What Is a Series 65 Exam and Who Needs To Take It?

The Series 65 exam, formally known as the Uniform Investment Adviser Law Examination, qualifies financial professionals. It evaluates an individual’s understanding of investment principles and laws. Its primary purpose is to ensure that those providing investment advice to the public possess the necessary knowledge and competency. Passing the Series 65 exam is a step toward offering financial guidance for a fee.

Roles Requiring the Series 65 Exam

Individuals who advise clients on investments and manage portfolios for a fee need to pass the Series 65 exam. This credential is required for becoming an Investment Adviser Representative (IAR). Most state securities regulators have established the Series 65 as the minimum qualification for IARs. An IAR acts in a fiduciary capacity, meaning they must prioritize their clients’ best interests when offering investment advice.

The Investment Advisers Act of 1940 is a federal law that regulates investment advisers, requiring firms or individuals compensated for advising on securities investments to register with the Securities and Exchange Commission (SEC) or state authorities. The Uniform Securities Act (USA) is a model legislation adopted by states that governs various aspects of the securities industry, including the registration of investment professionals. These laws collectively mandate that individuals providing investment advice for compensation meet specific qualification standards, such as passing the Series 65 exam.

Series 65 Exam Content Areas

The Series 65 exam covers a broad range of subject matter essential for providing investment advice. The examination is structured into four main content areas, each contributing a specific percentage to the overall score:

Economic Factors and Business Information (15%): Tests knowledge of economic cycles, financial reporting, and various types of risk, including concepts such as inflation and economic indicators.
Investment Vehicle Characteristics (25%): Assesses understanding of different investment types, including fixed income securities, equities, mutual funds, and annuities, along with their valuation factors.
Client Investment Recommendations and Strategies (30%): Focuses on developing investment strategies based on client profiles, financial goals, and risk tolerance. Topics include capital market theory, portfolio management, tax considerations, and aspects of retirement and estate planning.
Laws, Regulations, and Guidelines, including Prohibition on Unethical Business Practices (30%): Covers federal and state securities acts, rules for investment advisers and broker-dealers, ethical practices, and fiduciary obligations. It also addresses communications with clients, compensation structures, handling of client funds, and conflicts of interest.

Series 65 Exam Format and Scoring

The Series 65 exam is administered by the Financial Industry Regulatory Authority (FINRA) on behalf of the North American Securities Administrators Association (NASAA). It is a computer-based examination taken at qualified testing centers. The exam consists of 140 multiple-choice questions, with 130 scored.

Candidates are allotted 180 minutes, or three hours, to complete the entire exam. To pass, an individual must correctly answer at least 92 out of the 130 scored questions, which translates to a passing score of approximately 70.8%. Test takers receive their pass or fail results immediately. If a candidate does not pass, there are waiting periods for retaking the exam: 30 days after the first and second failed attempts, and 180 days after a third failed attempt.

Preparing for the Series 65 Exam

Many individuals dedicate between 50 to 70 hours to studying for the Series 65 exam. Various study methods and resources are available, including comprehensive study guides, online courses, and practice exams. These resources often include detailed manuals, question banks, and simulated exams to help candidates familiarize themselves with the content and format.

Creating a structured study schedule can help manage the breadth of material. Practice exams are particularly useful for identifying areas of weakness and improving test-taking strategies. Access to audio versions of study materials and flashcards can also support learning and retention of key concepts.

Post-Exam Registration and Compliance

After passing the Series 65 exam, individuals must complete specific steps to become a registered Investment Adviser Representative. The primary procedural action involves filing the Uniform Application for Securities Industry Registration or Transfer, commonly known as Form U4. This form is submitted through the Central Registration Depository (CRD) system, which is maintained by FINRA.

Form U4 requires disclosure of personal details, employment history, and any regulatory or disciplinary events. It is how an individual associates with a registered investment advisory firm and registers in the appropriate jurisdictions. State registration is also a necessary step, as individuals cannot provide investment advice until their registration is approved by the relevant state securities authority.

Beyond initial registration, IARs are subject to ongoing compliance requirements, including continuing education (CE). In many jurisdictions, IARs are required to complete 12 credits of CE annually to maintain their registration. These credits typically include a balance of topics such as ethics and professional responsibility, as well as products and practices. This continuing education ensures IARs remain knowledgeable about current regulatory requirements and best practices.