FINRA Exam Tips and Career Advice 3 – What’s on the FINRA SIE Exam?

Tyler York
Achievable FINRA Exam Tips podcast

What’s on the FINRA SIE Exam? Get a full walk-through of the FINRA SIE Exam on this podcast with Brandon Rith, founder of FINRA tutoring firm Basic Wisdom and Achievable’s FINRA Expert.

If you’re looking for a comprehensive course to pass the FINRA SIE exam with a 98% first-time pass rate, check out Achievable’s FINRA SIE course.

FINRA Exam Tips and Career Advice 1 – What’s the FINRA SIE?

Hey guys, quick reminders year is Tyler York from achievable. If you love our podcast or love Brandon’s work as he explains finra SIE here. We highly recommend him as a tutor what you can reach it him at basic wisdom. Net or if you’d like to use on the course that we develop together, which is a course for your phone or computer about to pass the finra essay. You can try it for free at achievable. Me. Thank you.

Hi there, everyone. My name is Brandon founder and creator of basic wisdom. Simply put in my company helps people pass difficult Financial exam and I’ve also partnered with achievable, of course to revolutionize. How does material is taught? And if you haven’t checked it out already. We have an SIE product available. Not only on basic wisdom. Net but also achievable. Me check that stuff out if you’re interested and I’m sure you’re probably listening to this podcast to gather some information on the s i e and I’m more than happy to go over that today. My goal today is to go over the categories and even some specific topics that show up pretty often on. Most people’s s i e exam. And if you don’t know what SAE stand for that stands for the Securities industry Essentials exam. This is an exam that finra recently put out back in October of 2018 as an entry-level exam to give you an idea of the type of information you

I need to know going into an entry-level Finance position. There’s a lot of information that can be gathered about the s i e exam I end up working with a lot of people that’s it for this exam. I tutor on a seven-day-a-week bases in a lot of my students are people who are preparing for the s i e and I end up talking to them before and after the exam while I don’t discuss specifics and that’s mostly because finra has a bunch of rules that say no you can’t talk about specific questions on the exam. I certainly get a good idea of whether or not my students felt like they were adequately prepared or if there were some areas of the exam that they felt uncomfortable with in addition to the information I get about the SAE from people I work with I also get a vast amount of information from finra itself first and foremost finra put a Content outline, which certainly you can go out there and find that content outline. I think to be untrained eye you might look at that and feel V

Play overwhelmed a lot of times. I’ll just tell you. Hey, we’re going to test on federal blah blah blah or dysregulation it if you were to go on a Google search or a Wikipedia search for those rules and regulations that they’re quoting you’ll see that a lot of times these rules and regulations are pages and pages and pages of information. Well, unless you’ve been working in the industry or doing something like I’ve been doing in terms of teaching people how to pass his exams. You won’t know exactly what finger is going to cover in those areas. So again, you can take a look at the content outline. It might give you some information of what to expect but honestly if you’re new to the industry, I think the Continental I’m will probably scare you more than prepare you a better source of information is actually fenriz practice exam. And yes, if you didn’t know that finra has an s i e practice exam right on their website free to take you can take as many times as you want. The only problem is it’s literally the same 75 questions that you take every single time. I don’t know if they updated every

And then if you wanted website, it’ll say version for other SIE practice exam. But I’ve been looking at the stats for the last 2 months. It’s a literally never changed wherever you found this podcast whether it was on the basic wisdom website achievable website or even YouTube there should be a link to a document that will give you an idea of all the different topics that are covered on the SAT exam. And yes, I was nice enough to help you out. I spent a bunch of time going through that exam and categorizing the different areas that the exam focused on and also there are links to every single question that they show on the Praxis exam. So check it out. I think that’s a great resource free for you to use. Your welcome. Yes. I highly recommend you check out that document at the very least understand the big topics and big areas of the exam that you should really be prepared for even though it’s the practice exam and your test is inevitably going to feel at least a little bit different than it if not,

Much different. I think that fenrir would not put a practice exam out there. That’s just drastically different than the real exam. A lot of times vendors in myself included, you know for the s i e products that achievable put out in partnership with me. Our goal was to make our question sound exactly like the real exam. But to be honest, there’s no better place to go than Sandra. They write the exam questions. So I’m sure the practice exam is going to feel fairly close and it led the very least you’ll get an idea of what the wording is and how they set up their questions. So I’m going to speak mostly from that document. Feel free to follow along when you look at the document or again, just make sure you look at at some point time. It’s very valuable for anyone taking the SAT exam. So, what’s the breakdown? What what did I find where the most important category and I’m going to start from the top of this document move the way down. And whether you have in front of you are not this podcast should still work actually one more thing before we jump into the categories. It’s very important understand what the structure

