Series 7 Definition
Define the Series 7 License in Simple Terms
The Series 7 license is a securities license which enables the holder to solicit, purchase and/or sell most securities products, such as stocks, mutual funds, options, municipal securities, and variable contracts.
Holding the Series 7 license is a requirement for all U.S. stockbrokers and is considered to be the gold standard of financial advisor licenses.
The Series 7 exam is administered by FINRA, which is the government-authorized, non-profit organization responsible for administering all securities licensing procedures and requirements testing.
FINRA tests on behalf of the North American Securities Administrators Association (NASAA)–the group of state and provincial regulators tasked with protecting investors.
Qualifications for a Series 7
In order to sit for the Series 7 exam, candidates for a Series 7 license are required to have a sponsor from a FINRA-member firm or a self-regulatory organization.
Other exams you need a sponsor for include the following:
- Series 6 – Investment Company Representative (IR)
- Series 22 – DPP Representative (DR)
- Series 57 – Securities Trader (TD)
- Series 79 – Investment Banking Representative (IB)
- Series 82 – Private Securities Offerings Representative (PR)
- Series 86 and 87 – Research Analyst (RS)
- Series 99 – Operations Professional (OS)
With a Series 7 license, covered activities and products include all securities, except for commodities and futures.
Outlined by FINRA:
- Public offerings and/or private placements of corporate securities (stocks and bonds)
- Mutual funds
- Money market funds
- Unit investment trusts (UITs)
- Exchange-traded funds (ETFs)
- Real estate investment trusts (REITs)
- Options on mortgage-backed securities
- Government securities
- Repos and certificates of accrual on government securities
- Direct participation programs
- Securities traders
- Venture capital
- Sale of municipal securities
- Hedge funds
In order to handle commodities and futures, registered representatives will need a Series 3 license as well.
Purpose of a Series 7 License
The purpose of the Series 7 license, and all series-specific exams, is to ensure a level of competency for registered representatives in the securities industry.
The Series 7 exam is one of the more difficult exams to pass because of the scope of its content.
Series 7 Exam Structure
The following is a breakdown of the exam:
- 9 questions on acquiring new business for the broker-dealer from customers and potential customers
- 11 questions on opening accounts after obtaining and evaluating customers’ financial profile and investment objectives
- 91 questions on providing customers with information about investments, making suitable recommendations, transferring assets, and maintaining appropriate records
- 14 questions on obtaining and verifying customers’ buying and selling instructionsâ€”processing, completing and confirming transactions
Co-requisite: Series 63 and SIE exam
The SIE exam covers concepts fundamental to working in the industry and the Series 63 is a state-level exam which ensures brokers have covered state securities regulations and rules prohibiting dishonest or unethical practices.
Recommended Order for Taking Securities Test
Kaplan, the publisher of the most widely adopted textbook on the Series 7 license, recommends taking exams in the following order:
First, pass the SIE prior to securing sponsorship for top-off exams, then the Series 6 and/or Series 7, and finally the Series 63.