SIE Feature

What is the Securities Industry Essentials Exam?

The Security Industries Essentials Exam (SIE) is a new exam being introduced by the Financial Industry Regulatory Authority (FINRA) in October 2018. The SIE is being designed to allow people to enter the securities and insurance industries without being affiliated with any qualified firm.

In the past, it was necessary to be affiliated with an insurance company or investment firm to take the series 6 or 7 exams. The SIE changes all of that and tests a new financial professional on their knowledge of the basics associated with securities, securities trading, the securities and insurance industries, working in the industries and the basic products.

 

The Basics of the SIE

Much of the information regarding the SIE is still preliminary, but there are some important facts that we do know. The SIE consists of 75 multiple choice questions that have to answered in 105 minutes. In order to take the exam, the only qualifications you must meet are to be 18 years of age or older and a legal citizen of the United States.

Participants who take the SIE will not be given their score. They will be given a pass or fail indication and a certificate showing completion if they passed. As of March 2018, the proposed fee for taking the SIE is $60. To take the exam, you must contact your local FINRA testing center to see what dates the test is offered and schedule your time.

It is important to understand that passing the SIE does not make you a licensed securities sales professional. While the SIE is only the first step in becoming a securities professional, passing the SIE will most likely be required before you can be hired by an accredited firm. To become a licensed securities sales professional, you must also pass the “Series” exam pertinent to your industry (Series 6 & 63 for insurance).

The SIE is an exam that FINRA has created to help streamline and organize the securities licensing process. Anyone who is over the age of 18, regardless of educational background, can take the SIE. After October 1, 2018, it is expected that entry-level securities and insurance sales professionals will require a passing grade on the SIE to be considered for employment by any financial or insurance sales firm.

 

What is the Purpose of the SIE?

Prior to the introduction of the SIE, it was difficult for people who wanted to pursue a career in securities to get their start. While it is not too difficult to find a firm that would sponsor someone who shows the right level of determination, the ability to show an understanding of the industry was not always there. A degree in finance did not always guarantee a shot at being sponsored for a series exam.

The SIE allows anyone looking to start a career in the financial industry to come prepared with the credentials firms are looking for. Since anyone can take the SIE without a sponsorship, the SIE can act as a way for ambitious future financial professionals to show that they have the proper understanding of the industry to be able to succeed.

 

Do You Need Any Other Exams Beside the SIE to Sell Insurance Securities?

The SIE allows the securities industry to elevate the other exams to a more prominent level. In order to gain basic entry into the securities industry, a person would take and pass the SIE. The introduction of the SIE changes the way firms hire entry-level employees.

Once you are hired, the firm will generally then sponsor you to take the series exam that applies to your industry. An insurance company will still need their entry-level candidates to take the Series 6 & 63 exams, but they cannot take those exams until they have first passed the SIE. The SIE does not remove or replace any existing series exams. The SIE acts as the first step towards a career in the financial industry.

 

Does the SIE Replace the Series 6 or Series 63 for Insurance Agents?

The SIE actually does not replace any of the existing series tests completely. In all, the SIE replaces parts of the series 6, 7, 22, 57, 79, 82, 86/87 and 99. All of these tests contain the same types of introductory questions that would be asked at the entry level. The SIE combines all of those initial questions into one test and allows the series tests to become more specialized.

 

Is There a License Application After You Pass the SIE Exam?

Once you pass the SIE exam, you are then allowed to take any of the qualifying exams to get your securities license. You cannot take an exam without being sponsored by an accredited firm, but there is no waiting period between passing your SIE and taking a qualifying exam.

There is no automatic licensing application or fast path to a securities license after passing the SIE. The SIE is part of a broader plan that FINRA is using to change the testing process and streamline it. For now, passing the SIE exam carries no licensing weight. But it is essential in being allowed to take the qualifying exam for a series license that will allow you to become a licensed member of the securities community.

 

Will the SIE Affect People Who Already Have Their Series 6?

Anyone who passes their series 6 exam prior to October 1, 2018 will get their series 6 license as per the current rules. Once October 1, 2018 comes around, anyone looking to become series 6 licensed will first need to pass the SIE. While you do not need to be sponsored by a firm to take the SIE, you can be employed in the industry and take the exam.

The arrival of the SIE in October 2018 does not affect the status of any licenses that are currently in effect. Licensed professionals will not need to take the SIE when it comes time to renew their securities license.

If you had your series license prior to October 1, 2018 and you allowed it to lapse after October 1, then you must take the SIE before you can get your license back. Anyone who passed their series license exam prior to October 1, 2018 is considered to have already passed the SIE. But that is no longer the case if you allow your license to lapse after the October deadline.

 

How Does the Affiliation with FINRA Work?

Passing the SIE alone does not allow you to become a member of FINRA. You cannot take what will be called the "qualification tests" (Series 6, 7, etc.) without passing the SIE, but passing the SIE does not gain you entry into FINRA. In order to be a fully registered member of FINRA, you must pass the SIE and then a qualification test. Then you will get your financial trading credentials and be allowed to work in the securities industry.

 

What Subjects Are On the SIE?

The SIE is broken down into four parts that do not carry equal weight. Those parts and their respective percentages are:

  • Understanding capital markets and trade - 12 questions of 75
  • Identifying financial products and the risks they pose - 33 questions 75
  • Knowing the rules of trade as they apply to maintaining customer accounts and identifying prohibited practices - 23 questions of 75
  • Review of the federal regulatory laws that govern securities - 7 questions of 75

Full Securities Industry Essentials Content Outline

The majority of the SIE deals in customer service and ethics, while there is a summary glance at regulatory structure. The qualifying series exams tend to dive more into the legal structure of the securities industry, which is why it is not a prominent topic in the SIE.

 

Are Pearson Vue and Prometric still the providers of the exam?

As of January 1, 2018, FINRA is only offering securities exams through Prometric. The new SIE exam will fall under these same guidelines as FINRA is no longer using Pearson Vue for any testing.

Any current financial professionals who have traditionally done their testing with Pearson Vue can rest easy knowing that all of their data is safely stored with FINRA. There will be no need for licensed financial professionals to retake any exams that were done with Pearson Vue.

 

What are the Continuing Education Requirements of the series 6, 63, or the SIE?

Once you pass the SIE, your passing score is good for four years. Within that four year period, you are expected to become sponsored by a firm and take one of the qualifying exams to get your series license. If you do not take a series qualifying exam before the SIE four-year period expires, then you will need to retake the SIE to be qualified for sponsorship by an accredited firm.

Anyone who holds a series license must complete two sets of continuing education requirements to keep their license current. The first is called the regulatory element, and it deals with compliance and ethics issues within the industry. In order to maintain a series license, a securities professional must complete FINRA approved coursework 120 days before the second anniversary of getting their series license. After that first renewal period, the term shifts to doing the course work every three years. These courses are only available online through the FINRA website.

The second type of continuing education requirement is the firm element. Every accredited firm submits a Needs Analysis and Written Training plan to FINRA that outlines the educational requirements of its representatives based on the firm's business. From that information, FINRA develops a Firm Element Continuing Education Program that the firm must administer to all of its licensed associates on a regular basis. The results of these programs are transmitted to FINRA where they are kept on file.

FINRA is increasingly relying on its website as a resource for licensed securities professionals, and as a way to streamline the testing and education processes. Prior to taking any online continuing education courses, a licensed securities professional can utilize a growing library of resources available on the FINRA website that include videos and useful tutorials.

 

How to Apply to Take the Securities Industry Essentials Exam

This Exam is not available until October 1st, 2018.


Check back here at that time for a link.