The Uniform Securities Agent State Law Exam, also known as Series 63, is a financial industry licensing exam administered by the Financial Industry Regulatory Authority (FINRA). This exam is designed to test the knowledge of a candidate’s understanding of state securities regulations and laws. This exam is often a requirement for individuals who wish to …
The Uniform Securities Agent State Law Exam, also known as Series 63, is a financial industry licensing exam administered by the Financial Industry Regulatory Authority (FINRA). This exam is designed to test the knowledge of a candidate’s understanding of state securities regulations and laws.
This exam is often a requirement for individuals who wish to register as securities agents within their state. Passing the Series 63 exam demonstrates your comprehension of state-specific laws and ethical practices related to securities transactions. Whether you are entering the financial industry or expanding your role in it, obtaining the Series 63 license is essential to complying with state regulations and ensuring you can legally engage in securities transactions.
In this post, we will be providing an overview of the Series 63 exam, including what to expect during the exam, how Series 63 differs from Series 65 and 66, and what to do before and after taking the exam.
The exam was created by the North American Securities Administrators Association (NASAA) and is administered by FINRA. NASAA is an international organization that deals with investor protection, while FINRA is a government non-profit organization that deals in the oversight of broker-dealers in the US.
The Series 63 exam is for individuals aiming to operate in the securities industry within a state, enabling them to engage in the sale of investment products like mutual funds, unit investment trusts, and variable annuities. It centers on the ethical and fiduciary responsibilities inherent in the role of an investment professional. This emphasis is critical to guaranteeing a steadfast commitment to prioritizing the client’s best interests at all times. The exam delves into the fundamentals of state securities regulations. Individual states maintain their distinct securities regulations, commonly known as “blue-sky laws”, established to oversee the sale of securities.
Currently, as of February 2024, according to the FINRA website, all states except for Colorado, District of Columbia, Florida, Louisiana, Maryland, and Puerto Rico are required to pass or receive credit for the Series 63 exam.
The Series 63 exam is typically taken by FINRA SIE and Series 6 or Series 7 license holders that are looking to expand their client service offerings to include investment advice and transactions. They do so for career advancement, increased earning potential, and expanding the services they can offer their clients.
By passing the SIE exam, the Series 6 or 7, and the Series 63, you will be eligible for state-level agent registration, which is a prerequisite for advising and executing securities transactions within specific states. This gives you the ability to earn commission on executed trades for clients, thereby enhancing your potential earnings.
For those who have passed the Series 65 exam and hold registration for an Investment Adviser Representative, acquiring the Series 63 allows the provision of both fee-based and transaction-based services to their clients. This increases the spectrum of investment products and strategies that can be recommended by the advisor.
Lastly, this exam enhances professional credibility. After successfully completing all the exams, individuals can position themselves as credible investment adviser representatives.
After obtaining the Series 63 license, the individuals can operate as securities agents or registered representatives at state level. They can engage in the sales of securities, like stocks, bonds, mutual funds, and other investment products, within a specific state. They’ll be able to offer investment advice to clients within the scope of state regulations. Series 63 license holders typically work for broker-dealers or investment advisory firms.
However, the Series 63 license alone does not allow you to perform a licensed role. You will have to pass other examinations to be a registered agent. Those other exams are typically the FINRA Securities Industry Essentials (SIE) Exam and Series 6 or 7.
If you decide to obtain your FINRA SIE, Series 6, and Series 63, this will enable you facilitate transactions involving investment companies and variable annuity products. Typically, individuals making this choice are those that works on the sales side of an insurance broker that does not handle wealth management.
If you opt to acquire the FINRA SIE, Series 7, and Series 63, this grants you the ability to execute transactions for nearly all types of securities products. This licensing trajectory is usually done by individuals engaged in sales roles within a wealth management advisory firm, particularly those handling transactions exclusively for in-state clients.
Exam | Series 63 | Series 65 | Series 66 |
|---|---|---|---|
Official name | Securities Agent State Law Exam | Investment Adviser Law Exam | Combined State Law Exam |
Pre-requisite | None | None | Series 7 (co-requisite) |
Time | 75 minutes | 180 minutes | 150 minutes |
Questions | 60 | 130 | 100 |
Passing Score | 43/60 (72%) | 92/130 (70%) | 73/100 (73%) |
Cost | $147 | $187 | $177 |
Source: NASAA.org | |||
The Series 63 exam is a prerequisite for individuals wishing to sell securities or provide investment advice within a specific state. This 75-minute exam comprises 60 multiple-choice questions covering various topics such as regulations for investment advisers and agents of broker-dealers, communication with customers, ethical practices, and administrative provisions. A passing score is achieved by scoring a minimum of 43 out of 60 questions, a 72% passing score.
Moving onto the Series 65 exam, this is for individuals offering fee-based investment advice to clients. This 180-minute test includes 130 multiple-choice questions, covering areas from basic economic concepts, financial reporting, client investment recommendations, and laws regulating unethical practice. The passing score is a minimum of 70%.