An exam is SIE exam is a 85 question test. But 10 of those questions are just what they call experimental. They don’t count for anything. Sometimes. It’s material. They haven’t even put in their outline or you haven’t even read in your materials in a lot of times. They’re just putting those questions out there to see how you answer them and they might be topics that they’ll cover and future versions of the exam. So we have 85 questions on the actual test only seventy-five of them will count toward your final grade. The 10 experimental questions does not adhere to them right or wrong. It literally doesn’t count for anything. And by the way, you’re also not going to know which ones are the experimental questions, but I think it’s kind of tough. So test-taking tips for you. If you come across a question that just doesn’t make sense or it’s something that you’ve never seen before don’t freak out. There’s 10 of the 85 questions that are on there that are probably coming or is it you never even seen before that is to be expected on the exam. The federal practice exam is only 75 questions.

They do that because those in the amount of questions that are going to count towards your grade. So I broken down the practice exam based upon the 75 questions that they gave and I’m going to start from the most important categories maybe talk about some specifics and then move on from there the most tested category on the s i e is rules and ethics 14 of the 75 questions that were on the finra practice exam came from this area. And if you’re wondering what is it within that rules and ethics section, I’m just going to name a few of these specific topics that they covered the most tested topics were Communications with the public and a lot of times has questions are focused on if you’re sending a letter to 30 people or if you’re taking on that in the newspaper, what do you need to do as a registered rep and the other area that there were multiple questions on was Insider information, which even if you’re new to the industry, you’ve probably heard us inside information I mean Peck

Through Martha Stewart in jail for inside information or insider trading. So those in the most tested topics within roles in ethics and there’s just a bunch of random stuff in between. You’ll see some things on anti-money-laundering you’ll see some things about what you can and can’t do with a license or without a license you learn a little bit about what the financial crime enforcement network does and there’s some other random things in there. But anything dealing with random rules and ethics regarding you as a registered representative and working in finance that is where most of your questions are going to come from. I also think it’s to be expected that you’ll see a lot of questions that are very situational in this area meaning now, here’s the situation you’re registered representative. What should you do in this situation or what must you do in a situation. Those are the types of questions that are most frequent on the exam and given that this is a very entry-level version of a test that they’re giving you. I think that pretty much makes

That’s right. The second most important section right behind rules and ethics with 13 of your 75 questions was fixed income and if you’ve ever heard of a bond, this is what we’re talking about. A lot of people hate this section. It’s not terribly sexy. There’s not a lot of fun things to learn about when it comes to bond. But at the same time I also think that a lot of people just don’t understand bonds and that’s what drives a lot of the frustration. Yeah, they’re not the most interesting things in the world. But at the same time, they’re one of those things that if you give it enough effort, can you put it in to do enough research on this section? It really shouldn’t be that tough again. All the questions here are very basic very fundamental fixed-income type questions. Are there a lot of random areas that were tested in the fixed-income section. There was only one concept within fixed income that they tested more than once and that was callable bonds if you don’t know what to call.

No bond is it’s basically a bond that has a feature where the issuer whether it’s a company or a government whoever sold the bond. Essentially. They have the right to end the bond earlier than expected. Now if all that was foreign to you and you have no idea what I was just talking about get access to our SIU program. There’s a great section there about fixed-income that’ll really help. You understand what a bond is an and I and how to approach the statue questions, but beyond callable bonds, there was just a bunch of random stuff in there. What’s short-term debt? What’s a money market? How often does this type of bond pay interest? What’s a variable rate demand note, what are the different agency type of Securities and when they say agency ever talk about Federal agency Securities out there. So I want a random areas, but all time back to anything dealing with fixed-income, you know, if you don’t like the section, I got some bad news for you whether you go on to the Series 6

Series 7 or any of the other top off exam you’re likely going to see a fair amount of information, especially if you go onto the series 7 that relate back to bonds. So this is a preview get used to it. And if it if you don’t do well with that then do some research or reach out for help the next section. That was most testable number three was Equity nine of their 75 questions kind of came from equity. And if you don’t know what I mean by Equity just Inc stock a stock is an equity type of an investment yet whether or not you’re new to finance you probably thought of the stock market when you first started thinking about working in are in this world and yeah a bunch of questions came from these types of Investments.

