Series 6 License: Definition and How it Works.
PM
Summary:
Explore the Series 6 license, a critical securities credential enabling professionals to sell mutual funds, variable annuities, and unit investment trusts (UITs). Discover the license’s requirements, advantages, and limitations, and gain insights into its comparison with other industry licenses.
Delve into the financial services world and encounter the pivotal Series 6 license, a qualification for aspiring professionals. This license empowers individuals to function as registered representatives, facilitating the sale of mutual funds, variable annuities, and unit investment trusts (UITs). Alongside promising career opportunities, the Series 6 license has distinct requirements, merits, and drawbacks. In this comprehensive guide, explore the definition, prerequisites, benefits, disadvantages, and more, illuminating the intricate landscape of the Series 6 license.
Compare Investment Advisors
Compare the services, fees, and features of the leading investment advisors. Find the best firm for your portfolio.
Understanding series 6
The Series 6 license stands as an essential asset in the financial services sector. It’s a gateway for roles such as financial advisors, retirement plan specialists, investment advisors, and private bankers. To secure this license, candidates must successfully navigate the Investment Company/Variable Contracts Products Limited Representative (Series 6) exam. A parallel requirement is the Securities Industry Essentials (SIE) exam, which doesn’t necessitate firm sponsorship.
The Financial Industry Regulatory Authority (FINRA) administers the Series 6 exam, covering topics like mutual funds, variable annuities, securities, tax regulations, retirement plans, and insurance products. A passing score entails correctly answering at least 35 of 50 questions within 90 minutes. An additional five unscored questions bring the total to 55 questions. The examination incurs a $40 cost and occurs on a computer platform without reference materials.
Transitioning from in-person settings, FINRA introduced online testing for the Series 6 exam in 2020, replacing the need for candidates to visit Prometric test centers. While embracing online convenience, candidates had to install specialized software and provide cameras for exam supervision.
What does the series 6 allow you to do?
The Series 6 license empowers individuals as registered representatives, facilitating the sale of mutual funds, variable annuities, and UITs. These investment products offer simplicity and suit investors seeking diversification and long-term financial planning, such as retirement preparation.
It’s important to note that the Series 6 license doesn’t encompass the sale of other securities like stocks, bonds, or options. Professionals desiring to engage in such transactions need to obtain distinct securities licenses, such as the FINRA Series 7 license. Series 6 license holders may offer investment advice, process transactions, and uphold meticulous records within the scope of their license. Their work domain could include brokerage firms, banks, insurance companies, and other financial institutions.
Series 6 vs. series 7
A frequent point of comparison is the Series 6 exam versus the Series 7 exam. While the Series 6 exam is more cost-effective and involves a shorter test, it covers a narrower range of material. This license suits financial advisors focusing on insurance, annuities, and specific mutual funds, excluding individual stocks.
However, Series 6 holders lack authorization to sell exchange-traded funds (ETFs), a notable drawback. ETFs are growing in popularity due to their lower fees and retail investor appeal, often superseding mutual funds. Advisors targeting ETF sales must secure the Series 7 license, which entails a more comprehensive and pricier exam.
Requirements for series 6
A critical prerequisite for the Series 6 exam is sponsorship by a FINRA member or a self-regulatory organization (SRO). While no specific prerequisites exist for the exam, completing the Securities Industry Essentials (SIE) exam is mandatory. Before October 2018, the exam contained 100 questions without the SIE corequisite; today, it comprises 50 questions.
Series 6 exam sections
The Series 6 exam comprises 50 multiple choice questions and has a 90-minute time constraint. A passing score necessitates correctly answering 70% of the questions. Organized into four distinct sections, the exam’s coverage is as follows:
- “Seeks Business for the Broker-dealer from Customers and Potential Customers” (12 questions, 24% of the exam).
- “Opens Accounts After Obtaining and Evaluating Customers’ Financial Profile and Investment Objectives” (eight questions, 16% of the exam).
- “Provides Customers with Information About Investments, Makes Suitable Recommendations, Transfers Assets, and Maintains Appropriate Records” (25 questions, 50% of the exam).
