Series 65 Exam

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History

The Series 65 exam, also known as the Uniform Investment Adviser Law Examination, was created as a means to qualify individuals to operate as fee-based investment advisers. Each year numerous individuals seeking professional licensure take this exam. The need for such regulations dates back to the 1930s when government policymakers and the courts system decided that too many individuals were attempting to be financial advisers. As more Americans became victims of fraud, oversight and guidelines for the financial industry became necessary. Also, as the investment economy became more complicated the need for certification was viewed as essential. The test was created by the North American Securities Administrators Association (NASAA) and is administered by the Financial Industrial Regulatory (FINRA). [1] When the test was first introduced it focused mostly on ethical practices in the securities industry, the Uniform Securities Act, and state securities laws. However, in 2000 the exam was fundamentally changed and is now a general competency test dealing with ethics, retirement planning, portfolio management, investment strategies, and fiduciary obligations. [2]

Function

Series 65 Study Guide

The primary reason to take this exam is to earn legal certification to act as a paid investment adviser. Industry professionals who have seeking advancement are most likely to take the Series 65. If a person has not passed the Series 7 Exam, which grants qualifications as a General Securities Representative, then they must take the Series 65. An example of a potential test-taker would include financial advisers or a certified public account along with any other individuals involved in the financial services industry. Passage of the Series 65, and meeting other possible state requirements, allows a person to have legal standing to give investment advice for a paid fee. [3] There are no perquisites to sit for this test nor does an individual need sponsorship by an investment firm. This means that anyone who feels qualified to take the exam may do so. However, the vast majority of examinees will most likely have already graduated college with a degree in some aspect of business or finance. When completing the Form U10, which is the examination request form, individuals not employed or sponsored by an employer should write not applicable in the line marked sponsoring firm. Gaining a Series 65 license is viewed by many people as a way to make one more marketable with possible employers. [4]

Test Administration

Series 65 Flashcards

While the test is administered by the NASAA, in order to sit for the exam a person must first set up an online account at the FINRA website. Next, an interactive Form U10 must be filled out and make sure to indicate that it is for the Series 65 examination. Once an application has been received and possessed, candidates have 120 days to schedule a date at either a Sylvan Prometric Testing Center or Pearson Testing Center. Tests can be taken any day of the week except Sundays when testing sites are closed. There is an examination fee of $135 dollars that must be paid when you submit a Form U10. [5] This fee is nonrefundable. If you fail to set a testing date before the 120 days expires then your exam window will close and another examination fee will be due to reschedule. If a candidate fails the test then they must wait a minimum of 30 days before retesting. When a test-taker has failed the test 3 times they must wait 180 days before scheduling another exam. The Series 65 exam can be retaken as many times as necessary. Accommodations for individuals with disabilities are available and should be requested during the application process. [6]

Test Format

Sections of the Series 65 Test
Series 65 Test Subject Areas # of Questions Percentage
Economic Factors and Business Information 19 14%
Investment Vehicle Characteristics 31 24%
Client Investment Recommendations and Strategies 40 31%
Laws, Regulations, and Guidelines, including Prohibition on Unethical Business Practices 40 31%
Total 130 100%

Test Structure

The Series 65 Exam has 130 questions that deal with four major domains: Economic Factors and Business Information; Investment Vehicle Characteristics; Client Investment Recommendations and Strategies; Laws, Regulations, and Guidelines, including Prohibition on Unethical Business Practices. There are an additional ten pretest qustions mixed into the exam. These will not be counted into the candidate's final score. 180 minutes are allotted to answer all 140 questions.[7]

Test Environment

The exam is offered at Prometric Testing Centers. No cell phones or electronics of any kind are allowed in the testing area. There will be lockers provided for each candidate to store their personal belongings.[8]

Test Content

  • Sample Series 65 Test Questions:
  1. Which statistic is considered a leading indicator of economic activity?
    A. Average number of weekly claims for unemployment compensation
    B. Average duration of unemployment
    C. Level of industrial production
    D. Level of personal income
  2. Which type of retirement account can be used by self-employed individuals?
    A. Defined contribution plan
    B. 403(B) plan
    C. Keogh HR-10 plan
    D. 401(k) plan
  3. Which type of investment is always sold at a discount?
    A. Treasury Inflation Protection Securities
    B. U.S. Treasury bonds
    C. Municipal bonds
    D. Zero-Coupon bonds
  4. What type of rights, granted by a corporation, allow shareholders to purchase shares during a short period of time?
    A. Preemptive rights
    B. Subscription rights
    C. Voting rights
    D. Parity
  5. What is the SEC’s function with respect to the registration of securities and the enforcement of securities laws?
    A. Ensures that issuers provide full disclosure to the public
    B. Guarantees information provided by an issuer
    C. Approves new issues of securities
    D. None of the above
  6. Which is not an act of fraud as defined by the North American Securities Administrators Association?
    A. Market manipulation
    B. Making misleading statements of facts
    C. Actions meant to defraud another person
    D. Forecasting investment profits and returns

More free Series 65 practice test questions.

Scoring

The passing score for the Series 65 test is 72%. This calculates to answering correctly 94 out of 130 scored multiple choice questions. The exam must be completed within the allotted 180 minutes given. Since there is no penalty for incorrect responses test-takers should make educated guesses on difficult questions. [9] Scores are available immediately after the test and are also instantly recorded in the Central Registration Depository preserved by FINRA. Potential examinees should be aware that each year regulators and other industry officials create new questions and update the exam. These changes are often based on new laws and regulations. More substantial changes to the exam, such as modifications to the format, occur on a much less regular basis.

Answers to Sample Questions

1:A; 2:C; 3:D; 4:B; 5:A; 6:D;

References

  1. ^ Investopedia 22 April 2014
  2. ^ Forbes 22 April 2014
  3. ^ About 22 April 2014
  4. ^ Yahoo 22 April 2014
  5. ^ FINRA 22 April 2014
  6. ^ North American Securities Administrators Association 22 April 2014
  7. ^ Series 65 Exam Content 24 June 2014
  8. ^ Prometric Test Center 24 June 2014
  9. ^ Financial Planner World 22 April 2014