Definition of series 6

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What is Series 6?

Series 6 is a securities license authorizing its holder to register as a representative of a company and to sell certain types of mutual funds, variable annuities and insurance. Series 6 licensees are not permitted to sell corporate or municipal securities, direct participation programs and options. With Series 6, an individual can buy or sell certain types of mutual funds, variable life insurance, municipal fund securities, variable annuities and open-ended investment trusts.

Key points to remember

  • Series 6 is a securities license authorizing its holder to register as a representative of a company and to sell certain types of mutual funds, variable annuities and insurance.
  • Candidates must pass the Series 6 exam to earn a Series 6 license, and the Securities Industry Essentials (SIE) exam is a co-requisite for the Series 6 exam.
  • Candidates must be sponsored by a member of FINRA or a self-regulatory organization (SRO) to take the exam.
  • Round 6 exams were traditionally taken in person at testing centers, but FINRA started offering them online in 2020.
  • The biggest downside to a Series 6 license is that holders are not allowed to sell exchange traded funds (ETFs).

Understanding Series 6

Series 6 is a license sought after by professionals in the financial services industry. Jobs using the Series 6 license include financial advisers, pension specialists, investment advisers, and private bankers. In order to obtain the Series 6 license, applicants must pass the Investment Firm / Variable Contract Products Representative Exam (Series 6). The Securities Industry Essentials (SIE) exam is a co-requisite for the Series 6 exam. The SIE does not require firm sponsorship.

The Financial Sector Regulatory Authority (FINRA) administers the Series 6 exam. It covers topics such as mutual funds, variable annuities, securities, tax regulation, pension plans and insurance products. A passing grade is obtained by correctly answering at least 35 of the 50 questions within 90 minutes. Five additional questions are not marked for a total of 55 questions. The test costs $ 40 and is administered by computer without authorized reference material.

Candidates traditionally took the Series 6 exams in person at Prometric testing centers. However, FINRA began offering tests, including the Round 6 exam, online in 2020. Prometric also administered the tests online. However, applicants or their employers had to install specialized software on their computers and provide cameras. Note, however, that a Series 6 expires two years after employment, except in special circumstances such as a military deployment.

Advantages and disadvantages of the 6 series

The Series 6 exam is often compared to the Series 7 exam. The Series 6 costs a lot less and has a shorter test covering less material. However, a Series 6 license is all that some financial advisers, investment advisers, and retirement planners need. These advisors may only need a Series 6 license if they only sell insurance, annuities, and certain types of mutual funds, not individual stocks.

The biggest drawback of a Series 6 is that holders are not allowed to sell exchange traded funds (ETFs), or stocks and bonds, as they are considered to be corporate securities. This is a significant drawback, as ETFs generally offer lower fees and increasingly replace mutual funds as the preferred investment vehicles for retail investors. Retirement advisors and planners who want to sell ETFs must obtain a Series 7 license, which requires taking a longer, more comprehensive exam that costs more.

Requirements for Series 6

Candidates must be sponsored by a member of FINRA or a self-regulatory organization (SRO) to take the exam. There are no prerequisites for the exam, but the Securities Industry Essentials (SIE) exam is a co-requisite for series 6. Prior to October 2018, the exam consisted of 100 questions and did not have a co-requisite SIE.

After receiving a passing grade, applicants must then register with FINRA through their sponsoring company in order to trade authorized securities. Series 6 holders are considered limited representatives of their sponsoring company. As a limited representative, they may sell certain types of mutual funds, variable annuities, and variable life insurance.

Series 6 review

As reported by FINRA, the Round 6 exam covers four specific sections.

  • “Broker-Trader Business Research with Clients and Prospects,” which includes 12 questions, covering 24% of the exam.
  • “Open accounts after obtaining and assessing clients’ financial profile and investment goals” has eight questions, covering 16% of the exam.
  • “Provide clients with investment information, make appropriate recommendations, transfer assets and maintain appropriate records” is half of the 25-question exam, covering 50% of the exam.
  • “Obtains and verifies buy and sell instructions from customers; processes, completes and confirms transactions ”consists of five questions covering 10% of the exam.

Continuing education

License holders must meet continuing education requirements and receive sponsorship from a FINRA registered company to maintain their Series 6 licenses.

FINRA’s continuing education program has two components: a regulatory component and a firm component. Regulatory, FINRA requires license holders to complete a computer-based training session within 120 days of the second anniversary of registration. FINRA also requires a computer training session every three years thereafter. The firm element requires brokers to establish and maintain a continuing education program.

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