How to Pass the Securities Industry Essentials (SIE) Exam

The SIE exam is a critical first step in the path to becoming a financial advisor or insurance agent. This introductory exam tests your knowledge of securities and is required for anyone planning to work with securities.

Passing the SIE test comes down to understanding the test, taking advantage of SIE exam prep, and being ready and focused on test day. This article will give you all the tools you need to prepare for and pass your SIE Exam.



What is the SIE?

The Security Industry Essentials, or SIE, exam tests your understanding of the basic knowledge needed to work in the securities industry. It is required for all financial advisors and insurance agents who use securities-based products as part of a financial plan with clients.

A score of 70 is required to pass the SIE test and will satisfy the passing requirement for four years. The SIE exam costs $60 to take, which is paid at registration.

Successfully passing the SIE exam allows you to register for and take advanced licensing exams, such as the Series 6 and Series 63. These exams are required for financial professionals working in different capacities as financial advisors or insurance agents to become licensed. The type of license you need to get will depend on your role and your state’s requirements, but the most common to begin are the Series 6 and the Series 63.



What does the SIE Exam cover?

The SIE exam focuses on the basics, so advanced knowledge of securities is not expected. To pass the SIE exam, you should be familiar with what securities are, how the market functions, and what federal regulations are in place to protect consumers.


Who Works in the Securities Industry

You should start by knowing the role of the major participants in the securities market. These include the Securities and Exchange Commission (SEC), Self-regulatory Organizations (SRO), the Department of the Treasury, Internal Revenue Service (IRS), the Federal Reserve, Securities Investor Protection Corporation (SIPC), and the Federal Deposit Insurance Corporation (FDIC).

The SIE exam focuses on federal agencies and regulations, but it is also a good idea to be familiar with the function of state regulatory agencies, such as the North American Securities Administrators Association (NASAA).

As a potential participant in the securities market, you will need to know what kind of jobs are available working with securities and what each of them do. As a prospective broker, advisor, trader, agent, or other financial professional working with investors, you should know what type of work each of these positions does.


What is the Securities Market

You should know the basics of the financial markets, including what the primary, secondary, third, and fourth markets are and how they work together. You will also need to understand what major factors impact the stability of the financial market and how businesses operate within it.


What is sold in the Securities Market

Passing the SIE exam shows that you are able to enter a career as a financial professional selling securities, so you will need to know what kinds of products you are able to offer and how they work. This includes when you can sell them, to whom you can sell them, and the documentation you will need to provide throughout the process.

These offerings could include public and private securities, initial public offerings (IPOs), and methods of distribution. You will also need to know what documents are required with each and SEC regulations that provide guidance for professionals and investors as they sell and buy securities.

Regulations of the securities market tested on the SIE Exam

  • The Securities Act of 1933
  • The Securities Exchange Act of 1934
  • The Investment Company Act of 1940
  • The Investment Adviser Act of 1940
  • The Securities Investor Protection Act of 1970

Other laws and guidelines also apply, but these five major regulations from the SEC helped establish the basic guidelines that are still applicable today.

In addition to SEC guidelines, financial professionals are required to have knowledge of applicable rules from FINRA and the Municipal Securities Rulemaking Board (MSRB).



SIE Exam Prep

The SIE exam is the first required exam for those working toward a career in the securities industry. To register for the SIE exam, you do not need to have prior professional experience or be associated with a firm, so you may not have first-hand knowledge of securities.

While the material on this exam is basic in the securities world, it is definitely not common knowledge information. We recommend that you study intently for at least one to two weeks before attempting the test.

Recommended Course

For SIE exam prep, study guides and practice materials, StateRequirement recommends:

Test preparation for the SIE exam can make sure that your time and money are not wasted. Following helpful test prep tips will also prepare you to pass the SIE exam.

Tip:

Helpful tools for SIE exam preparation include study guides, flashcards, practice exams, and courses.


SIE Study Guide

The testable content on the SIE exam is not a secret. and FINRA offers a test outline to help test-takers prepare. This SIE study guide goes over the basic knowledge needed and the specific regulations that you should know to pass the SIE exam. The detailed content outline is available on FINRA’s website and explains how the exam is structured, administered, and what to study.

