Series 7 Exam Restructure: Everything You Need to Know

By | February 13, 2018

The Restructuring of the Series 7 Exam

Beginning October 1, 2018, prospective securities industry professionals looking to become registered with a firm at the representative level will be required to pass the new Securities Industry Essentials (SIE) exam in addition to a revised representative-level qualification exam. These exams are considered “corequisites” in meeting the exam requirement and obtaining a registration. This means there is no required order in which these exams must be taken or passed.

What does the current Series 7 Exam look like?

According to FINRA, an individual registered as a general securities representative is permitted to solicit, purchase, or sell all securities products, including corporate securities, municipal fund securities, options, direct participation programs, investment company products and variable contracts.

Prior to October 1, 2018 current registration candidates must pass the Series 7 exam by demonstrating they possess the knowledge needed to perform the five main job functions of a general securities representative. Candidates have 360 minutes to answer 250 multiple choice questions, and the exam requires a passing score of 72%.

The current Series 7 exam structure and breakdown based on the five main job functions is as follows:

Prior to October 1, 2018

Series 7 Exam Structure and Major Job Functions

Number of Questions Percentage of Questions
1. Seeks Business for the Broker-dealer through Customers and Potential Customers 68 27%
2. Evaluates Customers’ Other Security Holdings, Financial Situation and Needs, Financial Status. Tax Status, and Investment Objectives 27 11%
3. Open Accounts, Transfer Assets, and Maintain,  Appropriate Account Records 27 11%
4. Provides Customers with Information on Investments and Makes Suitable Recommendations 70 28%
5. Obtains and Maintains Customer’s Purchase and Sales Instructions, Enters Orders, and Follows Up 58 23%
TOTAL 250 100%

What will the SIE Exam look like?

All individuals engaging in the securities business will be required to take the SIE exam as of October 1, 2018 (not just Series 7 candidates). It will assess common securities industry knowledge and general concepts and will focus on industry terminology, securities products, the structure and function of the markets, regulatory agencies and functions, and regulated and prohibited practices.

On January 12, FINRA released the exam structure and specifics. Candidates will have 105 minutes to complete the SIE exam’s 75 multiple choice questions. The exam will be scored using a statistical adjustment process known as equating. Equating the scores will consider the slight variations in difficulty among the exam items and allows for a fair comparison of scores so that each candidate will be held to the same passing standard.

The SIE exam structure and breakdown is as follows:

Effective October 1, 2018

Securities Industry Essential (SIE) Exam Structure

Number of Questions

Percentage of Questions

1. Knowledge of Capital Markets 12 16%
2. Understanding Products and their Risks 33 44%
3. Understanding Trading, Customer Accounts, and Prohibited Activities 23 31%
4. Overview of the Regulatory Framework 7 9%
Total 75 100%

View the SIE Examination Content Outline

How will the Series 7 Exam be restructured?

Because of the new requirement and creation of the SIE exam, the Series 7 representative-level exam is being restructured and will be referred to as a “top-off” exam. With the SIE exam being structured to assess general securities industry knowledge, the restructured Series 7 representative-level exam will have fewer questions and a more in-depth focus on four main job functions as a general securities representative.

FINRA recently released the exam restructure and specifics. The new Series 7 top-off exam will consist of 125 multiple choice questions, allow the candidate 225 minutes to complete the exam, and will be scored using equating.

The new Series 7 exam restructure and breakdown based on four main job functions is as follows:

Beginning October 1, 2018

Series 7 Exam Restructure and Major Job Functions

Number of Questions

Percentage of Questions

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 16%
3. Provides Customers with Information about Investments, Makes Suitable Recommendations, Transfers Assets and Maintains Appropriate Records 91 50%
4. Obtains and Verifies Customers’ Purchases and Sales Instructions; Processes, Completes and Confirms Transactions 14 10%
Total 125 100%

Series 7 General Securities Representative Qualification Examination Content Outline

Where can I find exam prep materials for securities?

A.D. Banker & Company will provide a full line of study materials including an online course, study manual, practice exams, and web classes in addition to its current securities product offerings. Remember to check back with A.D. Banker & Company for updates regarding the SIE and the revised registration-level qualification exams on a regular basis. To speak with someone from A.D. Banker regarding all Securities licensing study programs, please contact us at 1-800-866-2468.

Author: Barb Gavitt, ITP, SILA-F

Barb Gavitt, ITP, SILA-F, is the Vice President of Product Development and Education for A.D. Banker & Company and is responsible for developing and maintaining the curriculum and learning tools used in insurance licensing and FINRA training courses, both live and online, delivered nationally. Barb has been in the insurance education and training industry since 1991. She has a B.S. in Education from Eastern Michigan University and a Certificate in Distance Education from Indiana University. She is an Associate Trainer for the International Board of Certified Trainers (IBCT) and holds the CDEI designation (Certified Distance Education Instructor) from the International Distance Education Certification Center (IDECC).

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