A Guide to FINRA Licenses to Advance Your Career in Finance

Key Takeaways

• People who seek security licensing typically want to act as an investment advisor, registered representative, stockbroker, investment banker, securities sales agent, or research analyst.  

• A person who has notation of a FINRA license next to their name would more than likely be able to jumpstart their salary.

• Anyone who is interested in becoming a registered representative in the U.S. securities industry will at some point need to know about FINRA licenses, which offer gateways to the securities industry.

Anyone who is interested in becoming a registered representative in the U.S. securities industry will at some point need to know about FINRA licenses, which offer gateways to the securities industry. To help them understand the ins and outs of this accreditation, here is a guide to FINRA licenses and advancing careers in finance.   

What are FINRA Licenses?

FINRA licenses, of which there are 17, are administered by the Financial Industry Regulatory Authority. FINRA is a self-regulatory organization that oversees securities licensing procedures and requisites, and also has record-keeping and disciplinary functions.  

Those who seek security licensing typically want to act as an investment advisor, registered representative, stockbroker, investment banker, securities sales agent, or research analyst.  The type of licensing required hinges on the kinds of goods or services sold or provided. Those who work in finance can choose the accreditation that matches their experience and investment or business specialty.

Every FINRA license corresponds with an investment type or business. There are three general licenses that are commonly sought, including Series 6, Series 7, and Series 3, the licensing requirements for which are overseen by the North American Securities Administrators Association.

Types of FINRA Licenses

There are various types of FINRA licenses, including:

Series 7

This is known as the general securities representative license, with holders listed by FINRA as registered representatives. Such licensees are referred to as stockbrokers.  Note that many financial planners and insurance agents also have a Series 7 license. 

Such a license permits the holder to sell nearly all individual securities, including call and put options, bonds and other fixed income, warrants, money market funds, mutual funds, hedge funds, and common and preferred stocks. However, the holder may not sell real estate, commodities futures, and life insurance. 

Lasting 3.45 hours and encompassing 125 questions, the Series 7 exam is the longest and most challenging, spanning all aspects of trading, put and call options, stock and bond quotes, ethics, margin, straddles, and securities regulations.

To be able to take the exam, the candidate is required by FINRA to first secure a sponsorship from a FINRA member or self-regulatory organization and pass a background check and be fingerprinted. They also must have a passing grade of at least 72 percent.   

Series 65

Individuals who provide financial advice on a non commission basis need a Series 65 license. Such people can include stockbrokers, financial planners, advisors, and others that charge an hourly fee for advice, fall under this tent.

The license requires passage of a 180-page, three-hour test that covers registered the rules of varying investment advisors. The test is officially called the Uniform Investment Advisor Law Exam, the test 

Series 63

This license, formally known as the Uniform Securities Agent State Law, requires an exam that is 1:15 minutes long and features 60 questions, including provisions covering the Uniforms Securities Act. It is required by each state in which the licensee transacts business. Anyone who has a Series 6 or 7 license must have this accreditation as well.

Series 6

Called the Investment Company and Variable Contracts Products Representative License, this certification gives entry-level finance individuals, particularly retirement planners and financial advisors, the knowledge to sell mutual funds and variable annuities. Someone with this license can handle variable life insurance, 529 savings plans, unit investment trusts, municipal fund securities, and local government investment tools.

Series 57

This Securities Trader Representative license is required for entry-level security traders who wish to execute convertible, equity, or preferred debt securities. This certification permits trader-related activities in stocks and bonds, OTC equity trading, proprietary trading, and NASDAQ equity trading.

Series 79

Investment Banking Representative Certification prepares investment bankers for responsibilities such as advising clients about equity and debt security offerings through mergers, private placements, acquisitions, and public offerings. Candidates who gain such certification can communicate with clients about topics such as equity offerings, financial restructuring, tender offers, asset sales, and business combination transactions.

Series 14

This accreditation prepares finance specialists by equipping them with the skills to conduct themselves as compliance officers. A person with this license will have learned about regulatory agencies, solicitations, markets and operations, customer and employee accounts, and registration. Other topics can include credit regulation and capital requirements, as well as investment banking.

Series 27

Gaining Financial and Operations Principal licensing allows finance specialists to fulfill the broker-dealer responsibilities, rules, and expectations. The specialist will learn how to perform activities having to do with topics such as books and records preservation, cash and funding management, customer protection, net capital, financial reports, and back-office operations. 

Series 24

This General Securities Principal certificate is for those in finance who wish to manage and supervise broker-dealer general securities. Activities they will be able to handle include trading, investment banking, private securities offerings, personnel management, broker-dealer registration activities, institutional and retail customer-focused activities, investment research and banking and market-making and trading activities. 

How Do You Get a FINRA License?

There are slightly varying requirements among licenses, but common steps to gaining a credential include:

• Taking and passing the Securities Industry Essentials (SIE) exam, which gauges a candidate’s foundational knowledge of the securities industry. The test homes in on securities products, industry terminology, regulatory agencies and their functions, markets function and structure, and prohibited and regulated practices.
• Finding a sponsoring FINRA firm or SRO.
• Choosing the appropriate exam for the career path.
• Registering and scheduling the exam.
• Studying the subject matter for at least 80 hours. 

