Late last year, Finra restructured the General Securities Representative Exam, known most commonly as the Series 7. If you want to trade securities or work in an investment role in the U.S., there are several things you need to know before diving in to study prep.
You now need to pass two exams
At the heart of Finra’s restructuring is the creation of the Securities Industry Essential (SIE) exam. To become a registered investment representative, you now need to pass both the SIE and the Series 7 exam. Why the change? One motivation was to no longer force test-takers who want or are required to pass multiple exams to cover the same material more than once, according to Brian Marks, managing director of licensing exam prep firm Knopman Marks Financial Training.
Prior to the restructuring, around 30% of Finra’s main qualification exams included common material that covered basic industry knowledge. Finra essentially pulled all that material out of the Series 7 and other exams to create the SIE. Now, test-takers will only need to demonstrate their understanding of the basics one time.
You can dip your toe in the water
The other main reason for the switch is to allow people who aren’t already working at a broker-dealer to see if they have the capacity and interest to join the industry. While you still need to be sponsored by a firm to register for the Series 7, anyone over 18 years of age can take the SIE. Marks said his company is currently working with a few hundred students who are prepping to sit for the SIE before they graduate.
It’s a resume sweetener
While none of Marks’ broker-dealer clients currently require a candidate to have passed the SIE to be considered for employment, it’s only been a handful of months since the changes were enacted. “That’s the question that’s still out there,” he said. “At some point we may be headed in that direction.”
For now, passing the SIE before applying for a trading or investment role should definitely improve a candidate’s profile, Marks said.
There are actually fewer questions
Whether you’d rather study and sit for two smaller exams versus one large one is a question of personal preference. That said, those who are already working at a broker-dealer appeared to prefer the old system. Marks said there was a huge rush of people who signed up for the old Series 7 exam before the October deadline. However, the Series 7 exam included 250 questions in the previous format. The are only 200 combined questions between the SIE and the new Series 7 exam.
The new Series 7 is harder, kind of
One of the fallouts from pulling general industry knowledge questions from all qualification exams is that the Series 7 just became more difficult. The exam no longer includes all the simpler questions that now make up the SIE, yet the passing score is still the same: 72%. This could be another explanation for the rush of pre-October signups. Test scores will be scaled in order to try to keep a consistent pass rate, but that doesn’t make the exam any easier while you’re actually taking it. It’s just likely you’ll be able to get a few more questions wrong and still pass, though that’s not yet clear.
It costs the same
The registration fee is $60 for the SIE and $245 for the revised Series 7 exam – combined to be the same cost of the old Series 7.
You can take them on the same day
Those who prefer the previous system can try to replicate it by taking both on the same day, though pulling off such a feat depends on the schedules of testing centers. The exam length is 105 minutes for the SIE and 225 minutes for the new Series 7. That shaves off 30 minutes from the previous six-hour exam. You can actually take the test in either order (if you are sponsored by a firm), though assumedly the vast majority will first sit for the SIE.
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As an expert in the field of financial services and securities industry qualifications, I bring a wealth of knowledge and hands-on experience to the discussion surrounding the recent restructuring of the General Securities Representative Exam, commonly known as the Series 7. I have an in-depth understanding of the regulatory landscape, industry trends, and the nuances of licensing exams, making me well-equipped to provide valuable insights into the changes implemented by Finra.
The restructuring, which took place late last year, involved the introduction of the Securities Industry Essential (SIE) exam, a pivotal component for those aspiring to become registered investment representatives. The motivation behind this restructuring was twofold. First, Finra aimed to eliminate redundancy in exam content by pulling out common material that covered basic industry knowledge from various qualification exams, consolidating it into the SIE. This means that candidates now only need to demonstrate their understanding of fundamental concepts once.
The second major shift was to make the industry more accessible to individuals not already working at a broker-dealer. While sponsorship by a firm is still required to register for the Series 7, the SIE is open to anyone over 18 years of age. This change allows prospective candidates to assess their capacity and interest in joining the industry before committing to the more advanced Series 7 exam.
Moreover, passing the SIE has become a valuable resume sweetener, even though it may not be a strict requirement for employment at broker-dealers. The impact of this change is still evolving, and it remains to be seen whether broker-dealer clients will increasingly consider the SIE as a prerequisite for employment.
Another notable aspect of the restructuring is the reduction in the number of questions. While some may prefer the previous system of one large exam, the new Series 7 exam is split into the SIE and a revised Series 7, totaling 200 questions—50 fewer than the previous Series 7 exam. Despite the reduction, the passing score remains at 72%. The exam's difficulty has increased due to the elimination of simpler questions that now form part of the SIE.
Despite these changes, the registration fee for the combined SIE and Series 7 exams remains the same as the old Series 7, with the SIE costing $60 and the revised Series 7 costing $245.
For those who want to maintain the tradition of taking both exams on the same day, it's still possible, although this depends on testing center schedules. The exam lengths have also been adjusted, with the SIE lasting 105 minutes and the new Series 7 lasting 225 minutes, shaving off 30 minutes from the previous six-hour exam.
In conclusion, the recent restructuring by Finra introduces notable changes to the process of obtaining the Series 7 qualification. These changes aim to streamline the examination process, make the industry more accessible, and potentially enhance the profiles of candidates in the competitive landscape of trading and investment roles.
