The Series 65 exam is required if you want to work as an investment adviser representative (IAR) or start your own registered investment adviser (RIA) firm. Passing this test lets you create financial plans, manage client portfolios, and give investment advice for a fee.
In this guide, InvestmentNews explains what the Series 65 licensing exam is, what it covers, and why it is important for aspiring IARs. We’ll also share tips to help you prepare for the test.
The Series 65, formally known as the Uniform Investment Adviser Law Examination, is required for anyone who wants to become an investment adviser representative. It was developed by the North American Securities Administrators Association (NASAA) with help from industry professionals. The test is administered by the Financial Industry Regulatory Authority (FINRA).
The Series 65 exam sets a baseline for professional competency. It is also designed to help protect investors by making sure advisers understand finance, economics, and investment laws.
Unlike many other securities exams, you do not need sponsorship from a financial firm to take the Series 65. This makes it accessible for those starting out or looking to open their own RIA firm.
The Series 65 exam is required for anyone who wants to pursue a career as an investment adviser representative and provide investment advice for a fee. Most states require you to pass this licensing exam before you can register and serve clients as an IAR.
But apart from IARs, certain investment professionals can benefit from earning the Series 65 license. These include financial planners and consultants who want to give investment advice as part of their services and those who want to start their own RIA.
A Series 65 license, however, is not required for broker-dealer agents or those who already hold a qualifying professional designation approved by NASAA. These designations include:
If you’re planning to start an RIA firm and want to find out why a Series 65 license is important, you can find more information in this guide.
The Series 65 exam covers four key topics:
Economic factors and business information: This section tests your knowledge of basic economic concepts, financial reporting, analytical methods, and types of risk
Investment vehicle characteristics: You’ll answer questions about different investment products, including cash, fixed income, equities, pooled investments, derivatives, insurance products, and alternative assets
Client investment recommendations and strategies: This part focuses on building client profiles, portfolio management, tax considerations, retirement plans, special account types, and performance measures
Laws, regulations, and guidelines on unethical business practices: this section covers the rules for investment advisers and representatives, broker-dealers, securities, client communications, and ethical standards
Below is a detailed breakdown of these topics as they appear on the exam. You can view the complete study outline on NASAA’s website.
|
SERIES 65 EXAM OUTLINE |
||
|
Topic 1: Economic factors and business information |
||
|
Coverage |
Exam weight |
Number of items |
|
15% |
20 |
|
Topic 2: Investment vehicle characteristics |
||
|
Coverage |
Exam weight |
Number of items |
|
25% |
32 |
|
Topic 3: Client investment recommendations and strategies |
||
|
Coverage |
Exam weight |
Number of items |
|
30% |
39 |
|
Topic 4: Laws, regulations, and guidelines on unethical business practices |
||
|
Coverage |
Exam weight |
Number of items |
|
30% |
39 |
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Series 65 is designed to test a candidate’s knowledge of finance, economics, investing, and the legal rules set by federal and state laws. Here’s what you need to know about the exam format.
The Series 65 exam consists of 140 multiple-choice questions. Out of these, 130 questions count toward your final score. The remaining 10 questions are included for pre-testing and do not affect your grade. You will not know which questions are scored and which are pre-test items.
You have 180 minutes to complete the exam. There are no scheduled breaks, so you should plan your time carefully to answer every question.
You must answer at least 92 of the 130 scored questions correctly to pass. This is the minimum standard for professional competency as an investment adviser representative. If you pass, you will only be told that you passed. If you fail, the system will show your scores for each of the four sections. However, you will not be told which questions you missed.
Each Series 65 exam is assembled from a large pool of questions. No two candidates will have the same set of questions, even if they take the exam at the same time. The test system uses difficulty and content parameters to make sure every version of the exam is balanced and fair.
The Series 65 is a closed-book exam. You cannot bring any reference materials or notes into the test room. Scratch paper and a basic calculator are provided by the proctor. You must return these items after the test.
If you do not pass, you must wait 30 days before retaking the exam. The 30-day waiting period applies to your first and second retakes. After a third failed attempt, you must wait 180 days before being allowed to try again. These waiting periods help ensure that candidates have enough time to prepare before each attempt.
Check out our Best in Wealth Special Reports page to get to know the most respected IARs in the US.
Passing the licensing exam is one of the most important steps to obtaining the Series 65 license. There are no specific prerequisites or prior certifications needed to sit for the test, but you must be at least 18 years old. As with any other licensing test, proper planning and preparation are key.
Here’s a step-by-step guide to getting the Series 65 license:
While not required, taking a Series 65 course can help a lot in helping you prepare for the test. Most providers offer self-paced online courses, allowing you to study in your free time. The NASAA website provides a list of course providers, but stresses that the organization does not endorse any of the vendors.
If taking online courses is not your thing, you can purchase study materials, also from these providers. A prep package can include practice exams, textbooks, study guides, and test manuals.
On average, a candidate spends between 50 and 60 hours studying for the Series 65 exam, although the actual timeframe depends on a person’s learning style.
If you’re being sponsored by a FINRA-member firm, your firm must file a Uniform Application for Securities Industry Registration or Transfer, also known as Form U4. This can be done via FINRA’s Central Registration Depository (CRD) system. You will also need to provide your Social Security number and submit fingerprints.
Once registered, you will be issued a CRD number and given a 120-day window to take the exam.
If you do not have a sponsor, you can sign up as an individual by submitting a Form U10. You are still required to create an account with FINRA. You must also pay the Series 65 exam fee, which costs $187.
Exams are scheduled through Prometric or by calling (800) 578-6273. You can choose from a list of local testing centers. Once done, you will receive an email confirmation with the exam date, time, and location, and the test-day procedures. Online exams are available but only for candidates that require testing accommodations.
One common misconception is that you need to get 70 percent of the answers right to pass. But according to the NASAA’s FAQ page: “The passing grade for the Series 65 exam is not 70 percent and is not calculated as a percentage. Candidates must answer 92 out of 130 questions correct to earn a passing grade.”
Some candidates also make the mistake of calculating their average scores on each of the sections. NASAA says, “The passing score is based on the overall exam. The parts of the exam are weighted differently, so you cannot determine your overall grade by averaging the scores.”
Passing the Series 65 exam is only one step in becoming an investment adviser representative. You must also meet all state licensing and registration requirements before you can do business. To ensure that you follow the correct process, always check with your state regulator.
If you want to sell securities, you will need to pass other licensing exams. These include FINRA’s Securities Industry Essentials (SIE) exam and the representative-level Series 6 or Series 7 exam, which requires a sponsoring firm. Most states also require a Series 63 license for those who want to become a registered representative or broker-dealer agent.
Get to know the top independent advisors in the industry in this special report.
The Series 65 license is required if you want to give investment advice or manage client assets for a fee. Passing the exam shows you meet the minimum standard of knowledge and competence set by state regulators and NASAA. It also allows you to register as an investment adviser representative, which is needed to work with clients or start your own RIA firm.
Holding a Series 65 license also builds trust with clients and employers because it proves you understand the laws, ethics, and fiduciary duties required in this field. This license also serves as a foundation if you want to pursue advanced credentials or grow your advisory practice.
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