What Is Series 65?
The Series 65 exam, formally known as the Uniform Investment Adviser Law Examination, is a foundational step for individuals aiming to act as investment advisers in the U.S. Designed by the North American Securities Administrators Association (NASAA) and administered by the Financial Industry Regulatory Authority (FINRA), this exam evaluates your knowledge on laws, regulations, ethics, and diverse subjects integral to the post of a financial adviser.
Key Highlights
- Expert Requirement: Financial professionals must pass licensing exams to practice in the U.S.
- Qualification: The Series 65 exam qualifies an individual to function as an Investment Adviser Representative (IAR) in most states.
- Comprehensive Coverage: Topics include securities acts, ethical practices, fiduciary obligations, client communications, compensation, conflicts of interest, and more.
- Test Format: The exam consists of 130 multiple-choice questions and requires a minimum score of 72% to pass.
- Extended Licensing: Passing the Series 65 might still necessitate the FINRA Series 7 exam for full-functionality, including selling securities.
Who Can Benefit from the Series 65?
Successfully completing the Series 65 allows candidates to become investment adviser representatives (IARs) in their respective states. As an IAR, there is an obligation to act in a fiduciary capacity, offering investment advice to clients for a fee. Crucially, candidates do not need any prerequisites or sponsorship from an investment firm but must file a Form U10 (Form U4 for brokers) and handle the $187 exam fee.
Series 65 Exam Structure
The Series 65 examination features:
- Question Format: 130 multiple-choice questions.
- Time Allowance: 180 minutes to complete the exam.
- Passing Score: A minimum score of 72% is essential.
- On-Site Requirements: Testing centers need an individual to use a provided four-function electronic calculator and dry-erase boards. No external reference materials are allowed.
Detailed Exam Content
The Series 65 exam covers significant areas:
- Economic Factors and Business Information (15%, 20 questions): Focuses on monetary policies, economic indicators, financial reporting, quantitative methods, and basic risk concepts.
- Investment Vehicle Characteristics (25%, 32 questions): Involves cash equivalents, fixed income securities, equity valuation methods, pooled investments, derivative securities, and insurance-based products.
- Client Investment Recommendations and Strategies (30%, 39 questions): Includes client profiles, portfolio management styles, tax considerations, retirement planning, ERISA issues, and trading securities.
- Laws, Regulations, and Guidelines (30%, 39 questions): Emphasizes state and federal securities acts, rules for investment advisers, unethical business practices, and fiduciary obligations.
Preparation Tips for Series 65
Numerous resources are available in books and online forms for Series 65 exam preparations. Suggestion involves dedicating between 50-70 hours of study time. Candidates primarily need to focus on effectively memorizing laws and rules. Conservatively, those with strong recall abilities might require less time.
Comparative Highlights: Series 65 vs. Series 63 vs. Series 66
The NASAA offers three primary exams - Series 65, Series 63, and Series 66:
- Series 63: Qualifies candidates to sell specific investment products at a state level.
- Series 66: Combines subject matter from both Series 63 and Series 65, needing an accompanying FINRA Series 7 license exam.
- Series 65: Opens paths for advisory services but may still necessitate Series 7 for executing trades.
FAQs
- Does the Series 65 License Expire? The Series 65 license remains active as long as the professional is in the financial services industry. An absence longer than two years might call for retaking the test.
- Do I Need A Sponsor to Take the Series 65? Sponsorship is not a necessity to sit for the Series 65 exam.
- How Much Does the Series 65 Exam Cost? The exam fee is currently set at $187. A passing score of 72% is required to move forward. Failure to secure this necessitates retaking for the same fee after 30 days.
- Can I Become An IAR Without Taking Series 65? Yes, passing the Series 7 and Series 66 exams provides an alternative route.
- Is the Series 65 a Hard Exam? Preparation modules suggest a pass rate of approximately 65-70%.
The Final Verdict
The Series 65 exam, officially branded the Uniform Investment Adviser Law Exam, scrutinizes the candidate’s capability to advise clients on investments while demonstrating financial expertise. States primarily utilize it as a threshold to qualify individuals as investment adviser representatives.
Related Terms: Series 63, Series 66, Series 7, FINRA, NASAA.
References
- NASAA. “Series 65 Exam Outline”.
- NASAA. “Series 65 Test Specifications”.
- Pass Perfect. “Series 65 Exam FAQ & Information”.
