Being an accredited investor or investment advisor requires a certain level of skill that only trained individuals can have. Aspiring investors and investment advisors must have a solid grasp of financial concepts; weigh risks and benefits thoughtfully and accurately; and the ability to manage their emotions in times of euphoria and uncertainty.
Simply put, it takes a lot to be qualified to give investment advice. After all, people’s financial success may depend on their advisor’s skill and competence.
The first thing you must have if you want to be an investment adviser? A Series 65 license.
The Series 65, more officially known as the Uniform Investment Adviser Law Examination, is an aptitude test that candidates take to qualify as a registered investment adviser (RIA) and investment adviser representative (IAR). It also allows successful candidates to not only be registered investment advisors in their states, but in other U.S. territories as well.
The exam is designed by the North American Securities Administrators Association (NASAA) and administered by the Financial Industry Regulatory Authority (FINRA). By passing the test, candidates will be able to acquire a securities license needed to be an investment adviser – a license is necessary before you can charge fees in exchange for financial or investment advice.
Holding a Series 65 license enables candidates to be either of the following:
Furthermore, those who hold a Series 65 license can also qualify as accredited investors if they are in good standing. This certification enables them to angel invest in high-growth startups and participate in Angellist Syndicates, among other opportunities.
While the Series 65 allows candidates to be licensed investment advisors and be qualified investors themselves, the Series 66 enables them to fulfill all functions under the scope of the Series 63 and Series 65 exams. The following table highlights the key differences of the 2 exams:
|Series 65||Series 66|
|Officially known as the Uniform Investment Advisor Law Examination||Officially known as the Uniform Combined State Law Examination|
|130 scored questions||100 scored questions|
|Must be finished in 3 hours||Must be finished in 2 hours and 30 minutes|
|72% passing score (94/130)||73% passing score (73/100)|
|No prerequisite exam||Series 7 exam is a co-requisite for a candidate to be licensed|
Important to note is that the Series 65 can be taken without having passed a prerequisite exam. This means that you do not need to be employed by and sponsored by a FINRA-licensed firm to take the Series 65, making it accessible to any individual.
The Series 65 examination is composed of 140 questions; 130 of which are scored. Candidates have 180 minutes to finish the exam, and must get 94 correct answers out of the 130 multiple-choice questions to gain a passing score of 72.3 percent.
The 10 remaining questions are experimental ones which will randomly appear throughout the exam. They don’t count and will have no bearing on the candidate’s final score.
The Series 65 covers a wide range of topics under finance and investment including the following:
The first part involves basic economic concepts and questions about inflation and deflation; monetary and fiscal policies; economic indicators; global and geopolitical landscape; and overall business cycles. It also contains items on descriptive statistics; financial and valuation ratios; and time value of money concepts (i.e. IRR, NPV).
The second part focuses on investment vehicle characteristics. These include questions on types and characteristics of cash and cash equivalents; valuation of fixed income securities; equity securities; pooled investments; and insurance based products.
The third section of the exam is mainly client-centric, with additional emphasis on risk tolerance; investment theories and considerations; portfolio management strategies; estate planning and ownership; trading securities; and portfolio performance measures.
The last section includes questions about investment regulations; remedies and administrative provisions; communication with clients and prospects; and ethical practices and fiduciary obligations.
Unlike the Series 6 and Series 7 exams, candidates won’t need to secure a sponsorship before you can take the Series 65. All they have to do is to register as an individual directly on FINRA’s website. If they do have sponsorship, they would need to submit a Form U-4 through their current employer to jumpstart their exam application. They will then be given a total of 120 days to take the exam.
As for Series 65 fees, candidates must prepare $187 to be admitted to the exam. If your employer is sponsoring you, they may cover expenses such as the exam fee itself and test prep courses.
After passing the exam, the licensing process comes next. Candidates have to pay state fees post-exam and undergo a background check. They may check the status of their license application through FINRA’s Central Registration Depository (CRD).
The Series 65 license has a lifetime validity, provided you are employed in a sponsoring firm belonging to the financial services industry. If you ever decide to leave your current job, you must be able to find a new sponsoring employer within 2 years to keep your Series 65 license active. This is particularly essential in keeping your investments intact so as to avoid issues with your partner companies or businesses.
There are a lot of resources available for preparing for the Series 65 examination, from self-study options to live classes and tutoring. Among the self-study courses, Achievable’s Series 65 course is considered the best, especially for those without a formal finance background. The course’s easy to understand material uses real world examples and casual language to make complex finance topics approachable to anyone. Best of all, it also comes complete with videos for key topics, chapter review quizzes backed by an adaptive algorithm that automatically schedules them for maximum memory retention, and full-length practice exams designed to fully prepare you for the real Series 65 exam. There is even a built-in study planner and exam readiness tracker. You can try Achievable’s Series 65 course for free to see if it’s right for you.
As for the questions in the exam proper, some candidates may feel a bit challenged because of how broad the actual exam coverage is. Despite having general topics, the questions are often tricky as the exam covers all securities and investment strategies and regulations. Furthermore, the Series 65 will test candidates’ analytical thinking skills, comprehension, and capability to apply key concepts learned through situational questions.
You should expect the Series 65 exam to be about as difficult as the Series 7 exam. If you’re not in finance, then the closest comparison might be the GRE exam or even an AP exam from high school. You should expect that it will take you dozens of hours of concentrated studying, including chapter quizzes and practice exams, in order to feel fully prepared for the exam.
The road to being an accredited investment professional isn’t supposed to be easy, but the Series 65 is conquerable. It is an important assessment to test candidates’ knowledge on securities and regulations — areas critical for future advisors to master before they could provide sound financial/investment insights.
Got plans of becoming an accredited investment professional? Start preparing for the Series 65 exam today using Achievable’s Series 65 course.