The Series 26 exam, formally referred to as the Investment Company and Variable contracts Products Principal Qualification Exam (IP), is specifically designed for candidates sponsored by a FINRA member firm who want to transition into management roles.

This guide will break down the exam’s structure and cover effective study methods. It’ll also provide exam-taking tips and other techniques you can use to help ensure you pass the exam on your first attempt.

Exam Structure

This exam includes 110 scored questions, but each candidate also will encounter 10 additional, pretest items. These pretest items don’t count toward your final score but are included for data collection.

Question Format

The Series 26 exam includes 110 multiple-choice questions distributed across three major content areas:

• Function 1: Personnel Management Activities and Registration of the Broker-Dealer (16 items)
• Function 2: Supervises Associated Persons and Oversees Sales Practices (49 items)
• Function 3: Oversees Compliance and Business Processes of the Broker-Dealer and its Offices (45 items)

Duration and Timing

Candidates have two hours and 45 minutes to complete the Series 26 exam. It’s essential to manage your time wisely and try to attempt all questions in order to maximize your chances of success.

It’s also beneficial to reserve a few minutes at the end to review your answers and ensure you haven’t inadvertently skipped any questions.

Topics Covered

Below, you’ll find a summarized outline of the knowledge required to ace this exam. Remember, not all functions have the same number of items.

Function 1 – Personnel Management Activities and Registration of the Broker-Dealer

• 1.1 Conducts personnel management activities and administers the registration of the broker dealer and associated persons in the Central Registration Depository (CRD)® System by filing, updating or amending appropriate documents
• 1.2 Provides training and education on securities industry essentials, rules and regulations, product characteristics, and firm policies

FUNCTION 2 – Supervises Associated Persons and Oversees Sales Practices

• 2.1 Monitors, supervises and documents the sales activities of associated persons to achieve compliance with securities industry rules and regulations and firm policies and provide feedback regarding product knowledge and performance
• 2.2 Monitors, reviews and approves communications with the public to achieve compliance with securities industry rules, regulations, filing requirements and firm policies
• 2.3 Supervises recommendations and the handling of customers’ accounts and transactions for appropriate disclosures concerning products, sales charges, risks, services, costs, fees, and delivery of disclosure and legal documents
• 2.4 Supervises compliance with FINRA’s cash and non-cash compensation rules
• 2.5 Reviews and approves or prohibits outside business and personal financial activities of associated persons
• 2.6 Takes action, as necessary, regarding the conduct of associated persons and addresses violations or potential violations of securities industry rules and regulations and firm policies and procedures

FUNCTION 3 –Oversees Compliance and Business Processes of the Broker-Dealer and its Offices

• 3.1 Supervises the firm’s operational processes for compliance with regulatory requirements related to the opening and ongoing maintenance of customer accounts
• 3.2 Monitors, identifies and reports suspicious activities consistent with regulatory and firm requirements and verifies that documentation is retained and filed
• 3.3 Develops, implements and tests the adequacy of internal controls and monitors business activities for compliance with regulatory and reporting requirements
• 3.4 Performs required office inspections to verify compliance with regulatory requirements and firm policies and procedures
• 3.5 Proper handling, resolution and required regulatory reporting of customer complaints
• 3.6 Supervises introduction, maintenance and reporting requirements of products/business lines and financial responsibility compliance

Series 26 Exam Prep

Whether or not you pass the Series 26 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 study 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 26 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 to do the best you can to get as comfortable as possible in advance.