The securities industry is complex and filled with enough jargon, terminology, rules, regulations and licenses to make your head spin. The different types of securities licenses, including the Series 6 and Series 7 licenses, are in place for your protection. According to the Securities and Exchange Commission, you should know what kind of license your investments professional has before you start doing business with him.
Series 7 License
If you want to trade securities, such as stocks, bonds or equity options, you need to work with an investment pro who holds a Series 7 license. The Series 7 license is the national license that is required for everyone who works as a registered representative. A broker who holds a Series 7 license had to complete rigorous training and pass the six-hour General Securities Representative Examination, which covers everything from securities laws and regulations to professional ethics. Series 7 licensed brokers can help you with most types of securities, such as stocks, bonds, mutual funds, unit investment trusts, limited partnerships and equity options, but not life insurance, real estate or commodities futures.
Series 6 License
If all you want to buy are some shares of a mutual fund, you might not need a Series 7-licensed stockbroker. You just need a financial professional who holds a limited-investment Series 6 securities license. Mutual fund representatives, life insurance agents and other financial advisers might opt for the Series 6 license because it allows them to sell certain types of packaged investment products, such as variable annuities and mutual funds, that are appropriate for their clients.
Whether your financial pro holds a Series 6 license or a Series 7 license, he'll also need a Series 63 Uniform Securities Agent license for the state where he works. The Series 6 and 7 licenses are national licenses, while the Series 63 is a state license. Even if your financial adviser doesn't actually sell any financial products, if he charges you a fee for his services, he needs to hold a Series 65 license.
While the U.S. Securities and Exchange Commission regulates the securities industry, and states have their own securities laws and regulations, there are still plenty of unscrupulous individuals who are willing to work outside the rules to take your money. If you do business with such an individual, and she goes out of business, your chances of recovering your money are slim. The Financial Industry Regulatory Authority, the North American Securities Administrators Association and the SEC's Central Registration Depository can give you plenty of information on individual brokers and brokerage firms to help you make an informed decision about the investment professionals you do business with.
- Securities and Exchange Commission: Series 7 Examination
- Financial Industry Regulatory Authority: FINRA Registration and Examination Requirements
- Financial Industry Regulatory Authority: General Securities Representative Qualification Examination
- Financial Industry Regulatory Authority: Investment Company Products/Variable Contracts Limited Representative Qualifications Examination
Mike Parker is a full-time writer, publisher and independent businessman. His background includes a career as an investments broker with such NYSE member firms as Edward Jones & Company, AG Edwards & Sons and Dean Witter. He helped launch DiscoverCard as one of the company's first merchant sales reps.