Key Topics and Passing Tips

What Is the Series 65 Exam?

The Series 65 Exam, designed by the North American Securities Administrators Association (NASAA) and administered by the Financial Industry Regulatory Authority (FINRA), qualifies individuals to act as investment adviser representatives.

This exam covers laws, ethics, and investment strategies necessary for advising clients. To pass, candidates must correctly answer 92 out of 130 questions in 180 minutes, focusing on topics like economic factors, investment vehicle characteristics, and ethical practices. A passing score not only certifies expertise but also paves the way for a career as a licensed investment adviser.

Comprehending the Series 65 Exam Requirements

Successful completion of the Series 65 exam is designed to qualify candidates as investment adviser representatives (IARs) in their home states.  As an IAR, advisors must act in a fiduciary capacity, offering investment advice to clients for a fee. 

Passing the Series 65 exam, or Uniform Investment Advisor Law Exam, is the sole requirement to become an IAR. There are no prerequisites, and candidates do not need to be sponsored by an investment firm to sit for the exam, but they need to file a Form U10 (Form U4 for brokers) and pay the $187 exam fee.

The Series 65 exam has 130 questions on essential topics for giving investment advice to clients.  It covers economics, financial markets, investment vehicles, strategies, analysis, and ethics.

If you are not charging a fee and you do not regularly provide advice on securities, then you most likely do not need to get your Series 65 license. Other FINRA-administered qualification examinations include the Series 3 National Commodities Futures (NCFE), Series 7 General Securities Representative (GS), and Series 63 Uniform Securities Agent State Law.

Breakdown of the Series 65 Exam Structure

The Series 65 exam has 130 multiple-choice questions, and candidates have 180 minutes to complete it. You must answer 92 correctly to pass (70%).

Test takers must schedule an exam at a qualified testing center, where they are provided with a basic four-function electronic calculator.

Only this calculator may be used during the exam. Dry-erase boards and markers are also provided for candidates. No reference materials are allowed, and cheating is strictly penalized.

A firm can schedule the exam for a candidate by filing Form U4 and paying $187. If an individual is not firm-registered, the candidate uses Form U10 to request and pay for the exam.

Detailed Overview of Series 65 Exam Topics

NASAA provides updated information on the exam’s content on its website. The exam is structured as follows:

• Economic Factors and Business Information (15%, 20 questions): Topics include monetary and fiscal policy, economic indicators, financial reporting, quantitative methods, and basic risk concepts.
• Investment Vehicle Characteristics (25%, 32 questions): Topics include cash and cash equivalents, fixed-income securities, methods of fixed-income valuation, equities and methods used in equity valuation, pooled investments, derivative securities, and insurance-based products.
• Client Investment Recommendations and Strategies (30%, 39 questions): Topics include individuals; business entities and trusts; client profiles; capital market theory; portfolio management styles, strategies, and techniques; tax considerations; retirement planning; ERISA issues; special types of accounts; trading securities; exchanges and markets; and performance measurement.
• Laws, Regulations, and Guidelines, Including Prohibition on Unethical Business Practices (30%, 39 questions): Topics include state and federal securities acts; rules and regulations for investment advisers, investment adviser representatives, broker-dealers, and agents; ethical practices; and fiduciary obligations, including communications with clients, compensation, client funds, and conflicts of interest.

Comparing Series 65, Series 63, and Series 66 Exams

The NASAA offers three exams: Series 65, Series 63, and Series 66.

Created by NASAA in 1989, the Series 65 was the first exam to assess those seeking to provide advisory services.

At the time it was launched, it focused primarily on the Uniform Securities Act, NASAA rules, and ethical practices in the securities industry.

The Series 63 was developed to qualify candidates who wished to work in a state’s securities industry and sell investment products, such as stocks, mutual funds, variable annuities, and unit investment trusts. In other words, to execute trades rather than give out financial advice.

The exam covers the principles of state securities regulations and laws and is formally known as the Uniform Securities Agent State Law Examination.

The Series 66, a newer NASAA exam, combines content from Series 63 and 65, earning the name Combined State Law Exam. Test-takers of the Series 66 must also take the FINRA Series 7 licensing exam (which is not a co-requisite of the Series 63 or 65, although many individuals will still need the Series 7 to operate legally).

The Bottom Line

The Series 65 Exam, officially the Uniform Investment Adviser Law Exam, is essential for individuals seeking to become investment adviser representatives (IARs) in the United States. By covering topics such as laws, regulations, ethics, and financial concepts, the exam ensures candidates are prepared to offer investment advice and act in a fiduciary capacity.

With a 70% passing score requirement, the Series 65 signifies a minimum qualification demanded by most state regulators. Candidates can take the exam without sponsorship, but they should be aware of the $187 fee and the need for dedicated preparation, ranging from 50 to 70 hours of study.