Series 63: Uniform Securities Agent State Law Exam

The Series 63 is a 65-question test that the North American Securities Administrator Association (NASAA) developed, and it’s designed to qualify candidates as securities agents. The Series 63 exam covers state securities regulation rules as well as rules prohibiting unethical and dishonest business practices (not that you’d do anything like that). The Series 63 used to be the most common test taken along with the Series 7 and SIE. Judging by class sizes, however, I would say that around twice as many Series 7 students are now taking the Series 66 as compared to the Series 63.

Series 66: Uniform Combined State Law Exam

The Series 66 is a 100-question NASAA exam that combines the Series 63 and the Series 65 (Uniform Investment Adviser). The Series 66 is designed to qualify candidates as both securities agents and investment adviser representatives (IARs). The Series 65 portion of the Series 66 allows you to collect a fee for just giving investment advice. This license was implemented several years ago, and it’ll most likely be required if you work for one of the bigger broker-dealers. More and more firms are requiring the Series 66 because it gives their registered reps an additional service to provide for their clients and an additional way for you (and your firm) to make money.

Filling out an application to enroll

For you to obtain admission to the Series 7, your sponsoring firm has to file an application form (called a U-4) and pay the required processing fees with the Central Registration Depository (CRD). The U-4 is an annoying little form with about a gazillion pages that requires you to remember where you were ten years ago. You’re also required to submit your fingerprints, and you have to complete this step through an approved facility. Your firm will likely recommend the place it uses — often the local police precinct. (Be advised that your sponsoring firm will probably frown upon your fingerprints if they’re attached to your mug shot.)

If you want to see a preview of the U-4 registration form that you’re responsible for filling out and that your firm has to submit, visit the FINRA website (http://www.finra.org) and search for U-4.

It’s a date! Scheduling your exam

After your firm files the application with the Central Registration Depository and receives your enrollment notification, you can schedule an appointment to take the exam by contacting the Prometric Testing Center. Locate the test center nearest you by calling the Prometric center (800-578-6273) during business hours. Or you can visit www.prometric.com to schedule online.

Your Series 7 exam enrollment is valid for 120 days — you have to take the exam within this time frame. When scheduling your exam appointment, be ready to provide the exam administrators with

• Your name and Social Security number
• The name of your firm
• A telephone contact to reach you and your employer
• The name of the securities exam you’re registering to take
• Your desired test date

Getting an appointment usually takes about one to two weeks, depending on the time of year (you may wait longer in the summer than around Christmastime). Prometric will confirm your appointment on the phone or via email.

I suggest putting pressure on yourself and scheduling the exam a little sooner than you think you may be ready to take it; you can always move the test date back. (There will be a charge if you cancel within ten business days of your test date.) You know yourself best, but I think most students study better when they have a target test date.

You have a choice of locations to take the exam. If you’re a travelin’ man (or woman), you may want to schedule your exam at a location far away (maybe even in a different state) to get the test date that you want.

After you have your test date set, you may find that you’re ready sooner or will be ready later than your scheduled appointment. The exam center administrators are usually pretty accommodating about changing appointments and/or locations as long as you call before noon at least two business days before your test date, but there may be a fee involved.

You can get an extension from the 120-day enrollment only if you call within ten days of your enrollment expiration and if no earlier test dates are available.

Planning ahead for special accommodations

If you require special accommodations when taking your Series 7 exam, you can’t schedule your exam online. You have to contact the FINRA Special Conditions Team at 800-999-6647 or fill out the special-accommodations form at www.finra.org/sites/default/files/SA-Eligibility-Questionairre.pdf. Read on for info on what the test administrators can do if you have a disability or if English isn’t your first language.

Depending on your testing center, you may have to receive authorization to bring medical devices and supplies — such as insulin pumps, eyedrops, and inhalers — into the testing room. If you need authorization, call your local Prometric testing center, and they’ll be able to guide you on the approval process.

Just in case: Cancelling as an option

If something comes up or if you feel you’re just not ready, you can cancel your appointment to take the Series 7 exam without penalty if you do so at least ten business days before the exam date. If a holiday falls within the cancellation period, you have to cancel an additional business day earlier. For example, if you’re scheduled to take the exam on a Wednesday, you have to cancel on Tuesday two weeks before your exam date. If a holiday falls between those dates, you have to cancel on Monday two weeks before your exam date. For more information, you can visit www.finra.org/industry/reschedule-or-cancel-your-appointment.

