The Uniform Investment Adviser Law Exam, also known as the Series 66 exam, is a comprehensive test that covers a wide range of topics related to the role of a financial adviser. It includes laws, regulations, ethics, strategies, and other important aspects of offering financial advice and dealing with securities. Additionally, it covers state laws …
The Uniform Investment Adviser Law Exam, also known as the Series 66 exam, is a comprehensive test that covers a wide range of topics related to the role of a financial adviser. It includes laws, regulations, ethics, strategies, and other important aspects of offering financial advice and dealing with securities. Additionally, it covers state laws pertaining to securities and the purchase and sale of securities.
By taking the Series 66 exam, you can fulfill the requirements of both the Series 63 and Series 65 exams. By passing the Series 66 exam, license holders are authorized to provide financial advice and facilitate the buying and selling of securities. It combines the knowledge and skills necessary for these roles, making it a crucial step for those pursuing a career in the financial advisory industry.
In this article, we will provide a comprehensive overview of the Series 66 exam, including its content, differences from Series 63 and 65, difficulty level, costs, scoring, preparation tips, registration process, and what to do after taking the exam.
The NASAA Series 66, short for the Uniform Combined State Law Exam, is a comprehensive examination that covers a wide range of topics related to securities laws and regulations at the state level. It tests candidates’ knowledge and understanding of state-specific rules and regulations governing the sale and purchase of securities, as well as the ethical responsibilities and fiduciary duties of investment advisers. By passing the Series 66 exam, investment advisers demonstrate their proficiency in state securities laws and regulations. This ensures that they are equipped with the necessary knowledge and skills to provide sound investment advice and make informed recommendations to clients within a specific state jurisdiction. The Series 66 exam fulfills the requirements of both the Series 63 and Series 65 licenses, making it an efficient option for individuals who wish to qualify as both securities agents and investment adviser representatives. It consolidates essential regulatory knowledge under a single test, thereby streamlining the licensure process for aspiring financial professionals.
Candidates interested in taking the Series 66 exam can do so without the need for an employee sponsor. Unsponsored candidates who are not Form U4-registered or currently affiliated with a firm through FINRA’s system can open an exam enrollment and pay for the registration fee. The exam comes with a cost of $177 and offers two registration options. Candidates can either independently register for the exam or have their employer assist them by submitting the required forms: Form U4 for those employed by FINRA-member firms or FINRA members, or Form U10 for non-members.
With a Series 66 license, financial professionals gain the authority to legally operate as an investment adviser representative (IRA). This license allows them to engage in activities such as managing client portfolios, providing investment recommendations, executing trades, and offering financial planning services. The Series 66 exam is designed to assess candidates’ understanding of key topics such as state securities registration and exemptions, ethical practices and fiduciary responsibilities, investment strategies and products, retirement planning, taxation, and client communication. By testing candidates’ knowledge in these areas, the exam ensures that investment adviser representatives and securities agents are well-equipped to serve their clients’ financial needs and act in their best interests.
Series 66: The Uniform Combined State Law Exam: The Series 66 exam is unique in that it combines elements from both the Series 63 and Series 65 exams. While the Series 63 exam focuses on state securities regulations and the Series 65 exam covers investment adviser regulations, the Series 66 exam encompasses both of these areas. Certain topics, such as product analysis and strategy questions, which are prominent in the Series 65 exam, are not included in the Series 66 exam. This exclusion allows the Series 66 exam to focus more on the application of knowledge and regulations, rather than in-depth analysis of investment products and strategies. However, it is important to note that successful completion of the Series 7 exam is a corequisite for taking the Series 66 exam.
Series 65: The Uniform Investment Adviser Law Examination: If your sights are set on offering fee-based investment advice, Series 65 equips you with the necessary expertise. This exam delves into the legal, ethical, and regulatory dimensions of giving investment advice, ensuring you navigate this responsibility with competence and confidence. As a bonus, its content overlaps significantly with the Series 7, providing valuable reinforcement of key financial concepts. The Series 65 exam can also be used to gain accredited investor status.
Series 63: The Uniform Securities Agent State Law Examination: This foundational exam tests your understanding of state securities regulations, making it a vital step for anyone seeking to sell securities or provide investment advice within most states. It’s a test that covers the fundamentals and rules of state securities regulations. However, keep in mind that Series 63 alone doesn’t grant full autonomy. To handle transactions involving investment companies or variable annuities, you’ll need additional licenses like the FINRA SIE, Series 6, or Series 7.
Exam | Series 63 | Series 65 | Series 66 |
|---|---|---|---|
Official name | Securities Agent State Law Exam | Investment Adviser Law Exam | Combined State Law Exam |
Pre-requisite | None | None | Series 7 (co-requisite) |
Time | 75 minutes | 180 minutes | 150 minutes |
Questions | 60 | 130 | 100 |
Passing Score | 43/60 (72%) | 92/130 (70%) | 73/100 (73%) |
Cost | $147 | $187 | $177 |
Source: NASAA.org | |||
The Series 66 exam includes 100 multiple choice scored questions and 10 unscored questions. Candidates have 150 minutes (2½ hours) to complete the exam. To pass the Series 66 exam, candidates must correctly answer at least 73 of the 100 scored questions. There is no prerequisite for the Series 66 exam. However, the Series 7 exam is a co-requisite to the Series 66 exam. Those aspiring to become IARs or securities agents must successfully pass both the Series 66 and Series 7 exams, ensuring they meet the necessary regulatory standards.