Now that it was interesting there were a few areas that they heavily tested on within the equity section. The most tested was surprisingly stock splits. There are three questions on stock splits within the material and a stock split is when a company does something that either increases the amount of shares outstanding or decreases the amount of shares they have outstanding and that would be referred to as a reverse stock split. This might be the only area that you actually pull your calculator out for there’s some in math involved for some of these questions. And yeah, I think most people are going to see at least one. If not two or three questions on the real exam relating back to stock splits. I really don’t think you’ll see more than three but you know crazier things have happened. They were also multiple questions on rights and warrants both of which are things that give you the right to buy stock in a fixed-price. It’s kind of like a coupon

From a store right? Like if I have a coupon to buy a bag of apples for 4 bucks, that means I have the right to buy apples at a fixed price of $4 rights and warrants are basically the same thing except switch out apples with stock. There’s a few questions are the remaining questions are on we’re on on random topics in the a lot of times are worn a lot of questions on a what’s a stock or what the stock market in particular there were questions on what’s a tender offer. What’s the voting structure of a corporation? What’s that? Like there was also questioned about a stock dividend, which if you never heard about that, it’s a dividend where you get more shares of stock in the company that you won’t that was the feeling that I got from Equity a lot of random stuff but a specific focus on stock splits and rights and warrants for whatever reason the next section was customer accounts 7 question came from this area and when I say customer account

I’m talking okay, if a customer shows up in a brokerage from today and wants to open this type of an account me at what type of what what type of registrations do they have available to them how often do people send statements out? If a customer brings more than $10,000 of cash to deposit into an account. What do we need to file with the government? Those were the types of questions that you will see from that section even though some of this wasn’t covered on the practice exam. I do expect most people to see questions on things. Like what’s a fiduciary account or what do you need to open a guardianship account specifics with custodial account specifics with different types of joint accounts Etc. So make sure you know that information pretty well. There was no topic within customer accounts that came with multiple questions again just felt like a bunch of random stuff just covering different types of accounts and registration that you can open at a brokerage firm. Next. We have the primary Market the primary Market

Is where Securities are sold for the very first time and I don’t know when you’re listening to this. But if it’s anywhere near May 2019 the most recent IPO initial public offering that happened was Uber Uber decided to go public which is I guess fancy way of saying hey, we are got a company that selling ownership in the company and return for cash. So we were sold a bunch of stock to the public. I don’t know how much they raised probably multiples of billions of dollars that they raised and the primary Market covers all that process. What does it take for a company to go through the process of selling a security to the public by the way, if you don’t know what the word security means that the stock a bond mutual fund those are examples of Securities and you can easily replace the word security with investment, but there are a lot of rules and regulations and just general knowledge that. You’ll need to know about this Market.

The Securities Act of 1933 which is the law that covers the things that you should and shouldn’t do and must do when a when a company or an institution is selling something to the public the first time so, yeah, I expect you see at least one question coming from that specific legislation. And if you read through your materials you’re going to see that mentioned a fair amount in there, but everything else beyond that again felt kind of random their questions on syndicates and send the kits are groups of Institutions that sell Securities to the public on behalf of issuers. So let me translate that for you Uber hired Morgan Stanley. They were one of a few Underwriters and Morgan Stanley help to Uber sell their stock to the public because Uber is in the business of getting you from point A to point B whereas Morgan Stanley is in the business of helping big companies like uber

Sell stock to the public. So they’re a bunch of rules and regulations that come along with that whole world there. Send things that issuers must do their certain things that Underwriters must do bottom line. You have to have a general knowledge of what’s going on and what rules you got to follow when you go through that process next we have the secondary market for of the 75 questions came from this area. And yes, this is the market that trade things after their thoughts by the public for the first time. So as an example, if you bought a uber stock through its initial public offering directly from Morgan Stanley and then sold it the next day you be selling that stock in the secondary Market as an analogy. I kind of think of it like this if you’re buying a lawn mower for the very first time you would go to Home Depot buy a lawn mower and then use it right that would be like the primary Market you’re buying a lawn mower. It’s the first time it’s ever been sold brand new and then maybe a couple months later.

You don’t need the lawn mower anymore, or you just tired of it and you go on Craigslist and you sell it Craigslist is the secondary Market same thing with stocks. There’s a place where you buy the stock for the very first time it’s ever been owned by anyone and then there’s the secondary Market where people buy and sell those Securities after that. The secondary Market didn’t have a bunch of themes in it other than just paid. This is where Securities trade after they’ve been sold for the first time. They were questions on spreads bit asks also some questions on market makers which are basically businesses that trade directly with the public and make money doing so and there are also some questions on the different capacities that Financial firms can take on when they trade with the public if you ever heard the term agency or principal then there was one question on the exam to cover that and as you go further on in your career and further on to take other exams, that’s an area that I expect you to see a lot so so get used to agency versus Prince.