If you cancel after the proscribed deadline, if you don’t show up to take the exam, or if you show up too late to take the exam, you will be charged a cancellation fee equal to the Series 7 exam fee paid by your firm. Don’t try the old “I forgot” excuse, because not only is it ineffective, but I’m somewhat sure that it’s illegal in all 50 states, Canada, and the U.S. territories.

Reviewing the exam basics

The Series 7 exam is a computerized, closed book (in other words, no book), three-hour and 45 minute exam. The exam consists of 135 multiple-choice questions (although only 125 of them count toward your score — see the next section).

You can take restroom breaks at any time, but the clock continues to tick away, so you may want to reconsider drinking a mega-jumbo iced latte in the morning before you arrive at the exam center.

For information on the types of questions to expect, see Chapter 3. Flip to Chapter 4 for an overview of how your exam day may progress.

Practicing on ten additional trial questions

To ensure that new questions to be introduced in future exams meet acceptable standards prior to inclusion, you answer ten additional, unidentified questions that don’t count toward your score. In other words, you get 135 questions to answer, but only 125 are scored.

Note: If you see a question on the Series 7 that doesn’t seem even remotely similar to anything that you’ve studied (or even heard about), it may very likely be an experimental question.

Mastering the computerized format and features

Although you don’t need any previous computer experience to do well on the exam, you don’t want your first encounter with a computerized exam to be on the date of the Series 7. Being familiar with the way the questions and answer choices will appear on the screen is essential. Figure 1-1 can help you prepare for exam day.

A friendly exam-center employee will give you an introductory lesson to familiarize you with how to operate the computer before the exam session begins. Although the computer randomly selects the specific questions from each category, the operating system tracks the difficulty of each question and controls the selection criteria to ensure that your exam isn’t ridiculously easier or harder than anyone else’s. As a matter of fact, FINRA has recently started weighting the questions so that some will be worth a little more than average and some will be worth a little less depending on FINRA's feeling about how difficult the question is. To get you to a possible score of 100, the questions will average out at 0.8 point each.

The following list describes some important computer exam features:

• Scroll bars for moving the questions on the screen
• A clock to help you track how much time you have left during each part (if the clock is driving you batty, you can hide it with a click of the mouse)
• A confirmation box that requires you to approve your answer choice before the computer proceeds to the next question
• An indication of which question you’re currently on
• A choice of answering the questions by
  • Typing in the letter for the correct answer on the keyboard
  • Using the mouse to point and click on the correct answer
  • At some test centers, using a computer with a touch screen that lets you select the answer by pressing lightly against the monitor with your fingertip

• The capability of changing your answers or marking questions that you’re unsure of for later review, which allows you to go back and answer them at any time during that particular part

  You can mark answers for review or change responses only for the part of the test you’re currently taking. In other words, after you begin the second part, you can’t go back and change answers from the first part.

Although you can review and change all your answers at the end, don’t. Your brain is going to feel like it went through a blender by the time you get there. Review only your marked questions and change the answers only if you’re 100 percent sure that you made a mistake. As an instructor, I know that people change a right answer to a wrong one five times more often than they change a wrong one to a right one.

Instant gratification: Receiving and evaluating your score

Remember having to wait weeks for a standardized test score, hovering somewhere between eagerness and dread? Those days are gone. At the end of the Series 7, the system calculates your score and displays a grade result on the computer screen. Although the wait for your grade to pop up may feel like an eternity, it really takes only a few seconds to see your grade. When you sign out, the test center administrator will tackle you (well, approach you) and give you a printed exam report with your grade and the diagnostic score results with your performance in the specific topics tested on your exam.

Each question on the Series 7 exam is worth an average of 0.8 point (some are worth more and some are worth less depending on FINRA’s feeling of how difficult a question is), and candidates need a score of 72 or better to achieve a passing grade. This percentage translates to 90 questions out of 125 that you have to answer correctly. The scores are rounded down, so a grade of 71.6 is scored as 71 on the Series 7. When I took the exam, back when the passing grade was 70, one of the other students from my class got a 69.6 (which was rounded down to a 69), and he had the NASD (now called FINRA) review his exam to try and get him the extra point. Needless to say, they ruled against him and he had to take the exam again.