If You Dont Pass Series 65 When Can You Schedule Again
Executive Summary
With the Department of Labor's fiduciary dominion creating a push towards more levelized compensation, many insurance and investment product manufacturers are re-evaluating their commission structures, and a number of broker-dealers are re-evaluating their entire bounty structure as well. And a growing number of financial advisors are deciding that if the regulatory button is towards AUM (or retainer) fees, that they may as well just become (or join) a Registered Investment Adviser (RIA) directly. Which means in the coming year, in that location may exist a surge of Series 65 exam takers.
And so in this week'due south #OfficeHours with @MichaelKitces, my Tuesday 1PM EST circulate via Periscope, nosotros hash out tips for financial advisors to go their Series 65 license, and what to expect when going to sit for the Serial 65 exam.
The adept news is that because the Series 65 test is heavily focused on knowing the underlying laws and regulations that utilize to investment communication, it is primarily an exam of memorizing and recalling information. Which means people who are "good at test taking" volition notice information technology relatively easy, and for everyone else, it'south yet a manageable claiming, as long as you put in the hours to written report.
In fact, because the Series 65 exam is so popular, there are a number of providers who offering Series 65 study guide materials, practice exams, and other educational content to help pass the Series 65 exam. In practise, the almost popular providers announced to be Kaplan's Series 65 live review and practise exams, forth with TesTeachers, and for those looking for the nigh affordable option, consider Robert Walker'south "Pass The 65" book (and supporting practice exam questions equally well).
Notably, though, the reality is that the Series 65 ultimately qualifies investment directorate to give advice nearly how to invest a household's cumulative life savings... which arguably means a 3-hour licensing exam solitary shouldn't actually be sufficient in the offset place, and that advisors who are serious almost helping their clients should go further, pursuing professional designations like the CFP certification also. Fortunately, those whodopursue a professional designation, including the CFP marks, the ChFC, and the CPA/PFS, forth with the CIC or the CFA, can actually get a waiver to skip the Series 65 examination birthday (though it's still necessary to consummate the residual of the requirements to join an RIA as an IAR!).
But the bottom line is that the Serial 65 examination isn't actually much harder than other common industry licensing exams, like the Series 6 or the state Life and Wellness license. Most will have ii-4 weeks to written report, spending about 20-30 hours, and laissez passer the test with its required 72% passing class. Merely be certain to spend the time it takes to study and really learn the textile!
(Michael's Note: The video below was recorded using Periscope, and appear via Twitter. If you want to participate in the next #OfficeHours live, please download the Periscope app on your mobile device, and follow @MichaelKitces on Twitter, so you go the declaration when the broadcast is starting, at/around 1PM EST every Tuesday! You can also submit your question in accelerate through our Contact page!)
#OfficeHours with @MichaelKitces Video Transcript
Welcome, everyone! Welcome to "Role Hours" with Michael Kitces!
I wanted to talk today about what is takes to become a Registered Investment Counselor, and pass the Series 65 test.
When we look broadly at the world of financial advisors, the RIA (Registered Investment Advisor) segment is basically the merely growing channel of financial advisors that are out there. The full number of brokers at broker-dealers is in decline, the total number of insurance agents is in reject. It is considering of a combination of those who are retiring and leaving the industry, in some cases because they're breaking away from insurance companies or broker-dealers over to condign Registered Investment Advisors instead.
Simply we see this shift, where the RIA channel is growing. And the cardinal requirement for being a Registered Investment Counselor is that you have to laissez passer the Serial 65 exam. And the whole transition to DoL fiduciary frankly seems to only exist accelerating this further interest in becoming an RIA and passing the Series 65 test, given that one of the driving requirements of DoL fiduciary is that compensation, at a minimum, is going to have to exist more levelized, more smoothed out and spread out. So at the point that y'all're generally receiving ongoing AUM-style fees for solutions anyhow, it becomes pretty compelling to look at but becoming an RIA. And then you don't have a banker-dealer who takes a slice of your grid anymore, and you can enjoy ameliorate accept-home pay. And bluntly, if y'all're running as an RIA and just charging level AUM fees, you lot've got the streamlined version of the DoL fiduciary rule, called the Level Fee Fiduciary exemption.
