The Series 7 exam is challenging, but it’s not impossible. It may actually be easier than you expect – as long as you dedicate time to learning the concepts.
Knowing which concepts to focus on is half the battle, which is why it’s important to enroll in a Series 7 exam prep course. But below, we’ll give you some insight into how to prepare for the FINRA Series 7 exam.
Who Needs the Series 7 Exam
Passing the Series 7 exam is a necessary step to become a general securities (GS) representative, investment advisor, or financial advisor. It qualifies you to sell more securities products than the Series 6, and it is one of the longest FINRA exams.
About the Exam
The Series 7 exam is also called the General Securities Representative Qualification Exam.
You’ll get 3 hours and 45 minutes to complete the exam, and it must be taken in-person. There are 135 total questions, but only 125 of these questions are scored. You have to answer 72% of these questions correctly to pass.
As of March 2024, the Series 7 exam costs $300 per attempt. There’s no point wasting your time or money, so let’s talk about how you can pass this exam the first time you take it.
What’s Covered on the Series 7 Exam
The Series 7 exam is broken down by the four job functions (detailed below) that a general securities representative will perform in their role. The questions are designed to test your ability to apply your knowledge of the tasks, rules, and regulations to real-world scenarios. The rules and regulations can include:
FINRA rules
SEC rules and regulations
MSRB rules
CBOE rules
Government acts
Internal Revenue Code
But these functions are not weighted equally. Topics that fall under Function 3 are arguably the most important to study because they comprise a whopping 91 questions on the exam – which is 73% of the entire exam! If you answered this entire section correctly, you’d pass.
Function | Description | Percentage of Exam Items | Number of Items |
1 | Seeks business for the broker-dealer from customers and potential customers | 7% | 9 |
2 | Opens accounts after obtaining and evaluating customers’ financial profile and investment objectives | 9% | 11 |
3 | Provides customers with information about investments, makes recommendations, transfers assets, and maintains appropriate records | 73% | 91 |
4 | Obtains and verifies customers’ purchase and sales instructions and agreements; processes, completes, and confirms transactions | 11% | 14 |
Total: | 100% | 125 items |
To pass the exam, you need to get at least 72% of the questions correct. Let’s dive into what each function covers.
Function 1
Function 1 is all about finding new business and communicating with customers. You’ll need to know how to:
Contact current and potential customers by various communication methods
Develop and distribute approved advertising material with required disclosures
Bring a new issue to market
Describe investment products and services to customers, including:
Investment company products and variable contracts
Options-related communications and options disclosure documents
Municipal securities
Research reports
Government securities
Collateralized mortgage obligations
Certificates of deposit
The 9 questions in this function may ask about the details of any of these topics and the dozens of rules and regulations that securities representatives must follow.
Function 2
Function 2 covers discussing account types and making suitable recommendations for consumers. This includes how to:
Describe account types with intention to solicit
Gather and revise customer information
Make reasonable efforts to obtain the customer’s investment profile
Report suspicious activity
Get permission to open customer accounts
There are 11 questions that cover these topics and the associated rules and regulations.
Function 3
Function 3 is on the information general securities representatives provide the customer, making recommendations, transferring assets, and maintaining appropriate records. This includes knowing how to:
Discuss investment strategies
Explain risks and rewards of securities products
Assess customers’ portfolios to determine if investments match financial goals
Recommend investments
Provide disclosures for investment products
Discuss the customer’s account information, how requests are processed, and what documents are retained
This function is dense. You’ll need an in-depth knowledge of these securities products – including all the types, characteristics, and associated rules and regulations:
Equity securities
Packaged products
Options
Debt securities
Corporate bonds
Municipal securities
Asset-backed securities
U.S. Treasury securities
U.S. government agency securities
Function 4
Function 4 tests on the process of the customer’s purchase, including how to:
Provide current quotes
Process and confirm transactions
Inform customers of delivery requirements and settlement procedures
Inform the appropriate supervisor
Assist in resolving discrepancies, disputes, errors, and complaints
Address margin issues
And, of course, you’ll need to understand the rules and regulations associated with each of the above actions.
The Series 7 Exam Content Outline
We’ve kept the list in this blog as light as possible, but it’s never a bad idea to read through FINRA’s Series 7 Content Outline to see the specifics. FINRA’s content outline breaks down each function into subtopics and provides a list of objectives for each subtopic and the associated rules and regulations. The exam may test on any of these topics, so it’s good practice to check this and study accordingly.
All of A.D. Banker’s course material and practice exams are structured using FINRA’s content outline.
How To Study For the Series 7 Exam
Okay, so now you know how much information is covered on the Series 7 exam; but how in the world are you supposed to tackle it? Well, there are a few strategies that we tell our students to follow.
Get enrolled in a Series 7 exam prep study course
Devote a few hours every day to studying
Read through your all of study material multiple times
Focus on learning the concepts
Structure your studying around the content outline. Here are the functions in order of importance:
Function 3 – 91 questions
Function 4 – 14 questions
Function 2 – 11 questions
Function 1 – 9 questions
Aim to score 80% on full-length practice exams, but do not expect the questions to be identical to those that show up on the FINRA exam
Ninety percent of our students who follow our plans pass their exams. So what are you waiting for? Get started on your Series 7 exam prep course today.
Series 7 Study Guide
Whether you’re fully employed or in a training program, develop a routine that works for you. FINRA suggests devoting 80-100 hours to studying before taking the exam. Studying can be compared to building a muscle – you’ll want to build the habit over time.
Here’s an example of how to use our courses to prepare for the exam and pass in 30 days:
How To Get Your Series 7 License
At minimum, you have to pass the Securities Industry Essentials (SIE) exam and the Series 7 exam to qualify for your Series 7 license. You may also have to pass the Series 63 exam or Series 66 exam (if also getting licensed as an investment advisor) to become registered in your state. Check out our Series 7 License Requirements page to see more.
Because the Series 7 exam builds on the SIE exam’s knowledge, we recommend you start with the SIE exam.