Requirements for Obtaining a FINRA License

• Educational background. FINRA licenses do not require a college degree. However, an employer might.
• Industry experience. The SIE, which must first be passed, is open to anyone who is at least 18, including students and those interested in showing basic knowledge of the industry to potential employers. Results are valid for four years.
• Passing scores. To achieve the SIE passing score of 70 percent, candidates must correctly answer 35 of 50 questions. The current pass rate is 82 percent.

Other required passing scores and pass rates, where available, are:

• Series 6, 70 percent; 58 percent pass rate
• Series 7, 72 percent; 71 percent
• Series 22, 70 percent; est. 60-70 percent
• Series 57, 70 percent; est. 60-70 percent
• Series 79, 73 percent; 87 percent
• Series 82, 70 percent; est. 60-70 percent
• Series 86, 73 percent; 74.9 percent
• Series 87, 74 percent; 89.6 percent
• Series 99, 68 percent; 71 percent
• Series 4, 72 percent; est. 60-70 percent
• Series 9, 70 percent; est. 70-75 percent
• Series 10, 70 percent; est. 70-75 percent 
• Series 14, 70 percent; est. 50-60 percent
• Series 16, 72 percent, est. 50-60 percent
• Series 23, 70 percent; est. 50-60 percent
• Series 24, 70 percent; est. 70-75 percent
• Series 26, 70 percent; est. 50-60 percent
• Series 27, 69 percent; est. 70-75 percent
• Series 28, 69 percent; est. 50-60 percent
• Series 39, 70 percent; est. 50-60 percent
• Series 50, 71 percent; 84 percent
• Series 51, 70 percent; est. 70-80 percent
• Series 52, 70 percent; est. 60-70 percent
• Series 53, 70 percent; est. 50-60 percent
• Series 54, 70 percent; est. 50-60 percent
• Series 3, 70 percent; est. 70-75 percent
• Series 30, 70 percent; est. 50-60 percent
• Series 31, 70 percent; est. 70-75 percent
• Series 32, 70 percent; est. 70-75 percent
• Series 34, 70 percent; est. 70-75 percent
• Series 63, 71.7 percent; est. 80-85 percent
• Series 65, 70.8 percent; est. 65-70 percent
• Series 66, 73 percent; est. 65-70 percent

What are the Benefits of Having a FINRA License?

A person who has notation of a FINRA license next to their name would more than likely be able to jumpstart their salary. They also would be able to climb the financial services ladder and have more opportunities for career advancement. What is more, those who have a FINRA license in the financial sector have more credibility and trust, relative to those who do not.   

In 2021, the most recent year for which Bureau of Labor Statistics data is available, the median annual salary for commodities, securities, and financial services sales agents was $62,910, with the sector expected to expand 10 percent through 2031.

Meanwhile, the median salary for personal finance advisors was $94,170, a field expected to grow 15 percent through the next eight years.    

Also, since FINRA licensing typically requires a sponsor, earning one could help the licensee establish and nurture a relationship early in their career.

Learn More

Those looking to learn more about the different financial licenses would do well to check out insights and blogs featured by Yieldstreet, the popular investment platform for alternative investments – basically any assets other than stocks and bonds.

The site offers a comprehensive collection of information and resources about private markets and alternative investments, including the importance of portfolio diversification – the practice of constructing a portfolio with a mix of investments that have varying expected risks and returns. Such a portfolio can mitigate overall risk and volatility. 

Alternative Investments and Portfolio Diversification

Alternative investments can be a good way to help accomplish this. Traditional portfolio asset allocation envisages a 60% public stock and 40% fixed income allocation. However, a more balanced 60/20/20 or 50/30/20 split, incorporating alternative assets, may make a portfolio less sensitive to public market short-term swings. 

Real estate, private equity, venture capital, digital assets, precious metals and collectibles are among the asset classes deemed “alternative investments.” Broadly speaking, such investments tend to be less connected to public equity, and thus offer potential for diversification. Of course, like traditional investments, it is important to remember that alternatives also entail a degree of risk. 

In some cases, this risk can be greater than that of traditional investments.

This is why these asset classes were traditionally accessible only to an exclusive base of wealthy individuals and institutional investors buying in at very high minimums — often between $500,000 and $1 million.  These people were considered to be more capable of weathering losses of that magnitude, should the investments underperform.

However, Yieldstreet has opened a number of carefully curated alternative investment strategies to all investors. While the risk is still there, the company offers help in capitalizing on areas such as real estate, legal finance, art finance and structured notes — as well as a wide range of other unique alternative investments. 

Moreover, investors can get started with a relatively small amount of capital. Yieldstreet has opportunities across a broad range of asset classes, offering a variety of yields and durations, with minimum investments as low as $10,000.

Learn more about the ways Yieldstreet can help diversify and grow portfolios.

Summary

The Financial Industry Regulatory Authority (FINRA) administers a number of examinations for those who wish to become licensed financial professionals. That could mean investment advisor, stockbroker, registered representative, or related position. To facilitate the process, most investment and financial companies have a required licensing program included in the training package.