So the question that I want to tackle this week, that I've been hearing more and more over the by month or two, peculiarly as everyone seems to be assimilating the looming consequences of DoL fiduciary, is this question that Charlie asked:
"I primarily sold annuities for the past several years, but with the DoL fiduciary rule coming, I've decided to start doing a more than holistic advice. I know that I'll demand my Series 65 to get paid to manage assets, but I'm sort of nervous near the exam. Do y'all have any tips?"
Nifty question, Charlie. First and foremost, I'll say congratulations to you for making the transition away from simply selling annuity products and into really providing more holistic advice. I think that's a huge overall plus, for yous and for consumers, as an benefit that's going to come from DoL fiduciary itself.
Series 65 Requirements - The Uniform Investment Advisor Law Exam [Fourth dimension - 2:38]
Now, the Series 65 test, for those of you who aren't familiar... the Series 65 is what's called the Uniform Investment Adviser Law Exam. It'due south the licensing exam you have to accept to either become a Registered Investment Advisor, or technically to become the Investment Counselor Representative of an RIA. So if yous want to get paid a fee for investment communication, y'all accept to either be an IAR of a Registered Investment Advisor, or y'all become your ain RIA (and substantially be the sole IAR fellow member of it).
Now, the Series 65 itself is 130 questions that are scored, plus 10 addition questions that they use to seed hereafter exams, and you've got iii hours to consummate it. A passing grade is 72%. Information technology's directly pass/fail; there's no super-special bonus for getting a xc versus a 73, aside from yous are learning what laws use to you as a Registered Investment Counselor. And so bluntly, I would kind of hope everyone shoots for 100%. But you only demand a 72% to laissez passer.
When you look at the breakdown of the Series 65 exam itself, and the subjects it covers, you'll find that as the proper noun applies, it'southward the Uniform Investment Adviser Law Examination. So it's an examination virtually the uniform laws for investment advisors beyond all 50 states. Which ways at that place's a big focus on rules and regulations, along with a lot of material on the types of investment vehicles and their characteristics and how they work. And then a little chip most bones economic principles, and what's called Know Your Customer or KYC rules. Later all, you can't really requite good investment recommendations for clients, if y'all don't know enough about the client in the first place!
To sign up for the Series 65 exam, you either submit what's called a Form U10 if you're not already with a broker-dealer. If you are with a banker-dealer, you submit a Class U4 in order to apply for the test.
One of the nice things about this Series licensing examination though, unlike most other FINRA series exams, is that you don't have to be sponsored by a broker-dealer in order to take it. In fact, usually the whole indicate is you lot're going to become the Registered Investment Advisor instead of working nether a broker-dealer! Of class, you can be both, called either a hybrid or dual-registered advisor, only oft the whole point of pursuing the Series 65 is to not have a broker-dealer amalgamation.
To register, you simply pay $165, you file your U10, and then your exam window opens. You lot have 120 days to take the test. If you fail it, yous've got to wait 30 days to retest.
How Hard Is The Exam? Serial 65 Pass Rates [Time - four:59]
Now, one of the questions I become a lot is "How hard is the Series 65 test? What are the Series 65 laissez passer rates?"
Unfortunately, the short respond is that we don't know the Series 65 laissez passer rates. There'south no officially reported information on Series 65 pass rates, the way there is for CFP test pass rates. I know people who have done it and said it was really piece of cake. I know people who've done it and said it was brutally difficult. Bluntly, I retrieve a lot of information technology just varies on your comfort level with studying fabric and taking tests.
Because the reality is that the Series 65 exam is a examination of memorizing rules and laws, and existence able to regurgitate it for an exam. Some people are really good at recalling that information back upwardly; we call them "practiced test takers." They're but really expert at taking information in and recalling facts for an exam. Others struggle a little scrap more than. So if you struggle with tests like that in full general, yous're probably going to find the Series 65 difficult. If you find tests like that to be easy in general, you're probably going to observe the Series 65 is really easy.