The Series 66 exam combines elements of Series 63 and Series 65 and is for both security agent and investment adviser in a state. It is a 150 minute exam with 100 multiple-choice questions. A passing score is at least 73 questions correct for a 73% score. The Series 66 is commonly referred to as a merger of the Series 63 and 65 exams.
Career paths associated with these exams vary. The Series 63 allows individuals to facilitate transactions of investment products. The Series 65 stands alone, allowing people to act as investment adviser representatives without being a registered representative, while the Series 66 combines aspects of Series 63 and 65, making it a gateway for dual registration as both insurance or securities agent and an investment adviser representative.
The Series 63 exam consists of 60 multiple-choice scored questions and 5 unscored questions. The unscored questions serve the purpose of pre-testing, aiming to validate and establish the weighting of questions for future scoring in NASAA exams. Applicants will not be informed which questions are scored and which are unscored. Candidates have 75 minutes to complete the exam and must correctly answer 43 out of the 60 scored questions to pass the exam. The exam is comprised of the following topics:
Subject Matter | Weight | # of Questions |
|---|---|---|
Regulation of Investment Advisers | 5% | 3 |
Regulation of Investment Adviser Representatives | 5% | 3 |
Regulations of Broker-Dealers | 12% | 7 |
Regulations of Agents of Broker-Dealers | 13% | 8 |
Regulations of Securities and Issuers | 9% | 5 |
Remedies and Administrative Provisions | 11% | 7 |
Communication with Customers and Prospects | 20% | 12 |
Ethical Practices and Obligations | 25% | 15 |
Total | 100% | 60* |
*As previously mentioned, there are 5 unscored questions included in the Series 63 exam. These questions can be from any one of the subjects.
Three questions regarding general aspects of investment adviser regulation. May include state law investment adviser registration requirements, federal registration requirements, and dividing line between state and federal regulation of investment advisers. May examine several NASAA model rules.
Three questions concerning the general issues of investment adviser regulation. May include state law prerequisites for registration of investment advisers, federal registration stipulations, and NASAA Registration Requirements for Investment Adviser Representatives Model Rule.
Seven questions will address the general regulatory requirements impacting broker-dealers. May access federal or state broker-dealer registration criteria and Form BD filing prerequisites. May also cover broker-dealer supervision standards.
Eight questions to cover the definition, requirements, and activities of broker-dealer agents. May include registration requirements and Form U4 filing requirements. May assess knowledge of FINRA regulations pertaining to agent accounts at other brokerage firms and compensation to unregistered individuals.
Five questions regarding issuers and securities offerings. May assess fundamental principles of securities registration and exemption, the process of securities offerings, and criteria for securities underwriters. May inquiry about securities regulation and notice filing under state law. May examine legal standards to determine if financial instrument qualifies as security under the Howey test.
Seven questions testing the available public and private remedies for addressing violations of federal or state securities laws. May assess the extent of insurance coverage provided by the SIPC and administrative powers vested in state securities administration. May ask bout the breadth of antifraud provisions, the remedies available to state securities administrators for overseeing securities professionals and securities offerings, the investigative authority of state securities administrations, their capacity to issue orders, and potential civil and criminal repercussions for securities violations.
Twelve questions to cover regulatory obligations concerning operations, records, and communication with customers in broker-dealer activities. May test knowledge of SEC and FINRA rules pertaining to broker-dealer books and records and customer communications. May ask about options, like option valuation, and management of margin accounts by broker-dealers.
Fifteen questions to cover broker-dealer business conduct standards as outlined in both state and federal regulations. May delve into different forms of fraudulent broker-dealer practices, like churning, front-running, misrepresentation, unauthorized trading, insider trading, market manipulation, and spoofing or layering. Federal conduct standards that may be tested encompass FINRA conduct rules, SEC Regulation Best Interest, and soft dollar standards.
Since January 1, 2021, the enrollment fee costs $147. The fee can change depending on FINRA, so please check their website to confirm.
The Series 63 has a national pass rate of approximately 80-85%. This is relatively high compared to the national pass rates of the FINRA Series 7 exam (71%), NASAA Series 65 exam (65-70%), or NASAA Series 66 exam (65-70%).
The Series 63 is considered medium difficulty in the FINRA and NASAA licensing exam series, comparable to the FINRA Series 6 but a little easier than the FINRA Series 7 or NASAA Series 65 and 66 exams. That said, the Series 63 can be challenging due to several factors.
The main challenge is the short amount of time you have to complete the questions. You only have 75 minutes, meaning if you spend more than a minute and 15 seconds per question, you can fall behind quickly. This isn’t a lot of time (for reference, pause for 75 seconds right now using your timer on your phone), and you’ve got to maintain this pace for 75 minutes.
The exam demands a solid understanding of regulatory and legal aspects related to the securities industry, so candidates should not expect an easy time if they are not thoroughly prepared. Even experienced professionals will need test preparation materials in order to be able to pass the exam. The exam contains a lot of facts and figures that need to be memorized and aren’t typically learned about or brought up in day-to-day work in the securities industry.
Lastly, some candidates may find questions written in a way that requires careful interpretation, including those that use a double-negative structure. We’ve gotten reports of questions that are vague and unclear, making the first challenge of those questions figuring out what you’re actually supposed to do. Test takers must balance reading every question carefully with avoiding spending excessive time on any single question.
