The Series 24 exam — also known as the General Securities Principal Exam — is an essential milestone for professionals in the securities industry who seek to climb the leadership ladder. This exam’s structure makes it more than just a test of knowledge; it’s also an assessment of your ability to apply your knowledge in real-world, supervisory situations.

This article covers the nuances of the Series 24 exam, offers insights on preparation strategies and the test’s format, and shares valuable tips to help you prepare for the exam.

What is the Series 24 Exam

The Series 24 license, known formally as the General Securities Principal Exam, is tailored for those in the securities industry who want to move into supervisory roles. This challenging exam evaluates candidates’ expertise in three pivotal areas:

• Supervisory Procedures: This section assesses a candidate’s understanding of responsibilities, regulations, and guidelines within a managerial role. This includes compliance with federal securities laws and the proper supervision of registered representatives
• Investment Banking and Research: This section tests candidates’ knowledge of underwriting, mergers and acquisitions, financial restructuring, and the ethical considerations surrounding research and investment banking
• Trading, Market Making, and Research: This section focuses on the rules and practices associated with trading securities, including market making, order execution, and the methodologies used in securities research

Passing the Series 24 exam isn’t just a milestone; it’s also a gateway to higher responsibility within the securities industry. It signifies a comprehensive understanding of the operational aspects of running a brokerage firm and the ability to oversee trading and market activities effectively.

Exam Structure

In order to ace the Series 24 exam, you must familiarize yourself with its structure. Here’s a quick summary of the exam’s main highlights:

• Format: 150 multiple-choice questions
• Duration: Three hours and 45 minutes
• Passing Threshold: At least 105 correct answers (70%)

Note: This exam will include 10 additional, but unscored questions that the Financial Industry Regulatory Authority (FINRA) uses for future reference. You can access a tutorial from FINRA before the actual exam to help familiarize yourself with this test’s computerized format.

Content Outline

The Series 24 exam includes five sections focused on specific functions. Below, you’ll find a summarized content outline you can use when preparing for this exam. Remember, not all functions have the same number of questions.

Function 1: Supervision of Registration of Broker-Dealer and Personnel Management Activities

• 1.1: Initiate or terminate the registration of the broker-dealer and physical office locations in the Central Registration Depository (CRD) system by filing, updating, or amending appropriate documents
• 1.2: Conduct hiring and registration of associated persons and maintenance of registration

Function 2: Supervision of General Broker-Dealer Activities

• 2.1: Develop, implement, and update a firm’s policies, written supervisory procedures (WSP), and controls for applicable rules and regulations; and implement appropriate monitoring and testing
• 2.2: Supervise the conduct of associated persons
• 2.3: Supervise the compensation practices of members, associated persons, and other parties
• 2.4: Supervise the development, evaluation, and delivery of products and services offered by the broker-dealer
• 2.5: Take disciplinary or corrective actions relating to the conduct of associated persons; address regulatory actions regarding violations or potential violations of securities industry laws, rules, and regulations; and address customer and industry disputes
• 2.6: Develop and maintain policies, procedures, and controls relating to the creation and retention of books and records
• 2.7: Supervise compliance with financial responsibility requirements and funding and cash management

Function 3: Supervision of Retail and Institutional Customer-Related Activities

• 3.1: Supervise the opening of new accounts and the ongoing maintenance of existing accounts

• 3.2: Monitor, review, and approve speaking engagements and other communications with the public
• 3.3: Review securities transactions, recommendations, and account activity, and verify that required disclosures are made

Function 4: Supervision of Trading and Market Making Activities

• 4.1: Supervise order entry, routing, and execution
• 4.2: Confirm the proper booking and settlement of trades
• 4.3: Review executions of trades for compliance with trade reporting requirements

Function 5: Supervision of Investment Banking and Research

• 5.1: Develop and maintain policies, procedures, and controls; and supervise related investment banking activities
• 5.2: Review and approve investor disclosure materials, pitch books, and marketing materials
• 5.3: Develop and maintain policies, procedures, and controls; and supervise activities relating to research

Make sure to give each function a commensurate amount of time, and work on your weak spots to help ensure you pass the exam on your first attempt.

Series 24 Exam Prep

Whether or not you pass the Series 24 exam will inevitably come down to how well you prepare. Even though the ideal studying experience will differ from reader to reader, here are some general tips and guidelines you should keep in mind when preparing for this exam.

The right studying materials will not only help you grasp the content more deeply, but also keep you informed about the latest industry trends related to your exam.

Here’s an example of the types of resources you can use when preparing:

• Regulatory Documents: These can help you familiarize yourself with the latest regulations and updates you’ll need to know for your exam
• Content Outlines: You can use FINRA’s detailed content outline for this exam to ensure you don’t miss a topic during your preparation
• Professional Online Courses: You’ll also likely want to purchase a third-party course, such as one provided by the Securities Institute of America or Kaplan, because they can go a long way in helping you pass the exam on your first attempt

Think of it this way: Just as selecting the right tools for a project can help ensure success, choosing the best study materials will set the foundation for you to ace the exam.

Mock Exams and Sample Questions

Incorporating mock exams into your study plan is essential.

Why? Mock exams allow you to “get a feel” for the real exam, familiarize yourself with the types of questions you’ll need to answer, and check you’re capable of finishing the exam in the required timeframe.

Regularly taking mock exams also can help improve your confidence during the exam, which can prevent you from making unnecessary mistakes.

Exam Day Tips

Finally, here are a few tips you should keep in mind during your exam. They’ll help you optimize your performance, manage your time efficiently, and navigate complex questions with confidence.

• Strategize for ambiguous questions. If you encounter a question that stumps you, don’t dwell on it. Bookmark or flag it, and then move on to questions you can answer more readily. Return to those flagged questions once you finish the rest of the exam
• Keep time management in focus. Time can slip away quickly during an exam. Practice pacing yourself so you can attempt every question without feeling rushed. Consider wearing a simple wristwatch to keep track of the time, if permitted
• Review key concepts and formulas. In the days leading up to the exam, review key concepts, rules, and formulas essential for the Series 24 exam. Consider creating flashcards or a summary sheet for quick reference
• Arrive early and relaxed. On exam day, plan to arrive early to allow for any unexpected delays. Bring necessary identification and materials, and take a few moments to breathe and center yourself before starting

Remember, exam-taking can be a skill in itself. As such, it’s important you do the best you can to get as comfortable as possible in advance.