How to Prepare for the Series 65 Exam
How to Prepare for the Series 65 Exam
Samuel Feldman
Founder and Editor in Chief, The Fintech Corner | Finance Content Writer at Arrowroot Family Office & AFO|Wealth Management Forward. Passionate about technological innovation in Finance, Accounting, and Wealth Management.
The Series 65 exam, designed by the North American Securities Administrators Association (NASAA) and administered by the Financial Industry Regulatory Authority (FINRA), is an exam that investment advisers and all other financial professionals with the ability to advise clients on the area of investing and other general financial concepts take in the US. This exam covers important information regarding financial regulations, laws, analysis, economics, ethics, and investment vehicles and strategies. This information is essential for all financial advisors and investment advising professionals to understand.
The Series 65 exam was created to test financial professionals on their individual financial investment knowledge and their ability to advise a client with specialized investment strategies. In order to do well on this test, it is important to understand its components and test-taking strategies to pass the exam. With the successful completion of the Series 65 exam, candidates are qualified to charge fees for investment and securities advice, sell full-fledged advisory services, and advise clients as investment adviser representatives (IARs) in their home state or the state that they took the exam in.
At the most basic level, the Series 65 exam assists individuals in developing investment plans and strategies as well as understanding their client’s overall financial situation to know how best to act and plan around it. With the overall goal of an investment adviser being to improve a client’s portfolio or financial position for retirement, financial professionals stand to gain an extra applied understanding and knowledge from the Series 65 exam. However, Series 65 can be difficult to pass. It is important for exam hopefuls to understand what they are getting themselves into and how to best study for the exam.
What to expect from the Series 65 exam
Passing the Series 65 exam, formally known as the Uniform Investment Advisor Law Exam, is the only designated requirement in order to become an IAR. With no other prerequisites to the position, candidates are not required to be sponsored by a FINRA member investment firm in order to sit for the exam. However, a U10 form for non-firm registered test takers or a U4 form for brokers and other firm-registered professionals is required to be filled out alongside the $187 exam fee.
This Series 65 exam contains 130 questions covering various investment concepts deemed important for an investment adviser representative. Candidates have around 180 minutes to complete the exam, with 94 correctly answered questions of the 130 total questions needed to pass the exam, with a score of 72.3%. The test is to be taken at a qualified, state-registered testing center with a basic four-function electronic calculator with no graphing capabilities. Dry-erase boards and markers are provided to testing candidates; however, no reference material of any kind is permitted into the extra room, with severe cheating penalties administered if caught attempting to cheat on the exam.
Once registered for the exam, one has 120 days to take the exam before the need to register again. If one fails the exam during the provided exam window, one is allowed to retake the exam after a 30-day waiting period. However, after failing three times, one is required to wait another 180 days before registering again for the exam. There is no limit to the number of exams a candidate can take in one’s lifetime.
Exam topic breakdown
With complex tests such as Series 65 to study for, it is essential to break down each topic of the exam to understand the structure of the test. Given the number of hours required of an individual to study and master the material provided for the exam, it is essential to create a strategic study plan that one can follow and model off of when studying for the exam. Spending too much time or too little time on any given subject can have a detrimental effect on one’s preparation level for the exam. Therefore, the exam is structured as follows:
Economic Factors and Business Information (15%, 20 questions): These topics include monetary and fiscal policy, financial reporting, quantitative methods, economic indicators, and basic risk concepts.
Investment Vehicle Characteristics (25%, 32 questions): These topics include cash and cash equivalents, methods of fixed-income valuation, fixed-income securities, equities and methods used in equity valuation, derivative securities, pooled investments, and insurance-based products.
Client Investment Recommendations and Strategies (30%, 39 questions): These topics include individuals, client profiles; capital market theory, business entities, and trusts portfolio management styles, strategies, and techniques; retirement planning tax considerations, ERISA issues, special types of accounts, exchanges, and markets, trading securities, and performance measurement.
Laws, Regulations, and Guidelines, including Prohibition on Unethical Business Practices (30%, 39 questions): These topics include state and federal securities acts, investment adviser representatives, broker-dealers, and agents, ethical practices, rules and regulations for investment advisers, and fiduciary obligations, including communications with clients, client funds, compensation, and conflicts of interest.
How to Prepare for the Series 65 exam
1. Do not focus on memorizing concepts
Many securities exams or insurance licensing exams focus on short and long-term recollection of facts and terminology. Learning how to apply investment and securities information to a client’s personal financial situation is important for the exam. Focus on not just knowing the information needed for the exam but understanding it fully. Practice recalling and applying information from the exam to real-life to financial scenarios. One can do this by practicing hundreds of industry-related practice problems and quiz questions that have the same difficulty level as the test in order to prepare well for the exam and feel ready on test day.
2. Do not cram for the Series 65 Exam
Some candidates study for years to learn the material required to take the Series 65 exam. Other students can take up to three to five months of intensive studying before passing the exam. Each individual requires a different amount of time to study for the exam, yet on test day, all candidates answer the same set of exam questions. Spending thousands of hours studying exam material over a long period of time will give the candidate the best chance of passing the exam. If deciding to cram for the test, reflect on the amount of work that you have already completed in your preparation for the exam and how much work experience you have in the finance or investment industry. If you have other certifications or designations under your belt from the past five years, then possibly less preparation time would be required for you to pass the exam. However, this is a substantial risk to take, considering the difficulty of the exam.
