Series 7 Top-Off Exam Deep Dive: Content Breakdown and Preparing for the Exam
Alright, you’ve taken the SIE (Securities Industry Essentials) Exam, but now it’s time for you to take the Series 7 Top-Off exam? Don’t worry – while this exam is a step up in difficulty, you can easily tackle it by building on what you’ve learned so far. We’ll also share some important test-taking tips that will give you the edge on test day. Let’s begin.
Series 7 Top-Off Content Breakdown
The Financial Industry Regulatory Authority (FINRA) administers the Series 7 Top-Off, which is a 135 question exam. 10 of the questions are considered “experimental” and do not count towards your grade. In total, 125 questions will count toward your final score. The test is broken down into these categories:
|Topic||# Questions||% of Test|
|Seeks Business for the Broker-Dealer from Customers and Potential Customers||9||7%|
|Opens Accounts after Obtaining and Evaluating Customers’ Financial Profile and Investment Objectives||11||9%|
|Provides Customers with Information about Investments, Makes Suitable Recommendations, Transfers Assets and Maintains Appropriate Records||91||73%|
|Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions||14||11%|
This chart may vary slightly based on how the content of your specific book line up with the FINRA syllabus, but this rubric is a great starting point.
Now, digging into the content by sub-topic, you can get much more specific about what to expect. Let’s analyze the sections, starting with the largest:
Provides Customers with Information about Investments, Makes Suitable Recommendations, Transfers Assets and Maintains Appropriate Records – 91 questions – 73% of the exam
This section sticks out a little, huh? Yes, 73% of this exam will come from this section. It’s safe to say that you will not pass the Series 7 Top-Off unless you have a firm grasp of the concepts in this category.
The main focal point of this section is suitability, which involves making proper investment recommendations to customers. An understanding of the benefits, risks, and the typical investors of financial products is required. The most commonly tested securities (financial products) are:
- Equity securities (common and preferred stock)
- Exchange traded funds
- Exchange traded notes
- Debt securities (bonds)
- Investment Companies (for example: mutual funds)
- Direct Participation Programs
- Hedge funds
While the SIE tested the basics and fundamentals of these products, the Series 7 Top-Off will go further down the rabbit hole. The questions will be more complex and difficult to answer. It will be common for questions to provide various aspects of a customer’s financial situation and ask for the best possible recommendation.
Additionally, many rules and regulations govern financial professionals and their interactions with customers. There’s a long history of unethical and illegal activity in the financial markets. To avoid the mistakes of the past, you will be required to understand what the rules and regulations are and how they’re implemented.
Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions – 14 questions – 11% of the exam
This section is all about the actual actions that must occur when a security is bought or sold. Transparency is key and customers must fully understand the situations they’re in and how to navigate them. The test will inquire on a number of items, including:
- Types of transactions
- Types of accounts
- Order types
- Market dynamics and functions
- Market rules and regulations
- Customer disputes and complaints
Opens Accounts after Obtaining and Evaluating Customers’ Financial Profile and Investment Objectives – 11 questions – 9% of the exam
Once you get someone to agree to have you manage their investments, you will need to know the protocols of establishing relationships with customers. This section covers that topic and what rules and regulations need to be followed. This will include:
- Paperwork requirements to open accounts
- Types of customer accounts
- How to understand a customer’s financial situation
- Approvals required to open accounts
- Required disclosures to customers
Seeks Business for the Broker-Dealer from Customers and Potential Customers – 9 questions – 7% of the exam
Do you ever wonder what rules you must abide by while soliciting business from a customer? This category covers the rules and regulations of prospecting. This is the smallest category of the four, but there are dozens of topics that FINRA may test you on. These may include:
- Communications with the public
- Research reports
- Investment advertising
- Prohibited discussions with customers
- Supervisory requirements for discussions with customers
Bonus: Experimental Questions
The Series 7 Top-Off exam that you take will have 135 questions, with 10 of those questions being “experimental” questions that don’t count on the final exam. Don’t sweat this too much – just answer them as normal and be confident in your approach. This is one of the reasons why it’s so important to skip questions where you are “stuck”, which we cover more in our Test Taking Strategies post.
How to study for the Series 7 Top-Off Exam
Analyze the content and rate your knowledge
When you’re planning out your last couple weeks before test day, be sure to spend a bit of time with each section before planning – and do a couple practice questions from each one. You can probably already tell which sections you need more practice with. Take note of your confidence with each section.
Prepare a study schedule
Give yourself a time budget for how many hours you plan on studying between today and test day. Be realistic – the goal here is to set an appropriate schedule. For reference, most Series 7 courses recommend around 100 hours to master the subject. If you’ve already been reading through the material and are just planning your final review, 10-20 hours is often recommended.
Once you have your budget of hours, you need to split up your time according to two factors: how confident you are with each section, and how much of the exam is comprised of that section. You want to spend the most time studying the highest value topics where you have the most room to improve. Your goal is to maximize the impact on your score in the budget of time that you have.
Schedule? I have no time!
But wait, what if I’m far behind and the test is in a few days? You will be happy to hear that you can, in fact, get through more content than you think. In controlled studies, most students see a drop-off after studying for more than three hours in a row, but with just an hour break they can study another three hours with similar success. This doesn’t make for the best results, but it can do in a pinch.
The best results? You get those by studying consistently over at least a couple weeks, and reviewing the material you’ve already studying as you progress.
That’s it for our Series 7 Top-Off Exam walkthrough. We hope it was helpful! Don’t forget to check out our other free resources for the Series 7 on this blog and our website.