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What Is the Series 7 Exam?

Posted by Hannah Muniz | Jan 2, 2020 7:00:00 AM

General Education

 

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Series 7it might sound like a strange set of books you never got around to reading, but in reality it’s a financial qualification exam for aspiring stockbrokers. If you want to work with stocks, bonds, and investments, you’ll need to pass Series 7.

Read on to learn what exactly the Series 7 exam is, who takes it, what’s on it, how you can register for it, and what score you need to pass it.

 

What Is the Series 7 Exam? Overview

The Series 7 exam, formally called the General Securities Representative Qualification Examination, is a licensing exam for entry-level stockbrokers and other financial professionals who are involved in the buying, selling, and trading of securities, such as stocks and bonds. Specifically, Series 7 tests how well you know the essential functions of a broker, or general securities representative.

The exam is administered by the Financial Industry Regulatory Authority (FINRA). Here’s how FINRA describes Series 7:

"The exam measures the degree to which each candidate possesses the knowledge needed to perform the critical functions of a general securities representative, including sales of corporate securities, municipal securities, investment company securities, variable annuities, direct participation programs, options and government securities."

The purpose of Series 7 is for brokers and financial professionals to get their General Securities Representative registration, which makes them official registered representatives by FINRA and improves their employability in the financial sector.

To obtain this registration, you must pass the Series 7 exam and the Securities Industry Essentials (SIE) exam, which tests your knowledge of basic securities industry information.

To take the Series 7 test, you must be sponsored by a FINRA member firm. By contrast, anyone can take the SIE exam without FINRA sponsorship (college students typically take this exam before they take Series 7 since they don’t need an affiliation with a member firm to do so).

This is just an overview of how Series 7 works. Now, what about the format of the exam?

 

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What Is the Format of the Series 7 Exam?

Here’s an overview of the Series 7 exam format:

  • Questions: 125 multiple-choice questions (plus 10 unscored pretest questions)
  • Length: 3 hours 45 minutes
  • Cost: $245
  • Delivery Method: Computer

You’ll have 3 hours and 45 minutes to complete the Series 7 test, giving you around a minute and 48 seconds per question. There are no penalties for incorrect answers, so it’s in your best interest to put down an answer for everything and guess when you’re not sure.

While the actual test is just 125 questions long, you’ll get 135 questions in total: 10 of these are unscored questions that are randomly distributed throughout the test. Since you can’t know which questions count toward your final score and which do not count, it’ll be best for you to treat all questions as if they're going to be scored.

The Series 7 exam format changed a lot in 2018 and is now shorter and more focused. You’re also now required to pass the SIE exam along with Series 7 in order to earn your General Securities Representative registration with FINRA. (Before 2018, you just needed to pass the Series 7 examthere was no SIE exam). In other words, the SIE exam is a corequisite.

So what kind of content is on the Series 7 exam?

The Series 7 exam covers very specific knowledge all general securities representatives must have. There are four main categories, or "functions," to know. Here’s a look at how they’re spread out across the test:

Function

# of Questions

Percentage of Exam

1: Seeks Business for the Broker-Dealer from Customers and Potential Customers

9

7%

2: Opens Accounts after Obtaining and Evaluating Customers’ Financial Profile and Investment Objectives

11

9%

3: Provides Customers with Information about Investments, Makes Suitable Recommendations, Transfers Assets and Maintains Appropriate Records

91

73%

4: Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions

14

11%

TOTAL

125

100%

Source: FINRA Series 7 Exam Content Outline

As you can see, the vast majority of questions on the Series 7 exam are in Function 3, which is about working with customers. This is a major role of brokers, so it’s critical that you understand these pointspossibly even better than the other three functions.

 

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Series 7 Exam Registration and Logistics

Since you must be sponsored by a FINRA member firm to take the Series 7 test, you don’t actually register for it—your sponsor does. To sign you up, your sponsor must go through FINRA’s Central Registration Depository and file a Form U4, or a Uniform Application for Securities Industry Registration or Transfer.

