Stockbroker, financial consultant, financial advisor, securities broker — these are all general terms used by individuals and brokerage firms alike, to refer to a regulatory term of “registered representative” — or shortened to “registered rep”. A registered rep is an agent of a broker/dealer who is paid commissions on the trades placed through the firm on behalf of their customer.
A stockbroker who wants to offer general (or a “full line” of) securities would sit for the Series 7 exam. The series 7 exam was created by the New York Stock Exchange and is administered by the Financial Industry Regulatory Authority (”FINRA”). Most Series 7 reps are referred to as a “stockbroker”.
Registered representatives, however, may want to “limit” their registration and offer only a specific group of securities. As an example, “mutual funds”, or investment company products representatives, sit for the Series 6 exam — and only offer comments on mutual funds; Series 22 representatives only offer direct participation programs, and Series 62 representatives only offer corporate securities. Some people sit for the Series 6 or Series 62 exam to get into production faster, and then take the Series 7 later on.
Stockbrokers often offer commodity futures, commodity limited partnerships or “managed futures”. A separate registration is required, however, and that is having passed the Series 3 exam and being registered with the National Futures Association (”NFA”) as an “Associated Person”. The securities firm that the stockbroker is registered with must also be registered with the NFA / CFTC in order to offer futures products.
You need to interview with the kinds of firms that you feel will provide you with the best opportunity to be successful and offer the kinds of securities you would like to work with. If you’re looking to lower your trading commissions or just to trade your own account, most firms will not be interested in hiring you.
Firms are looking for individuals who can create commissions for the firm. If you’re well contacted or are “sales oriented” and can generate new leads and accounts, firms like Merrill Lynch, Smith Barney, Morgan Stanley, etc., will be a good fit — since your income will depend upon the commissions you generate.
If you want to be “service oriented” and receive a salary, you will want to interview with firms like Fidelity Funds or Charles Schwab. In either case, arrange directly for an interview with the branch/location where you would like to work; generally, brokerage firms will not pay a relocation allowance for a new representative. If the firm wants you — they will sponsor you for the Series 7 exam. Most FINRA exams require a sponsor in order to sit for the test.
Some think having passed the Series 7 exam prior to interviewing makes the candidate more likely to get a job as a stockbroker. It might — if two candidates are interviewing and are identical in all skills except one has passed the Series 7 and one hasn’t. What the firms are really looking for are the right skills.
When you’re new to the securities business, though, you want to learn as much as you can before interviewing. One of those ways, if your situation allows, is to pass any exam that you’ll probably need in
production before your interview — if your situation allows. You can sit for the Series 3 Commodity Futures Exam, the Series 63 Uniform State Laws Exam, and the Series 65 Uniform Registered Investment Adviser Exam without a sponsor. This also saves the broker/ dealer some money and (some think) shows the candidate is motivated.
The current exam fee for the Series 7 exam is $250.00, the Series 3 is $95.00, the Series 65 is $120.00, and the Series 63 is $82.00. You have two years from the date you pass the exam to complete your registration - otherwise you have to sit for the exam again. What this means is that if you pass an exam and then don’t go to work for the firm for some reason, you have two years from the date you passed the test to find another firm and register (with FINRA).
Remember, passing an exam is only one step in the registration process. You must be complete the registration process before you attempt any type of solicitation.
There are no educational or citizenship requirements to sit for the Series 7 exam; there is an age requirement where you must be of “legal age” and this is established by each state — generally being 18 years. Keep in mind, the brokerage firm that hires you may have more restrictive requirements (for example a college degree and 21 years of age).
After having passed the necessary exams you must complete your registration by having a background check, fingerprint card, register with the FINRA/NFA, and register with the Securities Commission of each state that you will do business in. In securities registration there are two levels of registration: federal and state. On the federal level you take the Series 6, 7, 62, etc., and then on the state level the State Securities Administrator will generally require you to have passed the Series 63 exam.
The application form for the FINRA exams that the Broker/ Dealer uses is called the U-4 form. If the firm you are going to work for is not an FINRA-member firm (for example a Registered Investment Adviser) a form U-10 is usually used.
FINRA administers exams for its own requirements, the National Futures Association (NFA), and the North American Securities Administrators Association (NASAA) through test sites run by Prometric Test Centers and Pearson VUE Testing Centers. Test Centers are located in many cities throughout the U.S. NFA exams include the Series 3, 30, 31, and 32. NASAA exams include the Series 63, 65, and 66.