Examinee Qualification: Securities agent and investment adviser representative (IAR)
Time Allowed for Exam: 2.5 hours (150 minutes)
Number of Questions: 110, 100 of which count toward the final score
Exam Format: Multiple choice
Score Required to Pass: 75%
Exam preparation time: Approximately 20-30 hrs (three weeks with between one and two hours of prep time daily)
Additional License Required: Series 66 is always taken in combination with the Series 7 General Securities Representative Exam
Testing Locations: Prometric Testing Centers throughout the U.S., Canada, Mexico, and U.S. Territories
Exam Covers:
- Economic Factors and Business Information
- Investment Vehicle Characteristics
- Client Investment Recommendations and Strategies
- Laws, Regulations, and Guidelines, including Prohibition on Unethical Business Practices
Series 66 Exam Overview
The Series 66 exam qualifies a person to register as both a securities agent and an investment adviser representative. The Series 66 is essentially a combination of the Series 63 (for securities agents) and Series 65 (for investment adviser representatives). However, a person taking the Series 66 must also take and pass the Series 7 (General Securities Registered Representative) exam before registering with a state regulatory commission.
Developed by the North American Securities Administrators Association (NASAA) and administered by the Financial Industry Regulatory Authority (FINRA), the Series 66 exam is available at testing centers in the U.S. and abroad. A pool of questions is available for the exam, and each exam is put together “on the fly,” based on a content rating and difficulty rating assigned to each question. This process makes sure each exam meets content specifications, ensuring each Series 66 exam has the same difficulty level. Ten of the questions are trial questions, placed randomly in the exam, and are not included in scoring.
Both an overall score and a score for each section of the test are given to examinees immediately after completion. Examinees that fail the exam have to wait 30 days to retest. Examinees that fail the exam three times must wait 180 days to take the exam again.
Series 66 Exam Content
Five percent (5 questions) of the exam covers Economic Factors and Business Information
- Financial reporting (1 question)
- Annual reports and prospectuses
- Corporate SEC filings
- Financial ratios
- Current ratio
- Quick ratio
- Debt-to-equity ratio
- Quantitative methods (1 question)
- Time value of money
- Internal rate of return (IRR)
- Net present value (NPV)
- Time value of money
- Types of risk (3 questions)
- Systematic risk
- Markets
- Inflation
- Interest rate
- Systematic risk
- Unsystematic risk
- Business
- Liquidity
- Political
- Regulatory
- Unsystematic risk
- Opportunity Cost
- Capital structure and priority of liquidation
Fifteen percent (15 questions) of the exam covers Investment Vehicle Characteristics
- Methods for valuing fixed income securities (3 questions)
- Discounted cash flow
- Types and characteristics of derivative securities (3 questions)
- Futures
- Options
- Forward contracts
- Costs, benefits, and risks of derivative securities
- Alternative Investments (4 questions)
- Hedge funds
- Limited partnerships
- Insurance-based products (5 questions)
- Annuities (fixed, variable, and equity-indexed)
- Life insurance
- Whole
- Term
- Universal
- Variable
Thirty percent (30 questions) of the exam covers client Investment Recommendations and Strategies
- Type of clients (5 questions)
- Individuals and sole proprietorships
- Business entities
- General and limited partnerships
- Limited liability company
- C-corporation
- S-corporation
- Trusts and estates
- Client profile (5 questions)
- Current financial status
- Cash flow
- Balance sheet
- Existing investments
- Tax situation
- Current financial status
- Financial goals and strategies
- Current income
- Retirement
- Death
- Disability
- Time horizon
- Financial goals and strategies
- Non-financial investment considerations
- Attitudes
- Experience
- Demographics
- Values
- Non-financial investment considerations
- Risk tolerance
- Capital Market Theory (2 questions)
- Modern Portfolio Theory
- Capital Asset Pricing Model (CAPM)
- Efficient Market Hypothesis
- Semi-strong
- Strong
- Weak
- Portfolio management styles and strategies (5 questions)
- Strategic asset allocation
- Style
- Rebalancing
- Buy/hold
- Asset class
- Tactical asset allocation (for example, market timing)
- Passive versus active investing
- Value versus growth investing
- Investing for income versus capital appreciation
- Strategic asset allocation
- Portfolio management techniques (5 questions)
- Averaging
- Dollar-cost
- Capital goal within specified time period
- Diversification
- Sector rotating