Definitely check out the question on the Praxis exam. If not on the document that I was referencing in the beginning of the podcast the next section and here’s another section that I get a lot of complaints about a lot of people struggle with options for of the 75 questions on the exam for options options are a tough area for a lot of people in my experience about 25% of the people that study options will just get it immediately. You probably read the section and think LG’s why is everyone struggling with this if you’re if you have friends going to the process as well? Yeah one out of every four people are going to think it’s a piece of cake roll through it and your Nibley going to hope that your entire test is options and congratulations of that to you. You’re the minority and I hope that’s that’s you especially if you’re going onto the series 7 because that’s a huge part of the series 750 s i e. You’re probably not going to see anything more than five to six questions.

The practice exam had for not expect most people say about four questions on their test for the other 75% of us that read options and just don’t get it. I got some bad news for you. It’s probably going to take you days if not weeks to get good at options. But there’s a silver lining with yes, I E. You only need to know the very Basics and yes options are very math heavy field, but I don’t really expect you to pull your calculator out much. I mean maybe for one question most of the time the questions are focused on what type of strategy is it. Is it bullish or is it bearish and by the way bullish is when we think Mark is going to go up there she is when we think Mark is going to go down other questions were things like if you’re going to buy an option as an opening purchase, how do you get rid of it? Later?

Spoiler alert closing sale, there were also some questions on hedging strategies, which is where you use an option to protect the stock position. There was also a question on income strategies where you are selling an option against a stock position typically to make money in a flat or neutral Market if any of that made any sense than those are the areas that I think that you’re going to see in the exam again. This is not an area that I think you should put too much effort into for the s i e and don’t freak out. I mean if you just thinking about the numbers, that’s how you get five option questions on the exam. You can literally say every single option question. They give you Mom. Yes, I E and still pass with flying colors. You would need to be stronger than the other areas. But, you know, not a big deal on this exam. Of course, if you go into the series 7 different story, the next section was investment companies in every single question essentially was about a mutual fund in one way or another

Other types of investment companies out there like unit investment trusts and face amount certificates Etc. But every single Investment Company question on the SAT practice exam was about a mutual fund in one way or another so definitely make sure you know, at least the basics with that type of stuff letter-of-intent breakpoints share classes. What an index fund as those are all areas. I think you’re going to see some questions on next suitability three of the 75 questions were from suitability. And if you’ve never heard that term before suitability is basically a recommendation any question that you get that involves analyzing what a risk is or investment objectives or hey, there’s a client’s situation. What would you recommend? Those are the types of suitability questions? I expect you to see and this is a good primer for the series 7 if it that is exam you going onto suitability is

Most tested topic on the series 7. So this is a foundation that you need to build and get better and better at if you’re going on to that top off exam every suitability question that was on this practice exam was risk focused so that as an example, you know. Hey, which of the following Securities is most subject to this risk. That’s your type of suitability question this exam. Make sure you know your wrist pretty well next and surprisingly. I didn’t expect there to be a lot of insurance questions, but there were three Insurance based questions on the exam two of them were on variable contracts and whether we’re talking about variable annuities or variable life insurance question came from just understanding what a variable contract comes with if you’ve ever heard the term separate account or just understood the idea that insurance and finance a lot of times overlap with these types of products. Then you probably have a pretty good idea of what they’re going to ask you on the s i e exam.

Can I get some questions on variable contracts in also going to get some questions on annuities in general the next section economics to questions on economics know you don’t need a PhD in econ. No, you don’t need to go break out your old college books or call your macro econ Professor. The seven basic there was one question on GDP specifically whatever session was and there was also a question on what the Federal Reserve does whenever things start changing in the economy. Very basic econ, not necessarily easy, but nothing too advanced, especially if you know a little bit about econ and how crazy that world can get. Now the rest of the sections are all single digit questions and I just couldn’t put them in any other bucket. So everything I’m about to go through is on the lighter side of testability on the exam and just not terribly important and I think you’ll be happy to hear a couple of things. I’m going to mention in here. For the

These last several categories on the go through don’t put a bunch of effort and they sections you don’t want to become an expert in same margin, which is literally the next section will talk about there was one question on initial deposits and meeting your initial requirement some of which relates the regulation T some of which relates to Federal requirements. And if you don’t know what a margin account is, it’s basically an account. Will you borrow money to invest into the market? A lot of people come to me and asked me to run them through a margin crash course for the s i e and the first thing I’ll always say is are you sure you want to spend time and money? I’m going through a topic where you’re probably going to only see one question on don’t spend a lot of time in this area. I would even say the same thing on the series 7 if you’re going on to that exam margin is an area that rarely will make or break you now granted. I have had some people tell me that they wish they spend more time on margin when they came back from the series 7, but that’s probably one out of

