What to Know About the Series 7 Test and How It Works
Learn what the Series 7 exam entails, how it's structured, and the full process to become a qualified securities professional.
The Series 7 exam, formally known as the General Securities Representative Qualification Examination (GS), is a key assessment for individuals pursuing a career in the financial services industry. Administered by the Financial Industry Regulatory Authority (FINRA), this examination is a fundamental step for those intending to engage in the sale of various securities products. Passing the Series 7 demonstrates the proficiency and understanding required for entry-level registered representatives.
Purpose and Scope
The Series 7 exam qualifies individuals to solicit, purchase, and sell a broad array of securities products. This licensure is for financial professionals, such as stockbrokers and financial advisors, who engage in general securities business. It ensures they understand the products they handle and the regulatory environment.
A Series 7 license permits an individual to handle a wide range of financial instruments. These include corporate stocks and bonds, municipal securities, options, and investment company products like mutual funds, exchange-traded funds (ETFs), and unit investment trusts (UITs). It also covers direct participation programs (DPPs), variable annuities, and government securities. This enables professionals to advise clients on diverse investment strategies. It does not cover commodities or futures contracts.
Exam Content Areas
The Series 7 exam assesses knowledge across four main functional areas, as outlined by FINRA.
The first function, “Seeks Business for the Broker-Dealer from Customers and Potential Customers,” accounts for approximately 7% of the exam questions. This section covers identifying potential clients, making initial contact, and presenting investment opportunities. It also includes understanding communication methods and ethical considerations in client solicitation.
The second functional area, “Opens Accounts After Obtaining and Evaluating Customers’ Financial Profile and Investment Objectives,” comprises about 9% of the exam. This part focuses on gathering client information, assessing their financial situation, and determining suitable investment objectives. Candidates must understand different account types, such as cash, margin, and retirement accounts, along with associated rules and regulations for opening them. This also involves understanding customer identification programs and privacy regulations.
The third and most extensive section, “Provides Customers with Information About Investments, Makes Recommendations, Transfers Assets and Maintains Appropriate Records,” makes up approximately 73% of the exam. This area covers investment products, including their characteristics, risks, and taxation. It includes equities, debt instruments, options strategies, mutual funds, and annuities, requiring a deep understanding of how these products function and their suitability for different investors. This section also tests knowledge of market mechanics, order types, and the regulatory framework governing securities transactions and client communications.
The final functional area, “Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes and Confirms Transactions,” accounts for about 11% of the exam. This portion focuses on the execution of client orders, including trade confirmations, settlement procedures, and record-keeping requirements. It also covers customer complaints, anti-money laundering regulations, and other compliance aspects of processing transactions. Understanding the operational flow of a brokerage firm and the responsibilities of a registered representative in completing trades is essential for this section.
Exam Structure and Logistics
The Series 7 is a multiple-choice examination administered via computer. It consists of 125 scored questions, with an additional 10 unscored pretest items randomly distributed throughout the exam, making a total of 135 questions. Candidates are allotted 3 hours and 45 minutes to complete the exam. To pass, a candidate must achieve a minimum score of 72%.
Candidates are required to pass the Securities Industry Essentials (SIE) Exam, either before or in conjunction with the Series 7. The SIE is an introductory exam assessing fundamental knowledge of the securities industry, including basic product types, market structure, and regulatory agencies. This co-requisite ensures candidates have a foundational understanding before the more detailed content of the Series 7.
The exam is administered at designated testing centers. The fee for taking the Series 7 exam is $245.
Registration and Testing Process
Registering for the Series 7 exam begins with sponsorship. An individual must be sponsored by a FINRA member firm or an applicable self-regulatory organization to be eligible. The sponsoring firm initiates the registration process through FINRA’s Central Registration Depository (CRD) system.
Once sponsored, the candidate’s enrollment information is entered into the CRD system, making them eligible to schedule the exam. Scheduling is done through the testing vendor.
On the day of the exam, candidates should arrive at the testing center prior to their scheduled appointment. Valid, government-issued identification with a photograph and signature is required for verification. The name on the identification must match the name under which the candidate is registered.
Upon arrival, candidates will undergo a security check. Personal belongings, including phones, smartwatches, and study materials, are not permitted in the testing room and must be stored in provided lockers. Candidates are often given a dry-erase board and marker for scratch work during the exam.