- Risk modification techniques
- Puts
- Calls
- Leveraging
- Averaging
- Tax considerations (1 question)
- Individual income tax fundamentals
- Capital gains
- Tax basis
- Alternative minimum tax
- Corporate, estate, and trust income tax fundamentals
- Estate and gift tax fundamentals
- Individual income tax fundamentals
- Retirement plans (2 questions)
- Individual Retirement Accounts
- Traditional
- Roth
- Qualified retirement plans
- Pension and profit sharing
- 401(k)
- 403(b)
- 457
- Nonqualified retirement plans
- Individual Retirement Accounts
- ERISA (Employee Retirement Income Security Act) issues (1 question)
- Fiduciary issues
- Investment choices
- 404(c)
- Investment policy statement
- Prohibited transactions
- Fiduciary issues
- Special types of accounts (2 questions)
- Education-related
- 529 plans
- Coverdell
- UTMA/UGMA
- Account ownership options
- Joint
- Pay-on-death
- Tenancy in common
- Education-related
- Trading securities (1 question)
- Terminology
- Bids
- Offers
- Cash accounts, margin accounts
- Market, limit, or stop order
- Principal or agency trades
- Quotes
- Short sale
- Costs of trading securities
- Commissions
- Markups
- Spread
- Exchanges and markets
- NYSE, AMEX, CBOE, regional, international
- OTC, Nasdaq
- Role of broker-dealers, specialists, market-makers
- Terminology
- Performance measures (1 question)
- Returns
- Total
- Time-weighted
- Risk-adjusted
- Internal rate of return
- Inflation-adjusted
- Holding period
- Expected
- Dollar-weighted
- Annualized
- After tax
- Yield
- Yield-to-maturity
- Current yield
- Benchmark portfolios
- Returns
Fifty percent (50 questions) of the exam covers Laws, Regulations and Guidelines (including prohibited unethical business practices)
- State and Federal Securities Acts and related rules and regulations (30 questions)
- Regulation of state and federal Investment Advisers Investment advisers are firms that charge a fee for giving advice concerning the purchase and sale of securities.
- Definitions
- Registration/notice-filing
- Post-registration requirements
- Investment Adviser Representative (IAR) Regulation
IARs are individuals associated with investment adviser firms.- Definitions of professional titles, duties, and roles
- Registration Process
- Regulation of broker-dealers
Brokers are in the business of making securities transactions for accounts belonging to other people, and dealers are in the business of buying and selling securities for their own account.- Definition
- Registration and post-registration requirements
- Regulation of agents of broker-dealers
- Definitions of professional titles, duties, and roles
- Registration and post-registration requirements
- Regulations of securities and issuers
Issuers are governments, corporations, or investment trusts that register and sell securities to pay for their own business operations.- Definitions professional titles, duties, and roles
- Registration and post-registration requirements
- Exemptions
- State authority concerning federally covered securities
- Remedies and administrative provisions
- Administrative actions
- Administrator authority
- Other penalties and liabilities
- Regulation of state and federal Investment Advisers Investment advisers are firms that charge a fee for giving advice concerning the purchase and sale of securities.
- Ethical practices and fiduciary obligations (20 questions)
- Communications with clients and prospective clients
- Disclosures
- Contracts with clients
- Guarantees of performance
- Unlawfully representing registrations
- Compensation of securities agents and firms
- Disclosing compensation
- Fees and commissions
- Performance -based fees
- Soft dollars (money paid by mutual funds or other money managers to their service providers)
- Client funds and securities
- Suitability of investment recommendations
- Sensible investing standards
- Discretion over client accounts
- Custody of client financial assets
- Authorization to trade
- Conflicts of interest and other issues concerning fiduciary responsibility
- Client confidentiality
- Excessive trading
- Loans to and from clients
- Sharing in the profits and losses of a customer account
- Insider trading
- Market manipulation
- Selling away (offering of securities that are not available from the representative’s firm)
- Communications with clients and prospective clients
Applying for the Series 66 Exam
Employing FINRA-member firms will submit Form U4 and pay the examination fee on behalf of Series 66 Exam applicants through the Central Registration Depository (CRD).
To enroll for FINRA exams, you must be sponsored by a state regulator or regulatory authority approved to sponsor candidates for FINRA qualifying exams. If your sponsor is NOT a FINRA member, enroll for your FINRA exam on the FINRA website.