You need to earn a few important licenses that allow you to operate a firm in your state in order to become a credible financial advisor. Financial advisors are the most competent in the field and have the necessary experience to work with a variety of clients when they are authorized to sell all types of investment products. Future chances for higher-paying employment, as well as the ability to freely run business operations, may result from this.
Financial consultants assist clients in achieving their long- and short-term financial objectives. In order to assist clients in making decisions about investments, tax regulations, insurance, college savings, mortgages, and retirement plans, they examine their clients’ financial needs. A bachelor’s degree in accounting, finance, business, or a closely related discipline is often required of financial advisors. They employ their financial knowledge to:
- Meet with clients in-person to talk about their financial goals.
- Teach clients and answer questions about investment opportunities and potential risks.
- Make recommendations or invest on behalf of clients.
- Monitor clients’ accounts to identify any changes that need to be made.
Financial advisors may work with large companies or by themselves to meet client needs. Some advisors also provide tax advice or sell insurance.
Financial advisors are required to obtain specific licenses depending on the products or services they provide and how they’re compensated for those services. Below are several common licenses advisors can earn:
Series 6 license
The Series 6 license, also known as the securities license, allows financial advisors to sell packaged securities or investment products such as variable annuities and mutual funds. To earn a Series 6 license, advisors must register with the Financial Industry Regulatory Authority (FINRA) and take a 100-question exam. This test covers topics such as key job functions, business development, laws and regulations, account management and making client recommendations.
Series 7 license
The Series 7 license, also known as the General Securities license, allows financial advisors to sell almost every type of investment product. This includes the sale of stocks, bonds, options, futures and packaged securities. To earn a Series 7 license, advisors must pass a 250-question exam administered by FINRA. Financial advisors take the Series 7 exam in three-hour segments and typically prepare for the test ahead of time.
Series 63 license
Financial advisors are required to earn the Series 63 license to conduct business within a state’s borders. To obtain a Series 63 license, advisors have to take an exam and answer questions about highly specific state laws and regulations. This FINRA exam consists of 60 questions. Financial advisors are required to have both a Series 6 or 7 and a Series 63 license to operate within any given state.
Series 65 license
If financial advisors receive payment in the form of fees instead of commission, they must earn a Series 65 license to work within their state. Like the Series 63, advisors earn the Series 65 license by taking an exam about various financial laws and regulations. More specifically, the Series 65 exam consists of 140 questions covering topics such as general investment principles, laws, regulations and unethical business practice guidelines.
Series 3 license
The Series 3 license, also known as the National Commodities Futures Examination, enables financial advisors to sell real estate, life insurance and commodities. The Series 3 license exam is administered by FINRA and consists of 120 questions.
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To earn specific licenses, financial advisors have to complete the following steps:
1. Take the Securities Industry Essentials (SIE) exam
To begin, take the Securities Industry Essentials (SIE) exam administered by FINRA. You can complete this exam without a sponsor, so individuals entering the field for the first time are likely to start with the SIE. The test covers general topics from the Series 6 and 7 exams. Passing the SIE exam can help you find a sponsor for the following steps in the licensing process.
2. Find a sponsor for Series 6 or 7 exams
To qualify for the Series 6 or 7 license exams, you must first obtain a sponsorship with a FINRA affiliated firm or self-regulatory organization (SRO). Contact several broker-dealers in your network to find out if they’re willing to sponsor you. If you’re new to the field or have minimal experience, be sure to pass the SIE exam so potential sponsors know you’re qualified.
3. Consider Series 3 license option
If you’re interested in selling real estate, life insurance or commodities, you must obtain a Series 3 license administered by FINRA. Because the rules and regulations vary depending on what you’re selling, you have to pass an additional exam to earn a Series 3 license. If relevant, consider this option before moving on to the next set of exams.
4. Take the Series 63 or Series 65 exams
Next, take the Series 63 or Series 65 license exams created by the North American Securities Administrators Association (NASAA) and administered by FINRA. The Series 63 exam is required by all states except Colorado, Florida, District of Columbia, Louisiana, Maryland, Ohio, New Jersey and Puerto Rico. Though similar, the Series 65 license exam focuses on general financial competency and is required for fee-based advisors.
5. Explore additional certifications
After earning the licenses necessary to conduct business in your state, explore additional certifications to further your career and become a more competitive advisor. The two most common certifications are:
- Certified Financial Planner (CFP): To become a CFP, you need to obtain a bachelor’s degree, complete CFP educational courses and work in the industry for at least three years. This certification shows you’re qualified and experienced enough to provide accurate financial advice.
- Certified Public Accountants (CPA): To become a CPA, you need a bachelor’s degree and at least two years of relevant experience. Adding accounting to your set of skills can provide higher-paying job opportunities in the future and help you expand and diversify your clientele.
When choosing someone to help manage money, it is important to know that your financial advisor is someone you can trust. In addition to their educational and work background, there are several professional licenses and certifications that can help identify a qualified specialist.