How does it compare to other financial advisor licensing exams? Charlie had said he was an already annuity amanuensis. Then Charlie, you've already done the Life and Wellness exam in your land. I think what you'll probably find is the Series 65 is comparable difficulty to the Life and Health exam. A fiddling easier than the Series 7, maybe comparable equally well to the Series 6. Compared to broader designations out in that location similar the CFP exam, though, the CFP exam is way, way harder and more circuitous than the Series 65. They're not fifty-fifty in the same camp as each other. At the terminate of the day, the Series 65 is nonetheless a fairly limited fourth dimension catamenia to study and go through; the CFP examination takes 12-xviii months for about.
In fact, well-nigh advisors I know that become through and study for the Series 65 take about 2 to four weeks to prepare for it. They spend a few hours a day, a couple of days a week. If you're good at going through material, reading information technology and retaining information technology, you may be able to but buy some self-study guides, read through, retain all the information, and you'll get take the Series 65 exam and pass it. Yous'll spend maybe 10 or twenty hours just self-studying for the exam.
Most people do at least a lilliputian bit more exam prep. Perhaps you make flashcards for yourself to test some of your knowledge and recall of the facts. Maybe you lot take some practice exams - at that place are a couple of providers out there - and spend another 10 or 15 hours doing that. So you're in for perhaps 20 or thirty hours of studying.
At the high end would be people who take a month, and spend 40 to 50 hours cumulatively studying the Series 65 test fabric.
Serial 65 Study Materials And Examination Prep Providers [Time - seven:34]
Now, the good news is because it'due south such a widespread and standardized licensing exam, there are a lot of providers out there that exercise everything from study materials - both written and instructors either doing recorded videos or alive videos - forth with lots of choices for getting flashcard materials and exercise exams. There are a lot of choices out there.
When I did my Serial 65 exam years ago, I studied with a group chosen Dearborn, which I know however does study test prep materials, but I don't think Dearborn really does the Serial 65 exam prep anymore. I call back they sold it off to someone else along the way.
But I talk to a lot of other advisors out at that place who go through Series 65 exam, and I can tell you the ones that I hear most commonly that are well-reviewed. The people who say, "I did the Series 65 exam prep, and so I took the test, and I felt the prep material appropriately prepared me for the test..." that is what you would desire.
The number one Serial 65 exam prep provider I hear recommended most often is Kaplan's Series 65 program. Y'all can become self-study materials, or you lot can take a live class. Virtually people sign upwards for their test bank of questions every bit well, and just keep taking practice questions over and over and over over again. Just keep drilling the practice questions. When you keep doing do questions and you're consistently scoring eighty% or to a higher place, you lot should be fine to get a 72% on the exam. Because once again, the test questions are reasonably comparable; Kaplan reportedly does a adept job.
The other program I've heard a lot of good reviews about I have to acknowledge, I am not familiar with it, I haven't been through information technology myself, is called TesTeachers. They exercise written report materials for lots of unlike programs, including lots of different Serial exams, and do this for the Series 65 exam in particular.
Now, for most of these, yous'll spend about $200 to $400 on the study materials themselves. Information technology'south towards the lower end if you merely get cocky-study materials, and towards the higher end if yous're going to get live or video instructors, and skillful Series 65 practise test questions every bit well.
The Serial 65 vs 66 Licensing Exams [Time - 10:06]
Now, I saw a question come through [from Periscope]:
"What's the difference between 65 and 66?"
Bully question. There are lots of unlike Serial exams.
The Series 65 is what you lot need specifically to become a Registered Investment Counselor. If you're also functioning under a broker-dealer and you're getting paid for securities products, you demand either the Series 6 to sell mutual funds, or the Serial seven if you're too going to go paid for stock trades. And so we have the Serial 65 for doing investment advice, and we have either the Series six or the Series 7 for selling securities products. With either of those, you also need the Series 63.
So you lot need the Serial 63 and the 6 or 7 to get paid for selling securities, and the Series 65 to get paid for investment advice. The Series 66 is a combo of the Series 63 and the Series 65. So if you're at a broker-dealer and you're going to be a hybrid, getting paid for investment advice (or managing investment accounts) and likewise for selling securities products for a commission, you would typically take the Serial 66, along with the Series 7.