350 people maybe even one out of every 100 margin should not make or break you on any finra exam next state laws and regulations. If you’ve ever heard the term blue sky. Yeah, we have to understand the very very very Basics when it comes to the laws and regulations that apply only at the state level. You won’t find a lot of information in the achievable materials about state laws mainly because there’s only a few things they really test on if you even get a question on that area. So again don’t spend a lot of time in this, you know, the next section this actually surprised me there was only one question on retirement accounts. I would have expected Federal to give us a little bit more there in a fact I do expect a fair amount of people to see more than just one question on retirement accounts. This is the only one question area that I would tell you that maybe be a little bit more careful on and no no your traditional IRA raise know a little bit about

5 plans know a little bit about your defined contribution and your defined benefit plan. That might be a little bit smoke and mirrors with his practice exam. We only have three more section to go through so we’re almost done but there was one question on Direct participation programs. If you never heard of a DPP before maybe you heard of a limited partnership, but these are business structures that are very unique a lot of times. They just want you to know the basic tax structure or why people invest in dpp’s nothing too crazy. Next. There was one question on taxes. It was pretty basic. It was a cost basis specifically focused on inherited Securities good news for people out there that just hate taxes. Not a lot on the TSI exam. I would expect you to see bad news. Your top off exam is probably going to have a bunch more on taxes. Nothing terribly insane, but you’re going to see some more and last and this was one that I was kind of surprised by but there was a question.

Currency exchange specifically about exchanging one currency to another I really wouldn’t expect most people to see too many currency exchange questions. But this one specifically focused on something called The Spot rate, which is just the rates today that you could exchange one currency for another nothing too complicated. And to be honest. This would probably be the opposite of what I was just saying with retirement accounts. I don’t think most people are going to see currency exchange questions on the exam. Maybe I’m wrong, but I think this is just a random one that Fender put on the Praxis exam just made me mess with you a little bit and that is the end of the list before you go. Let me give you some parting thoughts on what I think would make the best and most efficient study process. Of course, you got to make it through your reading materials. I know sometimes the material is not the most exciting or the most intuitive information that you’re reading, but you have to make your way through all the way.

Immaterial whether using achievable or any other vendor program and then on top of that as you’re doing your final preparation for the essay exam, it’s best if you’re focusing on the most testable areas and let’s do a quick recap the top three most tested areas are rules and ethics 14 of your 75 questions fixed-income 13 of your 75 questions in equity stock 9 of your test questions. Now if you add up all those numbers 14 + 1327 + 9 is 36 that’s a little bit less than half of the exam. If you focus on those three areas and get really strong and those three areas while you’re strong and half the exam and remember this is a test that comes with four choices and inevitably even if you just doing a blind guess you’re going to get 25% of those questions, right just by guessing so focus on those top three areas and make sure that you are a strong as pain.

Fulton those top three areas on the other side don’t spend significant amount of times in your last tested areas don’t spend significant amount of times a margin don’t spend significant amount of times and currency exchanges don’t spend a lot of time on state laws and regulations. Those are all areas that are not going to get you very far the exam. Hopefully this gives you a really good understanding of what the most likely testable topics are on the actual exam again, check out the document that’s available wherever you found this podcast, it breaks everything down give you a visual of everything that I talked about on this podcast and also include the links to pictures of all these questions if any of us out there, I think this is a great preparation tool and also I’d recommend that you go to fenriz website and you take the Praxis exam and all include the link on every part of every website that this podcast is available on go. Take it see how you do generally speaking if you’re scoring above a 70 on

Praxis exam the chances are you’re probably going to pass exam. But if you want to be thoroughly prepared the best way is just a going to your materials see as many questions as you can once you start scoring in the mid-to-high seventies on your practice exams, whether that’s their Federer or through achievable or whatever. That’s when you’re ready to take the test, of course the fender exam never changes. So if you take it once review it figure out where you went right where you went wrong and then retake it you need to see different questions every time you sit for a practice exam and see enough work on it enough and eventually you’ll make it past this and I’ll be your first step into breaking into Finance. If you have any questions about anything feel free to reach out. My name is Brandon Routh. Once again, you can go to basic wisdom. Net to get my contact information again, check out achievable. Me and I partnered with achievable to put out a fantastic new program that we think is better than anything out there on the market.

Watch I’ll be speaking materials wise and just the amount of information in the amount of questions. You can go through on a program. So check it out and give us some feedback. I’d love to hear from you. And that’s all I have for you today. Good luck with your studies, and I’ll talk to you soon.

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