If you want to trade any type of securities, such as corporate stocks or bonds, options or municipal securities, you need to pass the Series 7 exam. There are no specific education requirements to take the Series 7, but once you are licensed, you still have to complete ongoing continuing education -- that's mandated by FINRA, the Financial Industry Regulatory Authority.
You don't have to graduate from college to take the Series 7, although most registered representatives have college degrees. Most of these traders have studied economics, finance or business management, but these courses aren't prerequisites for the taking the exam. Few people take the Series 7 straight from college; it's more common to work, such as in the insurance field, before entering the investment business. You want some work background to prove you are a go-getter and hard worker -- valuable traits in the brokerage world.
In order to sit for the exam, you must be sponsored by a FINRA member firm. You must have been employed by that firm for a minimum of four months. The six-hour test consists of 250 multiple-choice questions covering topics such as municipal and corporate bonds, stocks, options, direct participation programs, investment company products and variable contracts. The test is divided into two three-hour segments of 125 questions each. A score of 72 percent is passing.
Continuing Education Requirements
Because the securities industry is constantly changing, FINRA requires periodic continuing education. There are two mandatory education requirements: the regulatory element and the firm element, both of which must be fulfilled in order to maintain the Series 7 license.
The regulatory element requires registered representatives to complete a computer-based training program after the second anniversary of their registration approval date. Keep in mind that the registration date is not the date the test was taken; it’s the actual date of registration. The regulatory element must be completed within 120 days of that date, and every three years going forward, as you work in the securities business.
The Firm Element
The firm element is administered by each broker/dealer and must comply with FINRA regulations. Each firm establishes its own test and annual testing schedule. Because the Series 7 license allows you to trade most types of securities, and registered representatives work in a variety of investment-related areas, the firm element covers a wide range of subjects. Sample topics include investment analysis, retirement plans, money laundering, FINRA rules and regulations, ethics and suitability.
Debbie Leaman lives in Salt Lake City. In 2004, she left a 20-year career in financial planning to pursue writing. Since then, she has contributed to publications as diverse as "Barrons," "Women’s Adventure," "JetWings" and "Utah Bride & Groom." Leaman is a graduate of Tufts University.