What Is the Series 6?
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 securities, and insurance. Holders of the Series 6 license are not authorized to sell corporate or municipal securities, direct participation programs, and options.
With a Series 6, an financial professional can purchase or sell certain types of mutual funds, variable life insurance, municipal fund securities, variable annuities, and unit investment trusts (UITs).
Key Takeaways
- 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.
- 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).
Series 6
Understanding Series 6
The Series 6 is a license sought by professionals in the financial services industry. Jobs utilizing the Series 6 license include financial advisors, retirement plan specialists, investment advisors, and private bankers. In order to obtain the Series 6 license, candidates must pass the Investment Company/Variable Contracts Products Limited Representative (Series 6) exam. The Securities Industry Essentials (SIE) exam is a corequisite for the Series 6 exam. The SIE does not require firm sponsorship.
The Financial Industry Regulatory Authority (FINRA) administers the Series 6 exam. It covers topics such as mutual funds, variable annuities, securities, tax regulations, retirement plans, and insurance products. A passing grade is achieved by correctly answering at least 35 of 50 questions within 90 minutes. Five additional questions are unscored for a total of 55 questions. The test costs $40, and it is administered via computer with no reference material allowed.
Candidates used to take the Series 6 exam in person at Prometric test centers. However, FINRA began offering tests, including the Series 6 exam, online in 2020. Prometric also administered the online tests. However, candidates or their employers had to install specialized software on their computers and provide cameras. Note, however, that a Series 6 expires two years after employment unless under special circ*mstances such a military deployment.
What Does the Series 6 Allow You to Do?
The FINRA Series 6 license allows an individual to act as a registered representative and sell mutual funds, variable annuities, and unit investment trusts (UITs). These types of investment products are considered to be relatively simple and are often suitable for individual investors who are looking for a way to diversify their portfolios or save for long-term financial goals such as retirement.
Holding a Series 6 license does not allow an individual to sell other types of securities, such as stocks, bonds, and options. If an individual wants to sell these types of securities, they would need to obtain a different securities license, such as the FINRA Series 7 license.
Individuals who hold a Series 6 license may be responsible for providing investment advice and recommendations to clients, as well as processing transactions and maintaining accurate records of their activities, but limited to the types of securities covered in this license. Series 6 licensees may work for a brokerage firm, bank, insurance company, or other financial institution, and may also be required to adhere to certain ethical and legal standards in the course of their work.
Series 6 vs. Series 7
The Series 6 exam is often compared to the Series 7 exam. The Series 6 costs substantially less money and has a shorter test covering less material. However, a Series 6 license is all that some financial advisors, investment advisors, and retirement planners need. Such advisors may only need a Series 6 license if they just sell insurance, annuities, and certain types of mutual funds, not individual stocks.
Series 6 holders, however, are not authorized to sell stocks, exchange-traded funds (ETFs), or bonds. This is a significant drawback because ETFs generally offer lower fees and are increasingly replacing mutual funds as the preferred investment vehicles among retail investors. Financial advisors and retirement planners who want to sell ETFs must obtain a Series 7 license, which requires taking a longer and more comprehensive exam that costs more money.
In comparison to the Series 6, the Series 7 license is generally considered to be more comprehensive and useful, and may open up more job opportunities in the securities industry. However, the Series 6 license may be sufficient for some individuals who are interested in selling mutual funds, variable annuities, and UITs and do not need to sell other types of securities.
Requirements for Series 6
Candidates must be sponsored by a member of FINRA or a self-regulatory organization (SRO) to take the exam. There is no prerequisite for the exam, but the Securities Industry Essentials (SIE) exam is a corequisite for Series 6 (Before Oct. 2018, the exam was 100 questions and didn't have the SIE corequisite. Today the Series 6 exam contains 50 questions).
Upon receiving a passing grade, candidates must then register with FINRA through their sponsoring firm in order to transact authorized securities. Holders of the Series 6 are considered limited representatives of their sponsoring firm. As a limited representative, they can sell certain types of mutual funds, variable annuities, and variable life insurance.
Series 6 Exam Sections
The exam has a 90-minute time limit and consists of 50 multiple choice questions. The passign grade is 70%. As outlined by FINRA, the Series 6 exam covers four specific sections.
- "Seeks Business for the Broker-dealer from Customers and Potential Customers," which is 12 questions—covering 24% of the exam.
- "Opens Accounts After Obtaining and Evaluating Customers' Financial Profile and Investment Objectives" is eight questions—covering 16% of the exam.
- "Provides Customers with Information About Investments, Makes Suitable Recommendations, Transfers Assets, and Maintains Appropriate Records" is half the exam at 25 questions—covering 50% of the exam.
- "Obtains and Verifies Customers' Purchase and Sales Instructions; Processes, Completes, and Confirms Transactions" is five questions—covering 10% of the exam.
Continuing Education
Licensees must fulfill continuing education 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.
Is Series 6 or 7 Exam Harder?
The FINRA Series 7 exam is generally considered to be more difficult than the Series 6 exam. The Series 7 exam covers a broader range of topics and requires a deeper understanding of the securities industry and financial markets.
How Much Does the Series 6 Exam Cost?
As of 2022, the Series 6 exam costs$75.
How Long Is a Series 6 Good for?
The FINRA Series 6 license is valid for the duration of your employment with a FINRA member firm, as long as you remain registered and in good standing with FINRA. If you leave the firm or your registration lapses, your Series 6 license will no longer be valid.
After two years, an individual who holds a Series 6 license must complete a certain number of continuing education (CE) credits in order to renew their license. The number of CE credits required for renewal depends on the specific requirements of the state in which the individual is licensed. In general, continuing education is required to ensure that registered representatives stay up-to-date on the latest developments in the securities industry and maintain their knowledge and skills. Completing CE credits can also help individuals maintain their professional licenses and stay in compliance with regulatory requirements.
The Bottom Line
The FINRA Series 6 is a securities license that allows an individual to act as a registered representative and sell mutual funds, variable annuities, and unit investment trusts (UITs). To obtain a Series 6 license, an individual must pass the Series 6 examination, which is administered by the Financial Industry Regulatory Authority (FINRA). The Series 6 exam covers topics such as types of securities, regulatory agencies, and investment risks. It is typically taken by individuals who are starting careers in the securities industry and who want to sell these types of investment products.