3. Read all test questions carefully
It is important to take time to fully read each test question in its entirety. At times in the exam, certain verbiage, vocabulary, or terms may confuse the test taker. While reading carefully and taking notes on the questions does take extra precious time from the exam, in the long run of the test, it will help the candidate’s overall success for the test as they will get questions correct and will not make simple comprehension mistakes. One way a test taker can accomplish this is by writing down extra notes and summarizations while reading a test question. This will allow the candidate to understand the question not just from reading the problem but from writing it out as well. Another strategy can be to eliminate wrong answers from the answer pool. This will allow you to focus on the most likely answers and avoid confusing yourself or wasting time on answer choices that cannot be right.
How to Succeed on Series 65 Test Day
When it comes to multiple-choice testing, applying certain testing strategies to questions asked on the exam can give you an edge over other test-takers. Below are some tips for the day of the exam.
- Answer every question on the exam. Every question on the exam should be answered, even if educated guesswork is involved in the test-taking process. An individual has a 25% chance of guessing an answer correctly instead of leaving a full question unanswered, which gives the candidate a 0% chance of getting that question answered correctly. Candidates are never penalized for guessing a question on the exam. This means that every test-taking candidate should respond to every question on the exam, even if one were required to make an educated guess. If an individual is able to safely eliminate even a single possible answer choice from the answer pool, the chances of selecting a correct answer increase significantly.
- Stick to your gut when answering questions. The first response chosen during a multiple-choice question on any exam is typically the most accurate or correct answer choice. If a candidate has time at the end of the test, it is vital to look back at your most unsure answers to see if there is something that was missed or in need of a change. If one is unsure of an answer to a test question, it is best to put down an initial guess as the answer to the question and move on to the next question in order to save time on the exam. Instead of wasting precious seconds on difficult questions, it is often better to answer them quickly and move on to easier questions. This way, one is able to come back to the more challenging questions at the end of the exam while answering the more straightforward questions correctly in the beginning.
- Take care of yourself the night before the exam. For a student to succeed on the Series 65 exam, it is important for them to have a good night’s rest the night before, wear comfortable clothing, and eat a healthy breakfast. Each qualified testing center has a different environment; however, many are known to have intense bright lights and uncomfortable hard chairs. With the hard work and preparation one does to study for the Series 65 exam, candidates should feel confident in their ability to pass the exam, even with the uncomfortable circumstantial environment around them on test day.
Read more: How to Become a Financial Planner
FAQs
Just like any Series Exam, the Series 65 exam is a hard financial test with an approximate pass rate of 65-70% pass rate.
Most candidates report having to use a calculator between five to eight times on their exam. The financial math was not complicated, with candidates finding the biggest challenge on the exam was remembering which numbers and formulas to use in the calculations.
After failing the Series 65 exam a third time, a candidate must wait up to 180 additional days before scheduling the Series 65 examination again.
As of Nov 30, 2022, the average annual pay for a Series 65 holder in the United States was reported at $73,232 a year, which works out to $35.21 an hour, $1,408/week, or $6,102/month.
Test takers must take the Series 65 exam at a qualified testing center, which provides all candidates with a basic four-function electronic calculator. This is the only calculator that may be permitted on the exam.
The North American Securities Administrators Association (NASAA) states that the Series 63, Series 65, and Series 66 exams can only be made available online for candidates who require special testing accommodations.
The Series 65 license does not grant individuals the right to sell securities or investments; in order to do so, a Series 6 or Series 7 FINRA license would be required to market and sell securities. However, on its most basic level, a Series 65 allows a financial professional to give clients registered investment advice and analysis. Candidates who received their Series 65 license are also licensed and qualified as Investment Advisor Representatives (IAR) and are financial fiduciaries in most states.
To pass the Series 65 exam, candidates must achieve a minimum score of 72.3%, which means answering 94 of 130 multiple-choice questions correctly in 180 minutes. In order to increase one’s chances of passing the exam on the first attempt, an Series 65 exam prep course can help make it possible for the candidate.
- NASAA. “Series 65 Exam Outline.”. https://www.nasaa.org/exams/exam-content-outlines/series-65-exam-content-outline/
- NASAA. “Series 65 Test Specifications.”. Accessible From: https://www.nasaa.org/wp-content/uploads/2016/02/Series-65-Test-Specs.pdf
- Pass Perfect. “Series 65 Exam FAQ & Information.”. Accessible From: https://www.passperfect.com/series-65/series-65-exam-overview
- North American Securities Administrators Association. “Exams.”. Accessible From: https://www.nasaa.org/exams/
- Society of Actuaries.org. “The Impact of Investment Advice Regulations on Personal Actuaries,” Pages 4-6. Accessible From: https://www.soa.org/globalassets/assets/files/research/projects/state-sec-exam-exemptions-rev-06-27-2005-final-with-changes-from-jen.pdf
- Investment Adviser Association.org. “Chartered Investment Counselor (CIC) Designation.”. Accessible From: https://www.investmentadviser.org/resources/professional-designations/cic-designation
- Certified Financial Planner Board of Standards, Inc.”The Certification Process.”. Accessible From: https://www.cfp.net/get-certified/certification-process
- FINRA.org. “Qualification Exam Waivers and Exemptions.”. Accessible From: https://www.finra.org/registration-exams-ce/qualification-exams/exam-waivers-and-exemptions
- North American Securities Administrators Association. org. “Exam FAQs.”. Accessible From: https://www.nasaa.org/exams/exam-faqs/
- North American Securities Administrators Association.org. “Series 65 Test Specifications.”. Accessible From: https://www.nasaa.org/wp-content/uploads/2016/02/Series-65-Test-Specs.pdf
- North American Securities Administrators Association.org. “Series 65 Study Guide.”. Accessible From: https://www.nasaa.org/exams/study-guides/series-65-study-guide/
Samuel Feldman
Founder and Editor in Chief, The Fintech Corner | Finance Content Writer at Arrowroot Family Office & AFO|Wealth Management Forward. Passionate about technological innovation in Finance, Accounting, and Wealth Management.
