FINRA Exam Tips and Career Advice 6 – What to expect on the new Series 7 Top-Off Exam

Brandon Rith is the content creator for Achievable’s Series 7 program, and he discusses what to expect when you take the Series 7 exam. General dynamics of FINRA exams, the exam structure, and the most tested topics are covered in this podcast.

If you’re looking for a comprehensive course to pass the FINRA Series 7 exam with a 95% first-time pass rate, check out Achievable’s FINRA Series 7 Top-Off course or try some of our Series 7 exam questions for free.

FINRA Exam Tips and Career Advice 6 – What to expect on the new Series 7 Top-Off Exam

9.4s
Hey there, welcome to be achievable podcast. I'm Brandon rith content creator for the financial exam prep courses on achievable where we currently offer support for finra licensing exams life SIE exam. We just recently released our FINRA Series 7 program now available for you to try for free. The material is written in a down-to-earth easy and fun to read style comes with over 4000 practice questions and integrate smart technology that analyzes your progress to create an ongoing custom study plan. You can gain full access to the first chapter, which is on common stock by going to achieve. Me that's achievable. Me that's a great segue into today's topic which is what to expect on the Series 7 Exam. I assume most of you were listening to this podcast either have a test dates in the future or maybe are planning on taking the test or might be exploring this exam.

66.9s
Either way, the information will cover today should help you no matter what if you're thinking about taking the exam. This will give me an idea of what to expect in terms of your study process. And for those of you who are going to take the exam. This should give you a good idea of what the specifically focus on that's actually the main focus of our podcast today, which is to make sure that you know, the most tested areas on this exam first, let's talk about what the exam is and what it accomplishes known as the general Securities representative exam the series 7 is a finra administered licensing exam for people entering into the Securities industry. And by the way, if you don't know what a security is stocks bonds mutual funds things like those are securities and a lot of times you can use the word investment as a synonym or replacement for the word security, which is the organization that is responsible for

126.9s
Administering the series 7 is the financial industry regulatory Authority and on top of administering the series 7. They essentially regulate large portions of the investment markets and one of them more important functions is licensing and registration of Representatives. If you want to work in the Securities industry, you'll have to pass a number of financial exams. Just like the series 7 exams. You'll take are contingent on what you actually end up doing in the industry. But passing these exams demonstrates, you know, what you're talkin about when discussing the financial markets and specific investment with client which can be a really complex type of conversation and finances a really important aspect of Our Lives if it helps us save for our children's College expenses fund our retirements start small businesses or even fund charitable efforts in that is by no means the end of the list. Those are just maybe a couple things off the top my head. We don't want people who do

186.9s
Understand Securities or how Finance Works in general bumbling their way through discussions with clients. And that is one of the main goals of these licensing exams is to avoid that type of situation. Most people that's it for the series 7 will also be required to take the SAT exam which most of you will probably take actually prior to the series 7 and in addition State Licensing exams, like the series 63 or 66 are typically required as well and we will cover those exams in another podcast. The series 7 license is kind of the gold standard in regards to financial licenses. If you've ever watched a financial movie like Wolf of Wall Street or Boiler Room the series 7 is the only license they discussing those movies and that is by Design. If you want to be a stockbroker financial advisor Trader analyst or even a wealth manager or anything a bit sound similar to those types of jobs. You're most likely going to have to pass the series 7

246.8s
Example what's now pivot to what the exam actually covers the series 7 is 135 question exam but only 125 of those questions will count toward your final score thinner always include the extra questions in their exams that they deem experimental these exam questions are just ones. They're trying out most of time to see how you answer them and they might introduce into a future exam as an actual test question. Now the problem is it you won't know which questions are wedge. And those questions don't count for you or against you. So there's literally no point even worrying about these questions at the end of the day. You only need to worry about being graded on a hundred and twenty-five test questions. You must score 72% or higher in order to pass this exam, which means you'll need to answer 90 of those hundred 25 questions correctly or at least for the most part finra. Does this weird thing with all their exams, which I call scaling for difficulty. The following language are all Quote directly from fin.

306.8s
Website quote your test scores placed on a common scale with all other candidate test scores for that exam and statistical adjustments are made to the score to account for slight variations in the difficulty that may exist among different sets of exam questions. There's an element of Randomness with finra exams and you could end up with a very difficult or even a very easy exam both of which are within the realm of possibilities. If you're given a very difficult exam. There is a silver lining your grade will be skilled upward and vice versa meaning that if you were giving a very easy exam. Hey, you got to watch out because that grade might be scaled downward. So for example, if it still doesn't make sense, you could potentially score a 65% on what fendrick deemed is a very difficult exam and end up with a pass as your final results, even though the passing score of 72% This is how fenrir justifies making the test as equal as possible for any

366.8s
Given person that sets for the exam we don't know how much the scale influences exam grading. This is something that fenrir doesn't disclose and I don't expect them ever to disclose it. But I have a hunch that it could be significant. If a test has significantly difficult. The reason I say that is just from my experience of helping people on this exam. One of the most common forms of feedback. I get to my students regarding this test is something like that. That was the most difficult exam. I ever talked. I was I swear I was going to fail exam but hit the submit button actually passed and here's the thing is I think they're right. I don't think this is a Miss Judgment of the exam or or even test anxiety fueling your perspective of the exam. I think people are really getting very Advanced stats of questions, but the greeting of the exam compensates for the difficulty again to make it fair to for everyone. This is actually a very important thing to be aware of for all finra exams.

