Series 7 License

Written by True Tamplin, BSc, CEPF® | Reviewed by Editorial Team

Updated on December 12, 2022

What Is the Series 7 License?

The Series 7 license allows the holder to solicit, purchase, and/or sell most types of securities, such as investment company products, corporate securities, and municipal fund securities, except for futures and commodities. 

Considered to be the gold standard of financial advisor licenses, holding the Series 7 license is a requirement for all U.S. stockbrokers. 

Series 7 is administered by the Financial Industry Regulatory Authority (FINRA), which is the government-authorized, nonprofit organization responsible for administering all securities licensing procedures and requirements testing. 

The Series 7 license sets the competency of a registered representative to work in the securities industry.

 

Who Should Get the Series 7?

The Series 7 exam is a requirement for anyone looking to work in financial services. This includes insurance agents, financial planners, stockbrokers, and advisors.

The Series 7 license signifies that the professional has the knowledge and ability to buy, trade, or sell all security products, including mutual funds, corporate securities, hedge funds, and venture capital.

Financial professionals usually obtain the Series 7 license early in their careers because many finance positions require this license.

Series 7 Requirements

Requirements for the Series 7 license are as follows:

Security Industry Essentials (SIE) Exam

In 2015, FINRA streamlined its testing structure by consolidating the fundamental knowledge shared across several Series exams into the Securities Industry Essentials (SIE) Exam.

The SIE exam assesses candidates' knowledge on securities industry information, including the risks associated with different types of products and the structure of the securities industry. 

The test also covers regulatory agencies and their functions, as well as prohibited practices in the industry.

The exam is open to anyone aged 18 and above, including students and potential candidates looking to demonstrate basic industry knowledge to prospective finance industry employers. 

The SIE is not required to be taken by representatives who are in good standing with the Financial Conduct Authority (FCA) in the United Kingdom or a Canadian stock exchange or securities regulator. This is in accordance with FINRA Rule 1220.01.

Results of the SIE exam are only valid for four years. It is important to note that passing the SIE exam alone does not qualify you to register with any FINRA member firm or participate in the securities business. 

You need to pass the SIE exam and a qualification exam relevant to the type of business you will engage in to become registered to participate in any securities business. To take the qualification exam, you need to be associated with a member firm.

Topics covered in the SIE exam are capital markets, financial products, financial risks, customer accounts, stock trading, prohibited practices, and an overview of regulations. 

FINRA Member or Self-Regulatory Organization Sponsorship

In order to be eligible to take the series 7 exam, you must have a sponsorship from a FINRA member organization or a self-regulatory organization (SRO). 

To earn this sponsorship, you will need to find a job or internship at a financial institution, such as a bank or a brokerage firm.

When considering a job search, looking for opportunities in mid-sized firms may be helpful. These companies often have the financial means to sponsor you through taking the Series 7 exam. Series 7 sponsorships are often advertised on company websites. 

After finding employment, ask your employer about sponsorship for Series 7. The company usually applies for you and often pays the exam entrance fee.

Series 7 Exam

The Series 7 exam evaluates the competency of an entry-level registered representative to do their job as a general securities representative. The cost of taking this exam is $300.

The exam tests your ability to apply securities concepts to specific scenarios. The questions are related to day-to-day activities, job functions, and the responsibilities of representatives.

Candidates who fail the exam must wait 30 days before retaking the exam. However, if you failed the exam three times consecutively, you must wait for 180 days.

Series 7 Exam Structure

The Series 7 exam consists of 125 questions with a time limit of 3 hours and 45 minutes. This is taken online and comprises four sections with the following topics:

Series_7_Exam_Structure

There are also ten additional unscored pretest questions that do not contribute to your score. These are randomly distributed throughout the exam. 

Test takers must obtain at least a 72% score to pass the exam.

Permitted Activities Covered By Series 7

The Series 7 license qualifies the holder to perform all registered representatives' activities, except for handling commodities and futures.

Commodities and futures are permitted, provided the individual has the Series 3 license.

Permitted_Activities_and_Products_for_a_Series_7_License_Holder

Maintaining the Series 7 License

License holders who have passed the Series 7 exam must complete the Regulatory Element, a computer-based continuing education, within 120 days from their second anniversary from the date of obtaining their license. 

They will then need to meet the continuing education conditions for maintaining their FINRA registration every three years.

The regulatory CE program adheres to the basic rules and regulations, complying with the rules and issues related to sales and communication.

Series 7 License Renewal

The Series 7 license is valid for the entire period of working with a FINRA-member firm or self-regulatory organization (SRO). The license will expire when you are terminated or leave the firm and remain unemployed within two years at another FINRA-member firm or SRO.

Importance of the Series 7 License

The Series 7 license is essential for those seeking a career in the securities industry. It allows individuals to engage in many activities, including public offerings and private placements of corporate securities, direct participation programs, and exchange-traded funds.

A candidate who passes the Series 7 exam is qualified to work with various types of securities, including corporate securities, options, municipal fund securities, direct participation programs, variable contracts, and investment company products. 

This allows them to provide a broader range of services to their clients and gives them the ability to help meet the needs of a variety of investors.

The Series 7 license also prepares you to deal with your client's portfolios that focus on daily tasks such as opening accounts, evaluating customer security holdings, and making suitable recommendations.

Recommended Order for Taking Securities Test

Candidates for the Series 7 exam should also pass the co-requisite SIE exam and Series 63 exams to be fully eligible to buy and sell securities.

The best practice for taking the exams required to earn your Series 7 license is to pass the SIE first, then focus on the Series 6 and/or Series 7, and finally, the Series 63.

This advice comes from Kaplan, the publisher of this exam's most widely adopted textbook.

Final Thoughts

Series 7 license is a must for anyone seeking a career in the securities industry. It allows individuals to engage in various activities, including public offerings and private placements of corporate securities.

The Series 7 license is important for individuals who intend to work in the securities industry. It also prepares you to deal with your client's portfolios that focus and participate in various activities in the securities market.

Individuals need to maintain their license by completing a computer-based continuing education program two years after obtaining their license. The license expires if an individual is terminated or leaves their firm and remains unemployed for two years.

The Series 7 exam covers a wide range of topics, making it one of the most challenging exams to pass. However, anyone can earn their license with the right study tools and enough time to prepare.

FAQs

How much does the Series 7 exam cost?

The cost of the Series 7 exam is $300.

What is the Series 7 license?

The Series 7 license is the license that entitles the holder to solicit, purchase, and/or sell all types of securities products, except for commodities and futures.

How many hours is the Series 7 exam?

The Series 7 exam is 3 hours and 45 minutes long.

What is Series 7 used for?

The Series 7 license is important for anyone seeking a career in the securities industry. It allows individuals to engage in a variety of activities, including public offerings and private placements of corporate securities. The Series 7 license is also important for those who want to work with a variety of different types of securities, including corporate securities, options, municipal fund securities, direct participation programs, variable contracts, and investment company products.

How many times can you fail the Series 7?

Candidates are allowed to retake the Series exam an unlimited number of times. However, they must wait at least 30 days before retaking the exam. If they failed the exam three times consecutively, they must wait for 180 days.

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.

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