, he says.
How to Become an Investment Advisor Representative, or IAR
Passing the Series 65 is a prerequisite to working as an IAR. To become fully licensed, you likely need to meet certain state requirements as well, which can vary from state to state. Many states require a background check, application and payment of a fee, but they can impose other requirements, too.
Some states may let you become an IAR without taking the Series 65 if you have another credential, such as the chartered financial consultant credential, certified financial planner or chartered financial analyst.
“Advisors often desire to become an IAR as their clients’ needs change from executing stock or mutual fund transactions to needing more comprehensive investment advisory services, especially as clients age and grow their wealth,” Steeno says. “IARs can offer fee-based guidance, planning and investment advisory services to clients when affiliated with a registered investment advisor.”
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 passed the Series 7 and Securities Industry Essentials (SIE) exams, 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.”
How Long Does the Series 65 License Last?
The North American Securities Administrators Association (NASAA) is an international investor protection agency of state securities administrators. While there are no continuing education requirements to keep NASAA exams active, you do need to stay registered for your exam to remain active. Registered, in this case, means you need to be licensed with the state.
Most states give individuals two years after passing their exam to get licensed. Any longer than that and your exam expires, meaning you’d need to retake it to get your license. As long as you remain licensed, your exam won’t expire. If you leave your employer or lose your job, you’ll likewise have two years to become reemployed and reregistered before your exam expires.
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How to Pass the Series 65 Exam originally appeared on usnews.com
Update 12/09/22: This story was previously published at an earlier date and has been updated with new information.