Topics included in the exam range from Uniform Securities Act, Federal Securities Act, investment vehicles, portfolio & fixed income basics, financial profile, retirement & educational savings. The Series 66 exam has four different sections that cover different materials and are weighted differently. The exam questions and sections are weighted and allocated as follows:
Topic | Weight | Number of Questions | Key Topics |
|---|---|---|---|
Economic Factors & Business Information | 8% | 8 | Time value of money, statistics, financial ratios, valuation factors |
Investment Vehicle Characteristics | 17% | 17 | Cash equivalents, fixed income, equity, pooled investments, alternative investments, insurance-based products |
Client/Customer Investment Recommendations & Strategies | 30% | 30 | Client types, profiles, capital market theory, portfolio management, tax considerations, retirement plans, ERISA, special accounts, ownership, trading securities, performance measures |
Laws, Regulations, & Guidelines | 45% | 45 | Investment advisors, representatives, broker-dealers, agents, securities & issuers, remedies, communication, ethical practices |
Economic Factors and Business Information (8%):
This section includes 8 questions on but not limited to descriptive statistics (such as mean, median, mode, range, standard deviation, Alpha, Beta, and Sharpe ratios, correlation). Time value of money concepts such as internal rate of return (IRR), net present value (NPV), future value (FV). Financial ratio interpretation and calculation (such as current ratio, quick ratio, debt-to-equity ratio). Valuation factors, interpretation and calculation (such as price-to-earnings and price-to-book)
Investment Vehicle Characteristics (17%):
The 17 questions in this section include but are not limited to types and characteristics of cash and cash equivalents, such as insured deposits and money market instruments. Valuation factors of fixed income securities, such as conversion valuation and bond ratings. Types of equity securities such as common stock (domestic, foreign, American Depositary Receipt (ADR). Valuation factors of equity securities, characteristics of equity securities and more.
Client/Customer Investment Recommendations and Strategies (30%):
The 30 questions in this section include but are not limited to types of clients (including individuals, businesses, and trusts and estates), client profiling (including financial goals, current financial status, and risk tolerance), capital market theory, portfolio management strategies, tax considerations, retirement planning, trading accounts, performance measurement and more.
Laws, Regulations, and Guidelines, Including Prohibition on Unethical Business Practices (45%):
This section has 45 questions that includes but is not limited to regulations of investment advisers, including state registered and federal covered advisers, regulations of securities and issuers, remedies and administrative provisions, ethical practices and fiduciary obligations.
The Series 66 exam is known for its extensive coverage of detailed material, which poses a significant challenge for test takers. With a wide range of topics to study, individuals must dedicate a substantial amount of time and effort to prepare for this exam. While the official pass rates are not publicly disclosed, test prep programs estimate that approximately 65% to 70% of individuals successfully pass the Series 66 exam. This pass rate reflects the difficulty of the exam and the level of knowledge required to pass.
In comparison to the Series 65 licensing exam, the Series 66 exam requires less training time due to its smaller number of questions. This shorter exam duration is often seen as an advantage by many individuals, as it allows them to focus their preparation efforts on a more condensed set of topics. Consequently, some test takers find the Series 66 exam to be easier, particularly if they have already completed the Series 7 exam beforehand. Generally, it takes people longer to train for the Series 7 licensing exam, as the exam has more questions, and test takers have less experience in their career when they take the Series 7. This is also why people find the Series 66 exam easier, as they’ve already taken the Series 7 exam by the time they take the Series 66 exam. Familiarity with the exam format and content can provide a significant advantage in successfully navigating the Series 66 exam.
Acing the Series 66 exam requires dedication and strategic planning. Candidates typically aim for 70–80 hours of study time, though the timeframe is adjusted based on their existing knowledge. While study methods will differ per candidate, consistency is crucial and those planning on taking the Series 66 exam best achieve their goals by blocking time on their calendars – at least an hour or two during weekdays and 6–10 hours on weekends. Finding the time may not be easy, but candidates have to – you have to study to pass this test. Finally, you should schedule your exam within a week of finishing your prep to capitalize on the knowledge being fresh in your brain.
Choosing the right study materials is vital. Several test prep companies offer courses to help candidates pass the Series 66 exam, but they’re not all the same. While some firms offer live classes, most rely on self-study. Opt for a trusted online program as your foundation, offering convenience and flexibility compared to books. Consider tutoring or boot camps later for targeted support after building a solid understanding. Remember, the best program aligns with your learning style and schedule. Commit to your chosen plan, and success will be within reach!
And if you’re looking for a proven online exam prep course for the Series 66, Achievable’s Series 66 course checks all these boxes and more:
The Series 66 exam is a computer test administered by Prometric Test Centers nationwide. You can visit the website to find the exam center closest to you. You cannot sit for the exam online or take it in another testing location unless you provide medical proof that you cannot take exams in testing centers, due to a disability or other qualifying issue. Your test center will give you a tutorial on how to take the exam prior to taking it.
On the day of the exam, the administrator provides electronic calculators for candidates to use, and these are the only calculators allowed in the exam room. A dry-erase marker and a whiteboard are provided. No study or reference materials of any kind are permitted in the examination room, no pen, pencil, calculator, cell phone, smartwatch, or paper and there are harsh penalties for anyone caught cheating or attempting to cheat.
After taking the Series 66 exam, candidates typically find out immediately whether they passed. Once the exam is successfully completed, registration within FINRA becomes official within a few business days.
Candidates can take the Series 66 exam as many times as it takes to pass. However, there are waiting periods between each attempt. After the first failed attempt, candidates must wait at least 30 days before retaking the exam. If they fail a second time, they must wait at least 30 days again. Following the third unsuccessful attempt, candidates must wait 180 days before they can try again.
We hope this has shed some light on questions you might have had regarding the Series 66 exam. Remember to plan your study schedule effectively, utilize reputable study materials, and seek support from available resources such as instructors or online forums. Stay focused, stay determined, and trust in your preparation. Good luck on your Series 66 exam journey!
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