426.6s
What are the biggest pitfalls test-takers fall into is losing confidence MIT exam now? Let's just picture it. Imagine yourself in the test center you prepare for this exam 4 months your you think you're ready. You think you've studied all the right things you sit in your chair. You start the exam the first few questions seem pretty difficult. But you know, you're sure it's just the first couple questions that you're seeing and maybe that's just a a curveball your being thrown right from the start but 50 questions in you realize that every single question. You've been given it's not easy and most of them are significantly difficult some people unfortunately fall apart at this point. They start thinking about all the you know, what I called the I just failed conversations. They imagine having that conversation with their boss their family and their friends the reality is that most people will talk about study.

486.6s
What is exam mainly because it takes so many hours out of your life. So course your boss will know about it. If you work in the industry, but you're going to tell your family going to tell your friends are going to tell your neighbors and no one wants to come back from that exam telling those people that they failed it is no judgment of someone's character or how smart they are. In fact, I'd say most people that end up failing the series happen. It's just because they either didn't approach the study process in the right way or didn't give themselves enough time failing an exam that your career hinges on and that most people, you know are aware that you're taking it just kind of rub salt a little bit into the wound. The best thing that you can do is to not let those thoughts creep in and I know that's not an easy thing to do. If you mentally give up in the middle of the exam you're not going to be paying attention closely to the other question that you have to go through for those of you who have studied this exam in NC practice questions relating to the series 7, you know that these are very

546.6s
A picky questions sometimes one word can change everything in the question. The questions are also written in a real difficult in a tricky way. So you need to be on top of the ball in order to get through what majority is questions and answered them correctly this exam requires every ounce of brain energy to pass and you must pay attention to the details. Here's the thing that you'll need to remember. You're almost always doing better than you think you are because of the curve. Okay. Let's do a quick recap of what we just talked about before we get into the actual material on the exam. There are 535 test questions on the Series 7 Exam 125 of those test questions will count toward your actual grade. You must score 72% and there is a curb for difficulty now but break down the exam specifics finra breaks down the Series 7 Exam into four distinct categories, which all used to guide us a whopping 91.

606.5s
Questions or 73% of the exam is dedicated to one category. It's this category and I'll quote from Finland language provide customers with information about Investments makes recommendations transfers assets and maintains appropriate records. That's finra speak there. Let me translate that to you in plain English. This section is basically suitability suitability refers to making suitable investment recommendations to clients given their financial situation investment objectives and goals. It may sound simple, but the questions on this topic are some of the most difficult questions on the exam. Let's break down all you'll need to know to succeed in this category first. You need to think about Securities using what I call b r t i in this is something that you'll see is mentioned over and over again in the Achievable Series 7 program brti is Ben.

666.5s
It's risks and typical investor of different products that when I say products, I mean Securities, I mean Investments and there are a lot of them that we need to be aware of for the exam. Let's go to the brti of one of the more frequently discussed Securities and exam being common stock or what most people just referred to as stock. So let's start with the B the benefits what are the benefits of common stock? Well, they offer a growth also known as capital appreciation, which basically means that you can buy these at low prices and hopefully sell them in high prices later and also some stocks pay dividend income which is literally cash to investors just for holding their stock. Those are two great benefits of common stock next let's talk about the are the risks of common stock. Well, there are systematic also known as market-wide risks like Market risk, you know, that's basically when the market completely falls apart due to some circumstance or event

726.5s
The market crash in 2008 or coronavirus in March 2020 are examples of Market risk. There are also non-systematic risk that apply to specific businesses at a time like business risk, which is the risk that you just can't sell your products Financial Risk the rest of the company borrow too much money regulatory risk. That's where the government threatened is regulation or introduces regulation would cost the company money and even liquidity risk, which is the risk that a security will be difficult to sell and that is especially prevalent for unlisted stocks. That's basically a stock that does not trade on an exchange like the New York Stock Exchange or NASDAQ and last what about TI the typical investor common stock investors are typically young and have long time Horizons. This is mostly due to the risk involved with these Investments. The stock market is kind of like a rollercoaster especially if you've watched it at all in 2020 and you definitely want to make sure the people that are primarily putting lots of money in that.