- “Obtains and Verifies Customers’ Purchase and Sales Instructions; Processes, Completes, and Confirms Transactions” (five questions, 10% of the exam).
Continuing education
Maintaining a Series 6 license mandates fulfilling continuing education obligations and securing sponsorship from a FINRA registered firm. The regulatory and firm elements constitute FINRA’s continuing education program. Regulatory obligations include completing a computer-based training session within 120 days of the second registration anniversary and every three years thereafter. Additionally, broker-dealers must establish and sustain a continuing education program.
Financial advisor
Financial advisors help clients make informed decisions about their investments and financial planning. With a Series 6 license, financial advisors can offer clients mutual funds, variable annuities, and unit investment trusts as part of their comprehensive financial strategies.
Retirement plan specialist
Retirement plan specialists work with clients to develop retirement savings strategies. They can use their Series 6 license to provide clients with retirement-focused investment options, helping them achieve their long-term financial goals.
Investment advisor
Investment advisors provide personalized investment advice and recommendations to clients. With a Series 6 license, they can offer a selection of investment products that align with their clients’ risk tolerance and financial objectives.
Private banker
Private bankers work with high-net-worth clients to manage their financial portfolios. A Series 6 license allows private bankers to offer a variety of investment products to their clients, enhancing their wealth management services.
Industry impact of the series 6 license
The Series 6 license has a notable impact on the financial services industry, shaping the way investment products are sold and distributed. Here are a few ways the Series 6 license influences the industry:
Focus on long-term planning
With its emphasis on mutual funds, variable annuities, and unit investment trusts, the Series 6 license encourages financial professionals to prioritize long-term financial planning. These investment products are often associated with retirement planning and wealth accumulation over time.
Regulatory compliance and investor protection
The Series 6 license ensures that individuals selling investment products have a foundational understanding of securities regulations and investor protection. This regulatory framework helps maintain the integrity of the industry and safeguards investor interests.
Role in investment education
Professionals with a Series 6 license play a pivotal role in educating clients about different investment options and strategies. They can guide clients through the features and benefits of mutual funds, variable annuities, and unit investment trusts, aiding clients in making informed decisions.
Frequently asked questions
What is the series 6 license?
The Series 6 license is a securities credential that permits professionals to serve as registered representatives and facilitate the sale of specific financial products, including mutual funds, variable annuities, and unit investment trusts (UITs).
How can I obtain the series 6 license?
To acquire the Series 6 license, individuals must pass the Investment Company/Variable Contracts Products Limited Representative (Series 6) exam. Additionally, candidates are required to complete the Securities Industry Essentials (SIE) exam, which doesn’t necessitate firm sponsorship. Successful completion of these exams, along with sponsorship from a FINRA member or an SRO, is essential.
What can I sell with a series 6 license?
With a Series 6 license, you can sell mutual funds, variable annuities, and unit investment trusts (UITs). However, you are not authorized to sell stocks, bonds, options, or exchange-traded funds (ETFs).
How does the series 6 exam compare to the series 7 exam?
The Series 6 exam is less comprehensive and more cost-effective than the Series 7 exam. While the Series 6 license suits professionals who focus on specific investment products, the Series 7 license offers a broader scope, allowing the sale of a wider range of securities.
What are the continuing education requirements for a series 6 license?
Series 6 license holders must fulfill continuing education obligations to renew their licenses. This includes regulatory and firm elements. Regulatory obligations involve completing a computer-based training session within specific timeframes, while broker-dealers must establish and maintain a continuing education program.
How long is the series 6 license valid?
A Series 6 license remains valid throughout your employment with a FINRA member firm, as long as you maintain registration and compliance with FINRA standards. After two years, you must accumulate a designated number of continuing education credits for license renewal.
Key takeaways
- The Series 6 license enables professionals to sell mutual funds, variable annuities, and unit investment trusts (UITs).
- Passing the Investment Company/Variable Contracts Products Limited Representative (Series 6) exam and the Securities Industry Essentials (SIE) exam is necessary to obtain the license.
- Candidates must be sponsored by a FINRA member or an SRO to take the exam.
- Series 6 exams transitioned to an online format in 2020.
- Series 6 license holders cannot sell exchange-traded funds (ETFs).
Share this post: