The Financial Industry Regulatory Authority (FINRA) licenses candidates and firms in the finance industry to participate in the US markets. FINRA licensing is a requirement for a variety of roles in the finance industry, such as financial advisor, research analyst, investment banker, and trader. Below, we outline all of the entry-level FINRA licenses and which …
The Financial Industry Regulatory Authority (FINRA) licenses candidates and firms in the finance industry to participate in the US markets. FINRA licensing is a requirement for a variety of roles in the finance industry, such as financial advisor, research analyst, investment banker, and trader. Below, we outline all of the entry-level FINRA licenses and which career is unlocked by each one. Then we cover other financial licenses that you could obtain to further advance and upskill in the financial industry.
FINRA, short for the Financial Industry Regulatory Authority, is a non-profit authorized by Congress to oversee U.S. broker-dealers. Their responsibility is to “ensure that everyone can participate in the market with confidence” by enforcing ethical standards and laws on the finance industry. As a part of this responsibility, FINRA licenses all candidates for different roles in the financial services industry, most notably those that involve interacting with customers and customer funds.
Why are there so many finance licenses? The 1929 stock market mania and subsequent crash were caused in part by a lot of bad behavior by the financial advisors and traders of the time. Now, with these laws in place, consumers feel protected, which means they’re more willing to invest in both securities and your services. These licenses are crucial for maintaining trust with customers in today’s world.
The first FINRA license you will encounter is the FINRA Securities Industry Essentials (SIE) exam. The FINRA SIE exam is a medium difficulty exam covering many of the basics of finance, like rules, regulations, ethics, customer accounts, types of securities, options trading, and more. The SIE exam is something you can – and should – take before applying to jobs in finance. If you don’t have it, you will be asked to complete it within your first month on the job – sometimes while juggling other responsibilities.
Once you have your FINRA SIE exam license, you’ll be taking one of FINRA’s eight “Top-Off” exams to get licensed in a specific field within finance. We cover each license and field below.
There are eight “Top-Off” exams that, when paired with a FINRA Securities Industry Essentials (SIE) license, grant you a full license to operate on specific products in the finance industry.
The Series 6 Investment Company Representative license gives you the ability to sell “packaged” financial products such as mutual funds, unit investment trusts (UITs), variable annuities, and insurance. This license is most commonly acquired by people working in insurance advisorship and sales at a finance or insurance firm.
The Series 7 General Securities Representative license gives you the ability to sell almost all major consumer security types, including common and preferred stocks, call and put options, bonds, and other individual fixed income investments. It also gives you the ability to sell all of the packaged products that the Series 6 unlocks. The only products that Series 7 licensees are not authorized to sell are commodities futures, real estate and insurance – all three of which require an additional license.
The Series 7 is by far the most common FINRA license, in part because it is the most versatile. People with a Series 7 license are called “registered representatives” officially, but can also be referred to as financial advisors and stockbrokers.
The Series 22 Direct Participation Program Representative license gives you the ability to work with and sell direct participation program (DPP) financial products. A DPP is a non-traded pooled investment that is either in real estate or energy that generally is over a long time frame. It’s one of the only ways that everyday investors can get a piece of big, money-intensive investment projects like a real estate venture without having a lot of money to invest.
The Series 57 Securities Trader license gives you the ability to trade equity and debt securities as a Securities Trader Representative. This includes NASDAQ trading, over-the-counter (OTC) equity trading, and proprietary trading. The roles that typically require the Series 57 are:
The Series 79 Investment Banking Representative license gives you the ability to work in debt & equity offerings (including IPOs), mergers & acquisitions, asset sales, restructuring, financial restructuring, and other major business transactions. This license is required for many roles in investment banking, private equity, or hedge funds (and sometimes even venture capital).
