The first investment licence that potential advisors pursue is either the Series 6 or the Series 7 certification from FINRA. Between the two options, an individual is able to decide as to whether they want to jump right into the investments industry, or instead work their way in more gradually, so as to develop a greater practical understanding of the industry. While neither choice is ‘right’ or ‘wrong’ for everyone, it is good to understand the applicability of each, so that we know exactly what it is that our advisor is capable of.
The Series 6 licence is commonly referred to as a limited-investment securities licence, because of the way in which it allows a professional to deal in ‘fund’ or ‘packaged’ products. While usually most applicable to Mutual Funds dealers, Insurance Advisors and Lenders also find this licence beneficial because of the way in which it provides them with an understanding of basic investments through funds and annuities. From there, an Insurance Advisor or Lender is better able to describe how it is that their products contribute to the entire breadth of their financial position.
That being said, the Series 6 can be somewhat limited in the way that it restricts individuals from advising on the individual assets that actually make up the funds that they are selling. This can sometimes be confusing for hands-on clients that want to understand exactly what it is that drives their portfolios. Because of this frustration, many individuals choose to instead skip right ahead to pursuing the Series 7 exam.
The Series 7 licence allows professionals to deal in most investment securities. Individuals that pass this exam become known as General Securities Representatives, because they are allowed to advise customers on dealing with individual equities, simple derivatives, and fixed-income products. Additionally, the Series 7 exam allows an individual to deal in mutual funds. While not as encompassing as the Series 6 is for dealing with annuity products from life insurance packages, the Series 7 is by far the most common licence, as it is required to be held by most stockbrokers.
From here, we know that these individuals are qualified to be dealing with our financial position because of the way in which the exam is a grueling 6 hour marathon (though many finish early), and has reasonably high passing requirements for applicants.
While the two of these licences provide an entry-point for advisors into the world of financial advice, we need to remember that these are just the first steps in a career of continuing education. In the next article, we’ll proceed to discuss some of the exams that many advisors choose to continue with, so as to continue expanding their level of expertise.