Series 63 Definition
Define the Series 63 In Simple Terms
The Series 63 license is a securities license that enables the holder to sell securities in a given state.
The Series 63 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.
Purpose of Series 63 License
The purpose of the Series 63 license, and all series-specific exams, is to ensure a level of competency for registered representatives in the securities industry.
The Series 63 exam ensures that brokers have covered state securities regulations and rules prohibiting dishonest or unethical practices.
Series 63 Exam Structure
The following is a breakdown of the 60-question exam. The questions are broadly categorized into:
- state regulations
- administrative specifications
- client communications
- ethical practices and obligations
Co-requisites: Series 63 and SIE
The Series 63 license isn’t the only license a securities representative will need—it makes the holder eligible for a particular state, but one must also pass the co-requisite Securities Industry Essentials (SIE) and either Series 6 or Series 7 exams in order to be fully eligible to trade securities.
Additionally, a Series 65 license is required to sell financial advice for fees instead of commission, and a Series 66 license combines the Series 63 and Series 65, but is only eligible to those who pass the Series 7 license.
Suggested Order of Tests
Kaplan, the publisher of the most widely adopted textbook on the Series 63 license, recommends taking exams in the following order:
1. Pass the SIE.
2. Secure sponsorship for top-off exams.
3. Take the Series 6 and/or Series 7
4. Take the Series 63.
Series 63 and Financial Advisors
While financial advisors may be required to get a series 63 license, they are often not the ones making decisions on behalf of their clients.
Larger RIA firms have Financial Planning and Investment Strategy teams that put together firm-wide strategies for portfolios and clients depending on factors like:
- The amount of risk each client can sustain
- Total AUM
Exceptions to the Series 63 Requirement
States that don’t require the series 63 license:
- District of Columbia
- New Jersey
- Puerto Rico
Series 65 makes you eligible to sell financial advice.
Series 66 combines the 63 and 65, but not every state accepts the 66, which is why they still exist separately.