786.5s
Types of Investments can survive that type of risk and have time to recoup losses in case we run into a multi-year bear Market which basically means in the market is going down over a long. Of time. So that was brti benefits risks typical investor of common stock and you want to be comfortable with the brti of all the major Securities tested on this exam and these include preferred stock in addition to common stock corporate debt convertible Securities Municipal Securities US government securities mortgage back Securities Bank products, like CDs mutual funds closed-end funds exchange-traded funds exchange-traded notes REITs the also known as real estate investment trusts hedge funds direct participation programs, like oil and gas limited Partnerships and even options and that's not even the full list. Unfortunately. Those are just the most commonly discussed Securities on the exam of the Securities that I just listed two of them are especially

846.4s
Important given the number of times are mentioned on Fenris outline and that is Municipal Securities in options. Let's start talking about Municipal Securities first, which are investments that are offered by state governments City governments and local government. Basically any level of government that is lower than the federal government municipalities offer a wide range of Securities, which include General obligation bonds revenue bonds double barrel bombs Industrial Development bonds special tax Bond special assessment Bond anticipation notes 529 plans, and that's not it. Those are just the most commonly discussed Municipal Securities. Not only could you be tested on the characteristics and suitability of these products but also the issuance of the Securities prior to selling these Investments municipalities follow specific protocols that you must know and be comfortable with in order to answer the majority of those questions correctly options are derivative Investments That Make returns from

906.4s
Pictures that make bets on Market movements for example a long call investment which is an option is a bet that market prices are going to go up and if they go up you make money there are several options strategies that are commonly tested which include single-leg strategies hedging strategies income strategies straddles and spreads with these options strategies in particular. You want to feel really comfortable with how they work. And what's the math behind admitting. What's the maximum gain? What's the maximum loss? What's even the break-even what happens in the market price goes here or there you want to feel really comfortable with those topics. Also you want to feel comfortable with the suitability of options as well because you will likely see questions from that area. Let's bring it back to the big picture of U General suitability Municipal Securities in options full likely be the majority of your exam given the number of times. These topics are mentioned on finra Sie.

966.4s
7 outline you should absolutely make it a priority to master these topics as much as possible prior to testing. The rest of the exam is a bit of a crapshoot. Unfortunately. There are three other test categories which collectively represent 34 test questions or about 27% of the exam 14 test questions or 11% of the test comes from quote obtains and verifies customers purchase and sales instructions and agreements processes completes and confirms transactions unquote category. And yeah, that's finra speak again. So let's break it down. What is it actually mean testicle Topics in this category include order types like Market orders limit order stop order stop limit orders. You also need to know the components of order tickets and how those are generally submitted into the system short sales best execution requirements for broker-dealers and also margin account.

1026.3s
Those are those accounts where you borrow money to make investments into the market also known as leveraging of the previously mentioned topics order types and margin or likely to be the most heavily tested topics within this category 11 questions or 9% of the exam comes from the quote opened accounts, after obtaining and evaluating customers land from profile in investment objectives, unquote category testable Topics in this category include types of accounts, like Prime brokerage accounts. Also account registration is like individual joint trust custodial retirement plans like Ira and 401k and 403b supervisory systems that are implemented at your place of business things like that of the previously mentioned topics account registration in retirement plans are likely to be the most heavily tested topics within this category and one more to go one more category 9 questions or 7% of the exam come Sunday quote 6 business.

1086.3s
For the broker-dealer from customers and potential customers unquote category testable topics within this category include public Communications, like correspondence retail Communications and institutional Communications disclosures on advertisement Maine to the public the new issue process, like initial public offerings in exempt transactions, like regulation D or regulation of the previously mentioned topics public Communications in the new issue process are likely to be the most heavily tested Topics in this category. And that's your summary for what to expect on the series 7 as we've discussed. This is a very difficult exam. It covers literally hundreds of different topics that may take you several weeks or months to prepare for and you should make sure that you're using the best resources available out there and achievable for the series 7 which again, I personally wrote content for is available right now, which is absolutely free for you to try go to achievable.

1146.3s
I mean that's achievable. Emmy to gain access no payment required. No credit card required. No debit card required. All you need is your email address, and we'll give you access to the first chapter alongside with a bunch of practice questions and exam questions completely for free for you to try. Thank you so much for listening today. I hope that the information conveyed and shared in this podcast will help you pair for this test as efficiently and effectively as you possibly can and we're going to have more podcast coming out soon. This is going to be a priority not only four basic wisdom, but also achievable in the near future, so, please be sure to subscribe to us on Apple podcast Spotify YouTube or wherever you found this where I know where I'm probably I think 15 different platforms at this point, and it should be pretty easy for you to not only find us again, but also to recommend to your friends subscribe all that stuff the more you pay attention to us, no more free content we can give you. So again, thank you for Less.

1206.6s
Take care. Good luck with your studies and will see you soon.

Tyler York

17 Feb 2022, 17 min read