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The Series 7 examination and why you need to pass it

Everything you need to know about the Series 7 exam and how to pass it in this useful insider guide

What is the Series 7 exam?

Series 7 is not, sadly, anything to do with your favourite show on Netflix. Instead it’s a test, set by the Securities and Exchange Commission, that is designed to uphold the principles and fairness of the U.S. stockmarket. It’s a way of ensuring that brokers and dealers truly understand the market, and are qualified to guide their clients with proficiency and integrity. Think of it as a really hard, really long driving test that’s there to stop people in investment banking from crashing the market.

Who is the Series 7 for?

Series 7 is for entry-level, registered representatives. That means if you want to be any kind of general securities representative, broker or dealer and want to buy or sell pretty much any kind of financial securities, options or contracts,  you’ll need to pass the Series 7. And you’ll also need to be sponsored by a financial company who is a member of FINRA or a SRO.

What is the Series 7 exam about?

There are four main subjects covered by the Series 7 exam:

  • Finding and acquiring business from customers and potential customers (9 questions- 7%)
  • Evaluating customers' financial profile and investment objectives, opening accounts (11 questions- 9%)
  • Providing accurate information about investments, making recommendations, transferring assets and maintaining good records (91 questions- 73%)
  • Obtaining and verifying customers' purchase and sales instructions and agreements; processing, completing, and confirming transactions (14 questions-11%)

How long is the Series 7 exam and how many questions are there?

It’s a brute, at three hours and 45 minutes and 135 questions.

How difficult is the Series 7 exam?

Like all exams, the test becomes easier the more you do to prepare for it. The general consensus is that the Series 7 is less comprehensive, and therefore slightly easier to pass, than the CFA exams, but only 65% successfully make it through the Series 7 on their first time, so the pressure is on.

Tips to help you pass the Series 7

Brian Marks, managing director of New York-based FINRA Licensing Exam preparation firm, Knopman Marks Financial Training, offers his advice for acing the Series 7 first-time around:

1. Put the time in

My recommended prep time for the Series 7 exam is 80-100 hours. Study the right material and do at least 1,000 practice questions before the big day. Then it won’t be such a big deal.

2. Think concepts, not questions

Passing this test is less about memorizing answers and more about understanding the material.  Learning answers by rote is a formula for failure. People try brute force to memorize formulas rather than understanding the concepts. If your memory fails on the exam, there is no backup.

3. Don’t waste time on the technical subjects

Don’t spend too much time on the options and corporate bonds sectors when these two topics only account for about 20% of the exam. The new Series 7 exams place more emphasis on clients and constructing portfolios for them. There’s a trend towards testing practical knowledge to ensure that people are well equipped to meet clients’ investment needs.

4. Know the bell curve rule

The first and last 25 questions are usually the easiest, so don’t panic if it suddenly gets more difficult in the middle.

5. Train for what you’re getting yourself into

The Series 7 exam is three-hours and 45 minutes. The more you can practice this sort of exam, rather than  bite-sized study chunks, the better prepared you’ll be. Think  like an athlete and get your mind and body used to this marathon exam.

6. Make sure your study material is up-to-date

As regulators change the rules ever more swiftly, the study material you use needs to be less than a year old. Keep an eye out for crowd-funding questions and topics around making suitable investment recommendations. There’s a major trend toward the suitability of investments on the examination. They want to see that you know how particular clients would want to construct a portfolio and what types of products would be appropriate for them.

7. Go above and beyond

You need 72% to pass the Series 7 exam. Hit 80% in your practice exams and you go into the day knowing you can pass. Confidence is key and the bigger your margin for error, the better.

Photo by Joshua Earle on Unsplash

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AUTHORSarah Thompson Insider Comment
  • Dr
    Dr Herbert Barber
    14 October 2021

    Who is the wanna-be measurement expert discussing some "bell curve rule?" As an expert in measurement, there is no such thing. Questions are not easier in the front, nor on the end, not on a standardized or near standardized exam. Additional, a 3 or 4 hour professional exam is a VERY short exam compared to other fields.

  • ds
    20 October 2020

    Took the series 7 back in the early 90s after being hired to work on a trading desk. I did 6 months of study at home while working full-time on the desk. I used Pass Perfect study materials. I didn't get options and subsequently failed by 2 points my first try. Fortunately, my company booked me with a guru who taught the 7 class and he was an ace at options. I was totally prepared when I left that class and passed the next week. It was 250 questions and 6 hours. It opened doors for me professionally because in Florida it was scarce to find people who were licensed. You were snapped up quickly when you applied for work. When we got laid off due to crashes, like I did 2x, it was tough because no one understood what having a 7 meant outside of the business. It is a great achievement for anyone who completed it because it's tough. They apparently cut it down now, which is probably a good idea. I eventually had to get my 63 when I was at Morgan Stanley and dealing with the public. I studied for my series 24 but the market crashed in 2001, and I didn't get it in time. That's my one regret.

  • Sh
    2 April 2019

    This article needs vast updates. 1. the series 7 is no longer 6 hours or 250 questions long... It's about 3 hours and 125 (plus 10 non-graded) questions. 2. It is still NOT 20% options, more like 35% (I took it 03/29/2019 and did NOT pass) I've been using Kaplan, and while I like the ease of information use, I feel that they don't spend nearly enough time on the "KYC". I had at least 15 questions regarding choosing appropriate investments for clients and was WHOLEY under prepared. I'll be doing independent research going forward. I took the Old series 7 in December of 2018 (grandfathered in) and the 6 hours was brutal! I will say that after passing the SIE in February I hoped the 7 would not be as difficult, but they did not make it easier, there are still a great deal of options, bonds, and margin questions.

  • Se
    18 August 2018

    I think the tips here are good ones, especially putting in the time and focusing on concepts. I frequently tell my students that it is essential to understand the concepts.

  • Ro
    17 April 2018

    Hopefully you've already taken the Series 7 and passed, but if not, I want to let you know that I also come from a banking background for the last few years and I was a mortgage loan officer (originator) for nearly a decade prior to that. I knew the Series 7 was going to be tough, but nobody can prepare you for the daunting amount of information there is to learn until you actually start reading it. My company uses Pass Perfect to prepare for the securities exams. I took the Series 7 last week and scored an 87. I took the Series 63 today and scored an 88. I started reading the material less than 8 weeks ago. The practice questions, quizzes and finals really prepare you well. It also helps to have a teacher/mentor/tutor you can run to when things get fuzzy. Those were the ranges of my scores for the finals too, so Pass Perfect was pretty spot on with the scores I got on the real exams. I took a couple Kaplan finals as well, just to prepare myself with differently worded questions. I'm glad I took them, but I must admit, the Pass Perfect finals were closer to the real exam questions than the Kaplan finals were. If your company uses Kaplan though, you're probably safe, just based on the level of difficulty I saw on the questions. The Pass Perfect questions are difficult and tricky, but believe me, that's the kind of exam prep you want. You don't want it to be easy and then bomb the real exam. I'm a true believer in Pass Perfect and can definitely say it prepared me well. If you haven't taken the exam yet, I hope you do well and only have to take it once! Best wishes and God Bless!

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