Financial Advisor License Requirements

Social media may give users the impression that anyone can be a financial expert. Robo platforms may try to convince them an advisor isn’t necessary. Free trading apps open up the market to non-financial newbies. Is financial advisor licensing still necessary? Yes.

Licensed financial advisors can compete with robo advisors and free trading platforms. FAs are a higher-level option, where real humans are providing fiduciary level advice. Licensing is required for that. Here’s what you need to know about financial advisor license requirements.

Step #1: Start with the SIE Exam

The Securities Industry Essentials (SIE) Exam is a co-requisite to the Series 7 exam, but you don’t need a sponsor to take it. This is fairly new. In 2015, to eliminate redundancies, FINRA consolidated fundamental knowledge from existing “Series” exams into the SIE test.

The SIE was created for individuals who want to enter the field of financial services prior to finding a sponsor. It includes elements of the Series 6, Series 7, and Series 57 (Securities Trader), among others. Pass it and you can take “top-off” tests in each of those categories.

Note, however, that you must be sponsored by a FINRA member firm or self-regulatory organization (SRO) to take the top-off tests or sit for a Series 6 or Series 7. Passing the SIE Exam and adding it to your educational credentials will give you a much better shot at obtaining that sponsorship.

Step #2: Find a Sponsor for Your Series 6 or Series 7

The Series 6 and Series 7 license are some of the most important licenses for financial advisors. Here’s what you need to know:

  • The Series 6 license is valuable, but it will restrict you in terms of what you can offer to your clients. The Series 6 is for advisors who want to sell only packaged securities, like mutual funds and variable annuities. That’s a good start, but you may want to do more.
  • The Series 7 license gives you the ability to sell packaged securities, individual stocks, bonds, options, and futures. This is the gold standard of licensing for a financial advisor. Even if you start out with a Series 6, you may want to come back and do the Series 7 later on.

After you’ve been licensed for two years, you’ll need to complete continuing education (CE) courses to hold on to your Series 7 license. You have 120 days to complete those in the first cycle (after year two)—then they’ll be required again every three years.

Step #3: Consider the Series 3

In case you’re wondering, selling real estate or life insurance requires different licenses. Commodities are also a separate category. You need a Series 3 to sell those. For more information, financial advisor licensing options and qualification exams are listed on the FINRA website.   

Step #4: The Series 63, Series 65, or Series 66

Each of these examinations is administered by FINRA and created by the North American Securities Administrators Association (NASAA). They are similar, but there are some key differences. Your financial advisor license requirements in this area will be dependent on what type of work you want to do:

  • The Series 63 is required in most states if you want to be a registered representative. The exceptions are Colorado, District of Columbia, Florida, Louisiana, Maryland, New Jersey, Ohio, and Puerto Rico. The exam is composed of sixty multiple choice questions.
  • The Series 65 was expanded in 2000 from 75 questions to a 130-question competency exam. It focuses on state securities laws and ethics. You need to get 94 correct answers to pass. This license is required for fee-based advisers.
  • The Series 66 is a recent addition created by the NASAA to eliminate redundancies between the Series 7 and the Series 63 or 65. You must pass the Series 7 to be eligible. The combination of the two are sufficient for licensing in all states.

License Requirements Summarized

To summarize all of this, you’re required to pass the SIE to get started. The minimum licensing needed after that is a Series 6 and 63. That qualifies you to be an agent with the right to sell commissionable package securities, namely mutual funds and variable annuities.

If you want to become an investment advisor representative (IAR), the ideal scenario is to pass the SIE, Series 7, and Series 66. You’ll need a sponsor to accomplish all of that and it will take a few years. When completed, you’ll be able to offer a full range of financial services. 

Further Your Education: CFP and CPA Certifications

Once you’re fully licensed, you may want to become a registered investment advisor (RIA). Competition is fierce, so you’ll need something to distinguish your practice from other advisors in the space. Two key areas you can do that are financial planning and accounting:

  • To become a Certified Financial Planner (CFP), you must hold a bachelor’s degree and complete specific CFP-certified courses. The latter portion can be waived if you hold a CFA, CPA, or master’s degree. You also need to sit for the test and work three years in the industry. 
  • Certified Public Accountants (CPA) do more than just prepare tax returns. Accounting services will broaden your appeal to small business owners and high net worth clients. A bachelor’s degree with a focus in accounting is required, along with two years relevant experience.

Become an Independent Financial Advisor

Good Life Companies is an industry-leading independent financial advisor network offering a full suite of services and tools to transition and support independent advisors. Learn how we can help you establish and grow your business. Contact us today to get started.

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