Obtaining the license to sell securities is not an easy task. A person set out to gain one will need a broker-dealer to sponsor them. On top of that, they will need to pass a few exams with a relatively high percentage, which requires months of vigorous studying and preparations. This is why we’ve broken this process into eight easy steps you can follow, so you get your license with the least amount of stress.
Know What FINRA Is
One of the two essential organizations you should get to know is FINRA. FINRA stands for Financial Industry Regulatory Authority, and they are essentially in charge of most of the exams you need to pass if you want to get a license. They are also in charge of securities licensing and requirements. FINRA also keeps all records of securities licensing and also establishes rules which brokers need to follow. They are a non-profit organization that works under the supervision of the SEC (Securities and Exchange Commission) to provide the basic tools for policymakers and investors. In other terms, FINRA provides safety for investors while allowing them to engage in capital markets.
Know What NASAA Is
No, the NASAA has nothing to do with space administration, but it has something to do with America. It stands for North American Securities Administrators Association. It represents an association of state securities administrators responsible for protecting consumers who have purchased investment or securities advice. The main focus of NASAA’s members is to take the work of enforcing actions and share information. Other important goals centered around education and proper coordination for all the securities staff, no matter if they are state, provincial, district, or territorial agency staff. NASAA, the same as FINRA, also supervises the requirements for the licenses for three of the needed securities license types.
Should You Take an SIE Exam?
The first obstacle to following any kind of advice regarding securities licenses is remembering all the abbreviations that come with it. Luckily this is the last important one. An SIE exam is shorter than the Securities Industry Essentials exam, and as of October 2018. anyone who is getting their license after this date will need to pass it. As the experts from StateRequirement.com suggest, an SIE exam is also necessary if someone is planning on earning a Series 6, Series 7, Series 79, and Series 99. Taking this exam has some aspects that make the process easier, such as the fact that you may take it while you are still in school. In other words, you don’t have to be registered by a brokerage firm if you want to take it.
Know Which Licence You’ll Need (FINRA)
A license is essential if you want to sell securities at a brokerage firm. These firms will usually dictate what types of licenses you will need, which heavily varies from firm to firm. Some of the most common FINRA licenses are Series 6, Series 7, Series 31, Series 63, and Series 65. Series 6 applies to sell investment packages, also referred to as packaged investment products. Series 7 is necessary if you want to be a stockbroker. It allows you to sell all types of individual security, such as bonds, options, and stocks. Series 31, similar to Series 3, is needed if you want to sell managed futures.
Know Which Licence You’ll Need (NASAA)
The NASAA license requirements, as well as FINRA licenses, also depend on the brokerage firm you will work for. The most common NASSA licenses are Series 63, Series 65, Series 66, Series 79, and Series 99. Series 63 foes in tandem with Series 6 or Series 7 if you want to sell mutual funds in any state. Series 65 is necessary for financial planners/advisors who don’t work on commission but for an hourly fee. Series 66 can be held instead of both Series 65 and Series 63. Series 79 is needed to work with equity offerings, asset sales, or final restructuring. Finally, Series 99 is essential if you want to be a supervisor or a senior manager.
Pass the Exam
Now that you have thoroughly acquainted yourself with the main organizations and associations, as well as the many licenses available, it’s time to hit the books! The SIE exam and FINRA exam are referred to as “corequisites,” meaning that both are necessary. However, this doesn’t mean you need to take them in one sitting. You will need both licenses earned in any order. There are many training programs organized by brokerage firms. If this isn’t available to you, there are also exam preparation courses that are sure to help you pass the exam. Speaking of, to pass the exam, a minimum score of 72% or 73%, depending on the license, is needed.
Know Your State Requirements
A very important step on the road to getting your securities license is to make sure you have gone over all the requirements specific to the state you live in. Taking the FINRA exam and SIE exam can be quite overwhelming and stressful, and in the midst of your study sessions, it might slip your mind. There are some additional requirements you need to have under your belt if you want to sell securities in some states. Luckily there is a simple way to check this, and that is with the office of the Secretary of State you live in or the state you want your license to be valid.
Register Your Licenses
After all the hard work you have done by getting to know the organizations, associations, all the securities license types, and studying hard to pass the exam, now it’s time to relax. Well, not quite yet. The final step is to register your hard-earned license with an approved broker, and, of course, FINRA. The broker-dealer you registered to will hold your licenses and will also oversee your business for a fraction of the commission income. An alternative to registering with a broker-dealer is to register with the state if you will be managing assets worth less than $ 100 million. If they are worth more than that, to register with the SEC as mentioned above.
Now that all of your licenses are registered, you can have a moment to relax and celebrate with your friends and family. Then you can delve into the world of business and trading. Most importantly, you’ll learn all there is to know before you begin.