What Can You Sell With a Series 6 License?
Understand the precise investment products you are authorized to sell with a Series 6 license, defining its scope and limitations.
The Financial Industry Regulatory Authority (FINRA) issues various licenses for individuals in the securities industry. One credential is the Series 6 license, formally known as the Investment Company and Variable Contracts Products Representative Qualification Examination. This license permits an individual to act as a registered representative, enabling them to solicit, purchase, and sell a specific, limited range of investment products. It serves as an entry point for professionals focusing on certain types of packaged investments. The Series 6 license provides authorization for those offering products that pool investor capital for specific objectives.
Securities Covered
Holding a Series 6 license authorizes the sale of several distinct types of investment products.
Mutual funds: These are redeemable securities representing an undivided interest in a diversified portfolio of investments. These open-end investment company shares are purchased from and redeemed back to the fund company, with no secondary market trading.
Unit investment trusts (UITs): Similar to mutual funds, UITs are redeemable securities that pool investor money. They typically hold a fixed portfolio of securities and are not actively managed.
Variable annuities: These contracts provide for investment growth with tax deferral, often used for retirement planning. These products involve a separate account where investments are held, and the annuitant bears the investment risk.
Variable life insurance policies: These combine a death benefit with an investment component. Premiums are allocated to a separate account, offering potential for cash value growth.
Municipal fund securities: This includes 529 college savings plans and local government investment pools (LGIPs).
Closed-end funds: These can be sold by Series 6 representatives only during their initial public offering (IPO), not in the secondary market.
Securities Not Covered
While the Series 6 license permits the sale of packaged investment products, it also has specific limitations regarding what a holder cannot sell.
Individual stocks: Series 6 license holders are not authorized to transact in individual stocks, whether common or preferred. This restriction means they cannot facilitate the buying or selling of shares in individual companies on public exchanges.
Corporate and municipal bonds: These debt instruments represent loans to corporations or government entities. Their sale requires broader licensing.
Options: These contracts give the holder the right, but not the obligation, to buy or sell an underlying asset at a specified price. They are prohibited for Series 6 licensees.
Direct participation programs (DPPs): These are investments in ventures that pass through tax benefits and losses directly to investors. This category is not covered by the Series 6 license.
Exchange-Traded Funds (ETFs): These are marketable securities that track an index, commodity, bond, or basket of assets. They cannot be sold by Series 6 holders.
Understanding the Scope of the License
The Series 6 license positions an individual as a limited representative within the financial industry. It is specifically designed for professionals whose primary activities revolve around investment company products and variable contracts. This license is often a starting point for those working with mutual funds, variable annuities, and certain insurance products, particularly within financial institutions, insurance companies, or broker-dealers that specialize in long-term investment planning rather than active trading.
The Series 6 is distinct from more comprehensive licenses, such as the FINRA Series 7 (General Securities Representative license). The Series 7 grants authorization to sell a significantly wider array of securities, encompassing almost all types of investment products, including individual stocks, bonds, and options. While the Series 6 is suitable for roles focused on packaged products, it does not enable general brokerage activities that involve a broad spectrum of individual securities. The scope of the Series 6 license reflects its purpose: to qualify professionals for a specific segment of the securities market without requiring the extensive knowledge base needed for broader securities transactions.