What Is the Series 7 License?

Jun 06, 2023 By Susan Kelly

Practitioners of financial services must pass the Series 7 Exam on trading in securities of any kind other than commodities and futures. The official name for this test is the General Securities Registered Representative Exam or GSRE for short. It discusses a wide range of issues, including the rules governing the financial sector, customer interactions, numerous forms of securities, and the dangers connected with each of those categories. If you collaborate with a person who has a Series 7 license, you can anticipate that they will have an in-depth understanding of the following subjects:

  • Retirement plans
  • Stocks
  • Bonds
  • 529 college savings plans
  • Financial industry regulations
  • Mutual funds
  • Annuities
  • Exchange-traded funds (ETFs)
  • Life insurance
  • Taxes

Building diversified, risk-assessed investment portfolios for clients is a specialty of Series 7 financial advisers and other practitioners licensed in the financial services industry. Because the Series 7 Exam places a heavy emphasis on the principles of portfolio construction and asset allocation, it is in your best interest to seek the advice of these experts if you are contemplating making significant choices on investing or retirement planning.

Series 7 Education Requirements

A person must first get a passing score on the Security Industry Essentials (SIE) Exam before they are eligible to take the Series 7 Exam. This examination covers various financial issues, including investment products and hazards, the securities market structure, regulatory bodies, and many more. There are 75 questions in the SIE Exam, which are divided into four parts. These chapters are named as follows:

  • Familiarity with the financial markets
  • Acquiring knowledge of financial products and the dangers they pose
  • Acquiring knowledge of the trading process, customer accounts, and activities that are banned
  • An outline of the existing regulatory structure

Series 7 Exam Structure

After completing the SIE Exam, students will be qualified to take the Series 7 Exam. This examination is much more involved than others since it consists of 125 questions, costs $300, and gives test-takers three hours and 45 minutes to do it. All 125 questions are multiple-choice. The individual who completes this examination and goes on to get their certification will be considered a Series 7 professional. The following is an outline of the topics that will be covered in the Series 7 Exam:

  • Analyzing the investing requirements and objectives of clients
  • Providing financial advice to various clientele
  • Getting started with the acquisition of investments
  • Managing the transfer of customers' assets
  • Serve as an intermediary between the client companies and the broker-dealers

Why Is the Series 7 License Necessary?

In addition to having substantial industry expertise, financial professionals with Series 7 certificates must also meet higher standards of conduct than those who do not have licenses. The Financial Industry Regulatory Authority (FINRA) has stringent standards that professionals with a Series 7 license must follow to maintain their employment and provide the best possible service to their customers.

Completing the SIE Exam is a prerequisite to taking the Series 7 Exam. According to FINRA, the purpose of this test is to determine whether or not a candidate has a sufficient foundational understanding of the securities industry, including concepts essential to working in the industry, such as the different types of products and their risks, the structure of the markets in the securities industry, regulatory agencies and their functions, and prohibited practices.

As can be seen, those who have Series 7 licenses are required to adhere to stringent criteria. These folks can market almost any kind of investment. However, these registered professionals cannot offer goods related to commodities, futures, real estate, or life insurance since they have a Series 7 license. Brokers need additional licenses to market the many forms of investments and insurance products.

Bottom Line

If you're in the market for a financial adviser, one of the first questions you should ask is about the candidate's credentials in this field. The Series 7 license is notable within the profession because practitioners must complete one of the industry's longest and most difficult examinations to get it. Since they have this license, they can sell most types of securities, which indicates that they have a deep understanding of many aspects of finance. FINRA handles the examination. Those with this position are held to a higher level of conduct regarding how they interact with customers as a result.

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