Series 7 Exam

Written by: Nik Ventouris

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Series 7 Exam

Considering a role in securities sales or investment advice? If so, the Series 7 exam is your first step. This test is crucial for those seeking to work with stocks, bonds, and other securities in the United States.

This guide provides an in-depth look at the exam’s structure, the core topics it covers, and its scoring process. It also offers tips for exam day and strategies to help you prepare effectively.

What is Series 7

The Financial Industry Regulatory Authority (FINRA) created the Series 7 exam to evaluate the competency of entry-level general securities representatives. It ensures candidates possess the aptitude, skills, and foundational knowledge to execute the major job functions of a registered representative.

In order to work as a general securities representative, you need to not only pass the Series 7 exam, but also the general knowledge co-requisite: the Securities Industry Essentials (SIE) exam.

Interested in learning more about the Series 7 designation? Check out our in-depth Series 7 article for more information.

Exam Structure

This exam includes 125 multiple-choice questions — each with four answer options. These questions appear in separate categories based on the four primary job functions of a general securities representative:

  1. Seeks Business for the Broker-Dealer From Customers and Potential Customers. This section’s nine questions represent 7% of the exam.
  • 1.1 Contacts current and potential customers in person and by telephone, mail, and electronic means; develops promotional and advertising materials and seeks appropriate approvals to distribute marketing materials
  • 1.2 Describes investment products and services to current and potential customers with the intent of soliciting business

2. Opens Accounts After Obtaining and Evaluating Customers’ Financial Profile and Investment Objectives. This section’s 11 questions represent 9% of the exam.

  • 2.1 Informs customers of the types of accounts available and provides disclosures regarding various account types and restrictions
  • 2.2 Obtains and updates customer information and documentation, including the required legal documents, and identifies and escalates suspicious activity
  • 2.3 Makes reasonable efforts to obtain customer investment profile information, including, but not limited to, the customer’s other security holdings, financial situation and needs, tax status, and investment objectives
  • 2.4 Obtains supervisory approvals required to open new accounts

3. Provides Customers With Information About Investments, Makes Recommendations, Transfers Assets, and Maintains Appropriate Records. This substantial section represents 73% of the exam with a total of 91 questions.

  • 3.1 Provides customers with information about investment strategies, risks, and rewards and communicates relevant market, investment, and research data to customers
  • 3.2 Reviews and analyzes customers’ investment profiles and product options to determine that investment recommendations meet applicable standards
  • 3.3 Provides required disclosures regarding investment products and their characteristics, risks, services, and expenses
  • 3.4 Communicates with customers about account information, processes requests, and retains documentation

4. Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions. This section’s 14 questions represent the final 11% of the exam.

  • 4.1 Provides current quotes
  • 4.2 Processes and confirms customers’ transactions pursuant to regulatory requirements and informs customers of the relevant delivery obligations and settlement procedures
  • 4.3 Informs the appropriate supervisor and assists in the resolution of discrepancies, disputes, errors, and complaints
  • 4.4 Addresses margin issues

Although this test includes 125 scored questions, you’ll encounter an additional 10 unidentified pretest questions. These won’t impact your final score, but appear randomly throughout the exam for FINRA’s data-gathering purposes.

This means you’ll need to answer a total of 135 questions within a span of three hours and 45 minutes. There’s no penalty for incorrect answers, so we recommend you attempt to answer every question.

Recommended Course

Over 81% of our readers use Kaplan’s online courses — which come with a 93% pass rate — when preparing for their Series 7 exam. For comprehensive study packages, StateRequirement recommends:

4.7 out of 5 starsKaplan Education Company

Series 7 Exam Prep

Whether or not you pass the exam will inevitably come down to how well you prepare. Even though the ideal studying experience will differ by individual, here are some general tips and guidelines you should keep in mind when navigating your exam preparation.

Recommended Study Materials

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

Here are some examples 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 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 within 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 can 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 7 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.

Recommended: Interested in getting started? We recommend using Kaplan’s online study packages, which come with a 93% pass rate.

4.7 out of 5 starsKaplan Education Company

Series 7 Exam FAQ

Is the Series 7 exam difficult?

The difficulty of the Series 7 exam is subjective, depending on an individual’s background and preparation. However, it’s widely recognized as a comprehensive test that covers a broad range of topics related to securities, such as mutual funds, municipal securities, and direct participation programs. Proper study and preparation are essential to achieving a passing score.

What is the Series 7 exam for?

The Series 7 Exam — also known as the General Securities Representative Qualification Examination — assesses the competency of an entry-level registered representative to perform their role. It ensures the individual possesses the necessary knowledge to perform critical functions, including the sale of various types of securities (such as investment company securities) and the proper handling of client accounts.

How long does it take to pass the Series 7 exam?

Candidates have three hours and 45 minutes to complete the Series 7 exam. However, the preparation time to gain the required understanding of the securities industry markets varies among individuals. Some might spend a few weeks studying while others might take several months. Regular study and a structured approach can help you prepare effectively for this test.

Is Series 7 harder than the CPA?

Comparing the Series 7 exam to the Certified Public Accountant (CPA) exam is like comparing apples to oranges. While both are rigorous, they cover different domains. The Series 7 exam focuses on basic securities industry information and investments while the CPA exam focuses on accounting principles and practices. Some might find the Series 7 exam more challenging due to their background while others might deem the CPA more demanding.

How much does the Series 7 cost?

The cost of the Series 7 exam can vary, depending on factors like potential changes in fee structures or any additional charges from training providers. Make sure you check the official FINRA website or consult with a sponsoring firm for the most up-to-date fee information.

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