Financial advisors must possess various securities licenses in order to sell investment products. The specific products an advisor sells, as well as the method by which he receives compensation, determine which licenses he is required to obtain. Common licenses held by financial advisors include the Series 6, Series 7, Series 63 and Series 65.
Series 6 License
Administered by the Financial Industry Regulatory Authority, or FINRA, the Series 6 enables financial advisors to sell packaged securities, such as mutual funds and variable annuities. A financial advisor with only a Series 6 may not sell individual stocks or bonds.
Many advisors start by obtaining a Series 6 before moving on to the more comprehensive and difficult-to-obtain Series 7. By doing so, they can get hands-on experience and even sell a limited range of products while studying for the Series 7.
Series 7 License
The Series 7 is the gold standard of financial advisor licenses. Also administered by FINRA, this license enables an advisor to sell nearly every investment product. A Series 7 licensee may sell stocks, bonds, options and futures. The license also authorizes the sale of packaged securities, even if you do not carry an active Series 6 license. The only securities the Series 7 does not cover are commodities, which require a Series 3 license, as well as real estate and life insurance, both of which have their own licenses.
Because the Series 7 confers such broad authority, it is by far the most difficult license for a financial advisor to obtain. The exam is six hours long and has a first-time pass rate of only 65%.
Series 63 License
Every state requires a Series 63 license for financial advisors to conduct business within its borders. This is an exam you must pass in addition to the Series 7 or Series 6. It is shorter and easier, lasting only 75 minutes, but covers a lot of minutiae regarding laws and regulations, some of which is known to trip up test-takers.
Series 65 License
States also require the Series 65 but only for financial advisors compensated with fees as opposed to commission. Like the Series 63, this exam is heavy on rules and regulations, the reason being these rules differ greatly for advisors who do not get paid on commission.
That said, much of the material on the Series 65 is a rehash of what an advisor has already seen on the Series 7 and, therefore, the test is considered rather easy to pass when taken subsequently. Most advisors who take both exams take the Series 7 first. The Series 65 can be difficult for the small percentage of advisors who take it without having passed the Series 7.