The Series 82 Private Securities Offerings Representative license gives you the ability to facilitate private securities transactions on behalf of your organization. While much of the stock (securities) trading you think of is probably public (like the NYSE, NASDAQ, and other markets), there is a market for private securities as well. PSO representatives facilitate these transactions, which have become more prominent with startups like SpaceX or OpenAI staying private longer and at higher valuations.
The Series 86 and 87 Research Analyst license gives you the ability to create and publish research reports for financial firms. Research Analysts collect data, then create financial models and conduct technical analysis to determine the value and trajectory of that company. This is then put into a research report for either internal or public consumption.
You must pass both the Series 86 and Series 87 to receive your Research Analyst license. The Series 86 focuses on research and analysis, while the Series 87 focuses on preparing research reports properly. You can get an exception from the Series 86 exam if you have passed both Level I and Level II of the Chartered Financial Analyst (CFA) Exam, or both Level I and Level II of the Chartered Market Technician (CMT) Certification Examination. However, you will still need to take the Series 87.
The Series 99 Operations Professional license gives you the ability to oversee brokerage operations and activities. Operations professionals are responsible for the day-to-day functions of a financial firm: transactions processing, implementing proper procedures, and following applicable laws.
Now that you have a sense for the FINRA licenses, let’s go over some of the other commonly sought after licenses in the finance industry.
The finance industry is broad and has a number of different subcategories, some with their own licensing or certification requirements. Besides FINRA, the other main financial licenses are:
The NASAA’s multi-part mission is to protect investors from fraud and abuse, educate investors, provide guidance and assistance in investing in an established and safe way, and ensure the integrity of the financial markets. NASAA licensing is for investment advisers through the Series 63, 65, and 66 exams.
The National Insurance Producer Registry (NIPR) and National Association of Insurance Commissioners (NAIC) administer the regulations and licensing for insurance nationwide. The insurance industry is quite large, and has a number of different licenses for different types of insurance (typically Property, Casualty, Life, & Health). Every insurance state license is different, but licenses can typically be transferred state-to-state.
Certified Financial Planner is an optional but highly regarded certification in financial planning. It has been accredited by the National Commission for Certifying Agencies (NCCA) since 1995, showing both legitimacy and longevity. Many investment advisers (Series 63, 65, 66 exam holders) choose to get their CFP designation as well to be able to offer additional financial guidance to their clients.
Chartered Financial Analyst is an optional but highly regarded certification in financial analysis. The CFA Institutes mission is to promote “the highest standards of ethics, education, and professional excellence” for the finance industry. The exam is administered twice a year and has three levels: CFA Level I, CFA Level II, CFA Level III. Research analysts (Series 86/87) most commonly go on to become Chartered Financial Analysts.
Chartered Alternative Investment Analyst is an optional but highly regarded certification in alternative investments. The CAIA Association is similar to the CFA and CFP governing bodies in its purposes of member education, pushing for better ethics, and driving transparency. Those that pursue a career in investment banking, private equity, or venture capital are most likely to get the Chartered Alternative Investment Analyst certification.
The finance industry has a lot of licenses, probably more than you thought. The goal of all of these different licenses and certifications is to establish legitimacy and trustworthiness. While these licenses can be a pain to pass, once you do you are done (so long as you continue working in the industry and keep up with your renewals and continuing education). In return you’ll have a designation that permanently increases your value to an employer and the number of services you can provide to customers. Good luck!
Several FINRA and NASAA test concepts related to retirement plans, securities regulations, and IRS rules are changing in 2023. Good news – the Achievable team has you covered! Learn more about the updates to our courses here.
Achievable is committed to providing the most current and comprehensive education resources for FINRA and NASAA exams. As a part of this, we’re updating all our FINRA and NASAA prep courses to align with the recent amendments by the Securities and Exchange Commission (SEC) regarding the T+1 settlement cycle. What is Settlement? You probably already …
A complete walkthrough of how to get sponsorship for Series 7 licensing, including what sponsorship means, how to apply, Form U4, and what to do if you can’t get sponsored.
