The Series 7 Exam

What It Is:Series 7 is a license that's needed before securities can be distributed by an person. Those who pass the exam for a series 7 training are eligible to become a registered agent of broker-dealers in the United States.How It Works/Example:To get a 7 license, the applicant must pass the Series 7 exam (also called the General Securities Representative Examination). That test generally addresses the seven essential functions performed by authorized representatives: seeking business for the broker/dealer, assessing customer needs and objectives, advising clients, managing customer accounts and account records, detailing the securities markets and the factors that affect them, executing orders for clients, and monitoring client portfolios. The Financial Industry Regulatory Authority( FINRA) includes 250 multiple-choice questions and manages the test.The Series 7 exam is six hours long. The candidate must reply at least 70% of the 250 questions properly to pass.In general, an individual cannot legitimately guide clients, obtain transactions, or execute transactions for clients until he or she has passed the Series 7 exam, received the corresponding license.Although a Series 7 license enables the holder to sell a broad variety of securities, it does not permit the holder to sell commodities or commodities (this requires a 3 license ).Why It Matters:The Series 7 exam is a critical step in making sure brokers understand and have perfected a system of information about markets, purchase tools, securities law, and moral behavior. Therefore, individuals are helped by the presence of the Series 7 requirement by requiring some degree of a uniform knowledge base among agents.