Preparing for the Series 63 exam should involve studying the relevant material and practicing with sample questions. The amount of time actually spent preparing for the exam depends on your familiarity with the material. Typically, candidates invest 30-40 hours studying, often spread over the course of 1-2 weeks. Practice tests that incorporate challenging questions can help you prepare for the tricky questions you will find on the actual exam. Practice exams usually include comprehensive answers and explanations, offering valuable insights into the content you can anticipate being evaluated on during your Series 63. Here is a list of options to help you decide how you wish to study for the Series 63:
Paper textbook: Learn at your own speed with complete self-direction, but there are no adaptive support, analytics, or interactivity. Textbook expenses can range from between $50 to $300, but most are on the lower end of this spectrum.
Online self-study course: Study at your own preferred pace with interactivity and access to analytics. Effective programs, like Achievable’s Series 63 prep course, will adjust to your strengths and weaknesses, encouraging you to stick to your study schedule. Most Series 63 online self-study courses are roughly between $60 and $150.
Online class: Enroll in online classes following a set schedule. This structure can help you stay on task and it is nice to have an instructor available to answer any of your questions. The downside is that class-based prep is much more expensive – most online Series 63 classes are in the range of $130 to $200.
In-person class: Enroll in in-person classes following a set schedule. While many of the benefits of online classes are also shared by in-person classes, there are some tradeoffs regarding convenience and flexibility. However, some individuals find the in-person setting more conductive to staying on track with their study schedule and seeking help with challenging topics compared to online classes. The tradeoff is that you will need to commute to the classroom, which is time consuming and requires that you’re in town for the duration of the program. The cost is similar to online classes or a bit higher.
Hiring a Series 63 tutor: Hiring a personal Series 63 tutor will give you the highest level of personalized support and targeted feedback on you questions. Good tutors will also tailor their approach to address your specific needs to help you get the most out of their tutoring sessions. However, please note that tutoring is by far the most expensive option, typically costing between $50 to $300 per hour.
Unlike many FINRA exams, you do not need to be sponsored to take the Series 63. This means that you can register for the test on your own without a FINRA-member firm sponsoring. Therefore, there are two ways to enroll for the exam:
Individuals can register on the FINRA Exam Enrollment page. They will have to create an account and fill out the application.
If you work for a firm that is associated with FINRA, the firm must file the Uniform Application for Securities Industry Registration or Transfer (U4) Form with the Central Registration Depository (CRD) on your behalf.
Once enrolled and the exam has been paid for, you will receive a notice from FINRA with 120-day window to enroll. The exam is administered by computer at a Prometric testing center. You can either schedule your exam on their site or by phone, 800-578-6273. No fee will be collected at the test center. Payments are made directly to FINRA.
Since April 1, 2022, FINRA no longer offers online testing, but they can accommodate the candidate for certain circumstances if needed. Accommodations will be considered if:
The candidate has underlying health conditions or are immunocompromised and at an increased risk for severe illness.
The candidate lives more than 150 miles from a test center.
You will have to fill out different forms for each request type.
On the day of the exam, please plan to arrive 30 minutes before the scheduled exam to allow yourself time for check-in. Bring a valid, government-issued ID that has your picture and signature, like a driver’s license, passport, or military ID. Make sure the name on the identification matches the name you enrolled under for the exam. No photocopies or electronic versions of the ID are allowed. Expired IDs are not accepted.
If you arrive more than 30 minutes after the scheduled time and no seat is available, you will not be allowed to sit for the exam. You or your firm will have to submit and pay for a new enrollment before rescheduling.
You will NOT be allowed to bring in any personal items into the exam, including but not limited to: electronic devices, cameras, phones, any communication or recording devices, watches, purses, wallets and jewelry. You will be provided a locker to store these before entering.
FINRA exams are closed-book. You will NOT be allowed to bring any study materials to the exam room. You will be monitored through video and audio recording. Cheating has serious consequences, including invalidating your exam results or being banned from retaking exams or joining a FINRA member firm.
During the exam, you will be provided materials like a basic calculator, erasable note boards, dry-erase markers, noise-cancelling headphones, and tissues. These materials are cleaned before each test.
You are only allowed to take breaks to use the restroom. You will not be able to leave the center or access your locker during this time. Please note that the timer for your exam will not stop during these breaks.
Shortly after completing the exam, you will receive your results on the computer screen. A printed copy of your results will also be provided.
If you pass, no additional scoring details will be provided and official registration with FINRA is typically confirmed within several business days. If you fail, additional details about your exam performance will be provided. This is to help you with your future study efforts, so you know which topics to target.
There is no limit to the number of times you are allowed to take the exam, but there will be a waiting period. You must wait a minimum of 30 days after the date of your failed exam. However, if you fail the exam three or more times, the waiting period is extended to 180 days from your last attempt.
If the firm you work for requested your exam enrollment, they must re-request for you through the CRD. Exam fees will be charged again before you receive a new 120-day enrollment period to schedule your exam. If you are a self-enrolled candidate, you must submit a new request and pay for the exam on FINRA to secure a valid enrollment.
