The Series 6 is a securities license entitling the holder to register as a company’s representative and sell certain types of mutual funds, variable annuities, and insurance. Holders of the Series 6 license are not authorized to sell corporate or municipal securities, direct participation programs, and options. With Series 6, an individual can purchase or sell certain types of mutual funds, variable life insurance, municipal fund securities, variable annuities, and unit investment trusts.
As you begin your study and preparation for the Series 6, be aware of two things:
- What securities a Series 6 qualifies a candidate to sell, and what they cannot
- The relative importance of the topics that make up the exam.
Key Takeaways
- The FINRA Series 6 is a securities license entitling the holder to register as a company’s representative and sell certain types of mutual funds, variable annuities, and insurance.
- Candidates must pass the Series 6 exam to obtain a Series 6 license, and the Securities Industry Essentials (SIE) exam is a corequisite for the Series 6 exam.
- Candidates must be sponsored by a member of FINRA or a self-regulatory organization (SRO) to take the exam.
- Series 6 exams were traditionally taken in person at test centers, but FINRA began offering them online in 2020.
- The greatest disadvantage of a Series 6 license is that holders are not authorized to sell exchange-traded funds (ETFs).
Who Needs the Series 6?
The Series 6 exam is administered by the Financial Industry Regulatory Authority, better known as FINRA (Formerly NASD’s).
The official name of the Series 6 is the Investment Company/Variable Contracts Products Limited Representative Qualification Examination, and it is used to qualify financial professionals seeking registration to transact in certain types of investment trusts, mutual funds, variable annuities, and insurance. Holders of the Series 6 license are not authorized to sell corporate or municipal securities, direct participation programs, and options (for this you would need the Series 7).
Simply put, a person who wishes to become a registered representative (RR) and sell mutual funds, unit investment trusts (UITs), variable annuities, or variable life insurance must pass the Series 6 exam. A Series 6 RR cannot sell closed-end funds except at their IPO (a prospectus offering).
The Series 6 Exam
The Series 6 exam is now heavily oriented toward professional interactions with customers and divided into four main topic sections. The exam must be completed within 90 minutes and contains 50 questions (there are also 5 experimental questions that will appear on the exam, which are ungraded, for a total of 55 questions. Test takers will not know which ones these are). The passing score is 70%.
There are no prerequisites for the exam, but the Securities Industry Essentials (SIE) exam is a co-requisite for Series 6.
Scratch paper, pencils, and calculators are made available to candidates at the testing center.
Exam Topics
The Series 6 exam has 50 multiple-choice questions broken up into the four major topic areas, each concerned about the main functions of an RR:
- Seeks Business for the Broker-Dealer from Customers and Potential Customers (12 questions, 24%)
- Opens Accounts After Obtaining and Evaluating Customers’ Financial Profile and Investment Objectives (8 questions, 16%)
- Provides Customers with Information About Investments, Makes Recommendations, Transfers Assets and Maintains Appropriate Records (25 questions, 50%)
- Obtains and Verifies Customers’ Purchase and Sales Instructions; Processes, Completes and Confirms Transactions (5 questions, 10%)
Exam Time Management
Because there are 50 questions (plus 5 additional experimental questions) on the exam and just an hour-and-a-half to complete them all, candidates have just over one minute and a half to complete each question. Therefore, candidates should carefully budget their time.
Flag the Hard Questions
Series 6 candidates will normally encounter several questions on the exam that are long and wordy. These are situation-type questions and can take quite a bit of time to work through and answer. Although it is easy to get wrapped up in these questions, you should remember that the simple questions count just as much as those that are long and complex.
A good strategy, therefore, might be to flag a question—the computer program at your testing center will allow you to do this—that will take more time. That way, you can go back and work on answering it after you’ve finished the test. Choose the questions that you flag carefully: you won’t want to do it for 30 questions in a row!
Follow the Bell Curve
Those who have recently taken the exam report that the structure of the questions is a “bell curve.” That is, the first question and the last question on the exam are quite simple. The level of difficulty increases until one is past the midway point, then drops off steadily until the end. Be aware that this is likely to be your experience and don’t let the increasingly complex questions frustrate you. Press on. Easier questions will be on the way.
Don’t Second Guess Yourself
The majority of those who take the Series 6 report that they had time remaining after answering all the questions. If this also happens to you, finish the exam, wait for the congratulatory message, smile and go on about your life! Don’t go back and change answers! Statistically, when you change answers, you’re wrong most of the time. If you must guess, your first guess is usually the best.
Sharpen Your Skills
To help increase your speed in answering questions, do many practice questions. As you do the questions, keep track of your progress by noting your weakest topics If you are not performing well—especially in those areas that have a significant number of questions—you’ll need to review the subject matter more closely.
Exam Day
When you go to the testing center, be sure to arrive early. After you’ve signed in and put your personal effects in a locker, you’ll be given scratch paper, pencils and a calculator to use during the exam.
You will normally only need to use the calculator two or three times during the whole session. The current test is much less a mathematical exercise than it was several years ago. You must, however, be aware of the basic formulas for mutual funds. The database has a number of questions that require a candidate to recognize the formulas, although you won’t have to use them to do computations.
The scratch paper is another matter. Before you start the exam, make all the notes you need on the scratch paper. One of the most useful tools is the teeter-totter illustrating the yields on discount and premium bonds. You may be able to use these to simplify answering several questions. Anything else that you want to use as you take the exam should be on your scratch paper before you start the exam.
Exam-Taking Hints
- Read each question all the way through and look at all the answers. Then go back to the question before attempting an answer. Did you see the word “not” or “except”? Can you spot repeated keywords in the question and a specific answer?
- After you’ve followed the process, look at the answers. Eliminate the incorrect answers as quickly as possible. If two of the answers are exactly opposite the odds are very high that one of those is correct.
- If you are confronted with a question—particularly about rules—and can’t decide between the final two selections, carefully consider the longer answer. The question writer will normally include everything in the correct answer. However, you should only use this technique when you have to guess
- Don’t rush. In your haste, you might miss an easier question by failing to read carefully. Some of the questions are tricky, but don’t get too caught up with any one of these; easy questions count just as much as the longer, more difficult ones.
Continuing Education
Licensees must fulfill continuing education (CE) requirements and receive sponsorship from a FINRA registered company to keep their Series 6 licenses.
FINRA’s continuing education program includes two elements: a regulatory element and a firm element. On the regulatory side, FINRA requires licensees to complete a computer-based training session within 120 days of the second anniversary of registration. FINRA also requires a computer-based training session every three years after that. The firm element requires broker-dealers to establish and maintain a continuing education program.
The Bottom Line
If you follow the advice we’ve outlined here, you will be well on your way to passing your upcoming exam. To ensure you are at your best, go to bed early the night before the exam and do not try cram in study time immediately before your test. Relax as much as possible and go into the exam confident that you’ll pass the first time. Remember: 70% is a passing score—an A. 71% is an A+!