What Is the Series 6?
The Series 6 license is a coveted securities license that empowers holders to register as representatives of a company, enabling them to sell specific types of financial products, including mutual funds, variable securities, and certain insurance policies. However, those with a Series 6 license aren’t permitted to sell corporate or municipal securities, direct participation programs, or options.
With a Series 6 license, a financial professional can deal in specific products such as mutual funds, variable life insurance, municipal fund securities, variable annuities, and unit investment trusts (UITs).
Key Takeaways
- The Series 6 license allows representatives to sell certain specified mutual funds, variable annuities, and insurance products.
- Candidates must pass the Series 6 exam and the Securities Industry Essentials (SIE) exam to secure a Series 6 license.
- Candidates need to be sponsored by a FINRA member or a self-regulatory organization (SRO) to sit for the exam.
- Although traditionally taken in test centers, Series 6 exams have been available online since 2020.
- The Series 6 license does not authorize the sale of exchange-traded funds (ETFs).
Understanding Series 6
Professionals who seek the Series 6 license are typically involved in financial services, such as financial advisors, retirement plan specialists, investment advisors, and private bankers. To gain the Series 6 license, candidates must pass the Investment Company/Variable Contracts Products Limited Representative (Series 6) exam. The SIE exam is a corequisite for the Series 6, and although it does not mandate firm sponsorship, it’s a preliminary step.
FINRA administers the Series 6 exam, testing knowledge on mutual funds, variable annuities, securities, tax regulations, retirement plans, and insurance products. A minimum of 35 correct answers out of 50 questions within 90 minutes is required to pass. The exam costs $40 and is conducted via computer without reference material allowed.
Candidates originally sat for the Series 6 exam at Prometric test centers, but since 2020, online testing options require specialized software and camera setups.
What Does the Series 6 Allow You to Do?
Holding a FINRA Series 6 license qualifies an individual as a registered representative to sell mutual funds, variable annuities, and UITs. These financial products are relatively straightforward investment tools suitable for individual investors focusing on long-term goals, such as retirement.
A Series 6 license does not cover the sale of other securities, like stocks, bonds, and options. Professionals seeking to sell these must obtain other licenses, such as the FINRA Series 7 license.
Responsibilities of a Series 6 licensee include furnishing investment advice and recommendations, processing transactions, and maintaining accurate records, albeit limited to specific securities. They often work for brokerage firms, banks, insurance companies, or other financial institutions, adhering to rigorous ethical and legal standards.
Series 6 vs. Series 7
The Series 6 exam frequently comes up against the Series 7 exam in comparisons. While the Series 6 exam is shorter, less costly, and covers less material, it’s ideal for those only needing to sell insurance, annuities, and specific mutual funds, but not individual stocks. Series 6 license holders cannot sell stocks, exchange-traded funds (ETFs), or bonds, making the Series 7 exam and license preferable for those aiming to sell a broader range of investment products.
The Series 7 license, though more exhaustive and challenging, tends to open vast career opportunities in the securities realm.
Requirements for Series 6
Candidates must demonstrate sponsorship by a FINRA member or an SRO to sit for the Series 6 exam. Although there’s no formal prerequisite, the SIE exam coincides as a corequisite.
Upon passing, candidates must register through their sponsoring firm with FINRA to transact in authorized securities. Series 6 holders are considered limited representatives authorized to sell limited types of mutual funds, annuities, and variable life insurance.
Series 6 Exam Sections
The exam spans 90 minutes comprised of 50 multiple-choice questions, necessitating a passing score of 70%. The topics break down into four key sections:
- Seeks Business for the Broker-dealer from Customers and Potential Customers: 12 questions (24%)
- Opens Accounts After Obtaining and Evaluating Customers’ Financial Profile and Investment Objectives: 8 questions (16%)
- Provides Customers with Information About Investments, Makes Suitable Recommendations, Transfers Assets, and Maintains Appropriate Records: 25 questions (50%)
- Obtains and Verifies Customers’ Purchase and Sales Instructions; Processes, Completes, and Confirms Transactions: 5 questions (10%)
Continuing Education
To maintain a Series 6 license, holders must engage with continuing education mandates and retain sponsorship by a FINRA-registered entity.
FINRA’s continuing education splits into the regulatory and firm elements. Regulatory demands computer-based training within 120 days of the registration’s second anniversary, repeating triennially. On a firm level, broker-dealers need a continuous education program.
Is the Series 6 or Series 7 Exam Harder?
The Series 7 exam is broader and more challenging than the Series 6, demanding a deeper grasp of the securities industry and financial markets.
How Much Does the Series 6 Exam Cost?
As of 2022, the cost for the Series 6 exam is $75.
How Long Is a Series 6 Good for?
A Series 6 license stays valid throughout employment with a FINRA-member firm, contingent on good standing. Lapsed registration invalidates the license.
Every two years, holders must complete continuing education credits to renew the license, ensuring proficiency and adhering to current regulatory standards, which vary by state.
The Bottom Line
The FINRA Series 6 license permits a professional to act as a registered representative, facilitating the sale of mutual funds, variable annuities, and UITs. Gaining the license requires passing the Series 6 exam, focusing on investment types, regulatory bodies, and risk assessment. Designed for fresh faces in the securities industry aiming to sell these investment products, the Series 6 opens doors to specialized yet essential financial roles.
Related Terms: Series 7, FINRA, regulatory organizations, mutual funds, variable annuities.
References
- FINRA, “Coronavirus Impact on FINRA-Administered Exams”.
- FINRA. “Qualification Exams”.
- FINRA, “Series 6 Exam Outline”.
- FINRA. “Continuing Education”.