The test itself consists of 75 questions about securities and is broken down into four sections.

  • Knowledge of Capital Markets
  • Understanding Products and Their Risks (equity securities, treasury securities, direct participation program, real estate investment trusts, and others)
  • Understanding Trading, Customer Accounts, and Their Risks
  • Overview of the Regulatory Framework

Though they don’t share the exact questions that you will see on the exam, the subjects and themes shared in the outline will give you a leg up in understanding what you will see on the test.


Take an SIE Course

Taking an SIE exam prep course is how most people choose to prepare for the test. These courses are generally taken online with an at-your-own-pace setting.

These courses often include SIE study guides, concepts broken down into smaller units, SIE practice questions interspersed throughout the modules, and SIE practice exams. Make sure that you make the most of the time and focus on your SIE test preparation during that designated time and continue to go over take-home study materials.

If you prefer in-person accountability to help you prepare, an in-person SIE course may be the best option for you. You can find weekend courses around the country, as well as live online versions.

Recommended Course

For SIE exam prep, study guides and practice materials, StateRequirement recommends:

SIE Practice Exam

There is no substitute for actually taking the test, which is why the FINRA SIE practice exam is so important in your SIE exam prep. Taking an SIE practice exam can help you see the type of questions that are asked, assess your readiness before your actual exam day, and get you familiar with the test’s format.

To make the most of your practice test, treat it just like the real thing. Designate a quiet spot to take the test and remove any distractions. This includes cell phones, email, or other things that would not be readily accessible in the testing center.

You should also go through your practice test without consulting outside materials. These won’t be available when you take your actual SIE exam. Set a timer and see how you would score if it were an actual test, following all the requirements of the testing center.

FINRA’s practice exam will be similar to the practice exams included in your study course, though neither will be the exact questions you will see on the actual exam.



Tips for Test Day

Getting to test day is a big milestone! You have probably spent a lot of time learning about the securities industry and your future career. Focusing on crossing the finish line is just as important as the hours of studying you put in to get there.

Passing the SIE exam begins before you ever set foot in the testing center. You should prioritize getting a good night’s rest and eating a fulfilling breakfast before taking your test. Small steps like these will ensure that you are in tip-top shape during the test.

Testing centers recommend that test-takers plan to arrive at least 30 minutes before their designated exam time. Arriving early can also help alleviate any anxiety or rushing to find parking.

Tip:

Review your registration materials ahead of time for directions to the testing center and a list of policies about what you can and cannot have during the exam.

Before beginning the SIE exam, a testing center administrator will go over the rules for taking the test. This is also your chance to ask your test administrator any questions before you begin, such as the procedure for using the restroom or what to do if your computer malfunctions.

You are not allowed to bring extra bags or materials into the testing room, so it may be helpful to leave prohibited items at home or in your locked vehicle. Your test administrator will inspect anything that you bring into the testing room, including personal items like glasses, jewelry, or jackets.

Bring with you to the test center

  • Photo identification
  • Registration confirmation

Leave at home or locked in your vehicle

  • Cellphone
  • Calculator
  • Test study materials
  • Extra bags and jackets

If you do have extra items, you will be able to check them into a provided locker. You will not be able to access them during the test, however. Special arrangements can be made for required medications but you should consult with Prometric ahead of time to make sure.

A computer tutorial before the exam is provided and will help you understand how the mechanics of the computer program work. This ensures that you can make the most of your testing time.

You will have one hour and 45 minutes to answer 85 questions, only 75 of which will go towards your score. Don’t worry about which ones are scored and which aren’t. Just answer each question to the best of your ability, since there is not a penalty for guessing.

Tip:

Before submitting your test, go back and make sure you have answered all of the questions. If you aren’t sure about the correct answer, eliminate the ones that you know are not correct and make your best guess.



Passing the SIE Exam

If you are ready to take the Security Industry Essentials exam, get familiar with the test, prepare with courses or online materials, take a practice test, and show up ready to take the exam.




Information on this page has been gathered by a multitude of sources and was most recently updated on June 2020.

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