The Series 7 fee is $245, but most sponsors should cover this cost.

Once you’ve been enrolled for the exam by your sponsor, you get to pick your test date. FINRA will provide you with a 120-day window from which you can choose a day to take the Series 7 exam at a nearby Prometric test center.

To schedule a test date, go to the Prometric website or call them toll-free at (800) 578-6273. You'll need to give them the following information:

  • Your name
  • Your FINRA ID number
  • Your phone number and/or your sponsor firm’s phone number
  • The exam name (Series 7)

On exam day, make sure to arrive at least 30 minutes before your appointment. If you arrive more than 30 minutes after your scheduled time, you will not be allowed to test and your sponsor will be charged a late cancellation fee. Don't forget that you must also bring an official form of identification, such as a driver’s license or passport.

Once there, you’ll need to follow all testing center protocols in order to sit for the exam. Prometric has created a video to show you what to expect when you arrive.

You can change or cancel your Series 7 test date for free if you contact Prometric more than 10 business days before the exam. If you change your appointment within 10 business days, you’ll be charged a fee, which will be either $122.50 (if within three to 10 business days of your test date) or $245 (if within two days of your test date).

 

What Score Do You Need to Pass Series 7?

A passing score on the Series 7 test is 72%, meaning you must get at least 90 questions (out of 125) correct.

Because you’ll be taking the exam on a computer, you'll get your results right after you complete the test and will be told instantly whether you passed or failed. You will also receive a printed copy of your Series 7 score.

If you passed, it’ll simply say that on the report. If you failed, however, you’ll get further details on your performance on each topic of the exam to help inform your prep should you want to retake Series 7 at a later date.

Those who have failed the Series 7 exam can retake it in 30 days. Note that your sponsor will have to request another appointment for you following the steps above and pay a new exam fee.

So how hard is the Series 7 exam, really? In other words, what is the Series 7 pass rate?

At the 2019 FINRA Annual Conference, it was announced that the Series 7 pass rate for people who took the exam between October 2018 and March 2019 was 71%. In the past (before major changes were made to the exam in 2018), the pass rate was said to be around 65%.

As a result, we can say that the Series 7 pass rate is around 65-70%, meaning that the majorityapproximately two-thirdsof test takers pass the exam.

Still, many people don’t pass the Series 7 exam on their first attempt. If you're one of them, try not to worry! You can take the test as many times as you need to.

 

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Conclusion: So What Exactly Is the Series 7 Exam?

The Series 7 exam is a qualification exam for entry-level registered representatives (aka brokers or account executives) and other financial professionals who deal with the buying, selling, and trading of securities. You must pass both Series 7 and the SIE exam in order to be a FINRA-recognized registered representative.

To register for the Series 7 test, you need to have a FINRA member firm sponsor you. Your sponsor will also typically pay the $245 exam fee. The test lasts three hours and 45 minutes and consists of 125 questions (plus 10 pretest questions that do not count toward your score).

You’ll need to get at least a 72% (90 questions correct) on the Series 7 test to pass. Series 7 is a somewhat difficult exam with about a 65-70% pass rate, so be sure your Series 7 exam prep is on point and you're ready to put in the effort!

 

What’s Next?

Finances can be tricky, especially if you're in the process of applying to college. Let us help with our guides to how to apply for financial aid and colleges with the best financial aid.

Maybe being a stockbroker doesn't appeal to you. In that case, why not check out our step-by-step career guides to becoming a doctor, a college professor, and a dentist?

Considering joining the military? Then you'll need to know about the mandatory military tests, including the ASVAB and the Air Force PT Test.

 

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Hannah Muniz
About the Author

Hannah received her MA in Japanese Studies from the University of Michigan and holds a bachelor's degree from the University of Southern California. From 2013 to 2015, she taught English in Japan via the JET Program. She is passionate about education, writing, and travel.



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