What Is the Series 65?
Administered by the Financial Industry Regulatory Authority (FINRA) and designed by the North American Securities Administrators Association (NASAA), the Series 65 is an exam and professional license for individuals who wish to serve as investment advisors.
Formally named the Uniform Investment Adviser Law Examination, the Series 65 covers regulations, ethics, laws and professional practice subjects such as portfolio management, retirement planning, and fiduciary responsibilities.
The Series 65 is significant in light of the changing financial services landscape with the growth of Registered Investment Advisor (RIA) firms. Different from the old business model of charging a commission for an investment transaction or the sale of an investment product, the RIA model is fee for service model and is seen as more equitable and in the client’s best interest. In short, the Series 65 enables an advisor to effectively sell their time and advice, though not financial products such as insurance or loaded funds that pay transaction-based commissions.
Once a candidate has passed the exam, they are allowed to act as an investment advisor in most states. However, unlike other exams for FINRA Series (such as Series 7), the Series 65 does not require sponsorship by a member firm in order to sit for the exam. The fee for the exam is $175 and it is administered electronically in testing centers by Pearson VUE or Prometric. The results are calculated and certified immediately.
Series 65 Exam Questions and Content
The Series 65 exam is a multiple choice format comprised of 130 questions. The candidate must complete the exam with 94 correct answers to pass with a score of 72.3%. The breakdown of the topics and questions is as follows:
- Economic factors and business information (20 questions) -- general market knowledge such as economic indicators, financial reporting, understanding risk, monetary and fiscal policy, and quantitative analysis.
- Investment Vehicle Characteristics (32 questions) -- cash/cash equivalents, fixed income and equity securities and methods of valuation, insurance products, derivatives and pooled investment products.
- Client Investment Recommendations and Strategies (39 questions) -- business entities, individual accounts and trusts, client profiles, tax considerations, capital market theory, portfolio management, retirement planning, ERISA rules and issues, performance measurement.
- Laws, regulations, and guidelines including prohibition of unethical business practices (39 questions -- federal and state securities acts, rules, regulations, and laws, laws regulating investment adviser representatives, fiduciary responsibility, and ethical practices and regulations regarding client communication, conflicts of interest, client funds and compensation.
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