When I went through and got my Series licenses, I actually did them incrementally. I did the Series six and Series 63, and then I went back and sabbatum for my 7, and then I went and got my Series 65 considering that was all I had left. But if y'all're going to come in and do information technology all at in one case, y'all often do the Series 7 and the Series 66, because it'southward kind of the all-in-one wrapper in the broker-dealer environment.
Notably, if you're going to be a standalone Registered Investment Counselor, you don't need a Series 6 or seven. The Series 6 and the Series 7 are specifically for getting paid to sell securities products under a broker-dealer. If you're a standalone RIA, you don't have a banker-dealer at all. You don't need i, y'all don't take to be sponsored by i, and that ways you don't need a Serial vi or 7, nor a Series 63. Therefore you lot don't need the Series 66 either.
Then people who are going standalone RIA typically simply do the Series 65 exam. If you're at a broker-dealer and you lot're looking to do all of it together and you're going to be a hybrid or dual-registered, then you're probably looking at the Serial 66.
Series 65 Examination Waiver And Other Professional Designations [Time - 11:49]
Now, the other thing worth noting about the Series 65 exam itself, is that not everyone who wants to be an RIA, or an IAR for an RIA, actually needs to take information technology. There'southward an option to get a waiver and get out of the requirement.
Specifically, you lot can get out of the Series 65 exam itself if you have another approved professional designation. And NASAA, which is the North American Securities Administrators Association, and sets these rules, has a couple of dissimilar professional designations they allow. The CFP certification clears yous from the Serial 65 examination. So if you got your CFP marks already, you do not need to get accept the Series 65 examination. If y'all're a CFA charterholder, y'all're in the articulate. If you've got a ChFC from an American College, yous're in the clear. If you are a PFS, a Personal Financial Specialist, extended from your CPA license, y'all're waived out of the Series 65. And then if you have the CIC, which is the Chartered Investment Counselor program from the Investment Adviser Association.
Any of those designations, and y'all don't have to have the Series 65 exam. It'southward waived. Now, if you want to get paid for investment communication, you yet take to go an RIA. You all the same have to register as an investment advisor, either with the country, or with the SEC if yous're going to be across multiple states and yous're eligible by assets. The professional designations don't waive the requirement to register as an investment adviser. They just waive the requirement to practice the Serial 65 exam equally part of your overall registration requirements.
Going forward, I remember we're going to run across a lot of people in Charlie's state of affairs, that have maybe been part of the production ecosystem in the past, that want to start doing more holistic advice now that DoL fiduciary is coming, and is likely to cram down commissions, at to the lowest degree to some extent. Because if you're going to shift to a more levelized compensation model, most advisors notice once their avails grow to a certain point, that it's hard to justify beingness on a broker-dealer. You lot tin can establish your own RIA, pay your own operating expenses, outsource your investments to a third-party asset manager, and still net more take-home dollars every bit an advisor. Unless maybe y'all go to an independent broker-dealer where yous tin negotiate a much college grid payout.
So there's going to be more RIA registrations going forward. I suspect nosotros're going to come across a lot of people going out for the Series 65.
But the bottom line, Charlie, is I don't think the Series 65 is a horrific examination by whatever measure. If you were able to go through your life and health okay, and maybe you've done your Serial 6 as well, I don't think you're going to detect it any worse than those. Most advisors seem to view them pretty comparable. If you're good and comfortable taking tests, you're probably going to notice it really easy.
Only program to spend a few weeks reading the books. Get the study materials, and spend time reading then you'll exist able to recall the information. If y'all struggle a little taking tests, then definitely plan to practice practice exams. And frankly, just go on taking exercise exam questions from the test bank over and over and over over again, until you're scoring 80% or more, and and so you should be in the clear for taking the Series 65 test itself.
Coming together Series 65 Licensing Requirements vs Raising The Bar Of Compentency [Time - 14:42]
Frankly, I retrieve from the grand scheme, I actually think the Serial 65 is also piece of cake. And I don't mean that to put down everyone who plant passing the Serial 65 to be hard.
But when you recall about it, the Series 65 is the only dividing line betwixt a person off the street and a consumer's life savings. So if we're going to give someone a license to requite communication about a household's entire cumulative life savings that they spent decades to accumulate, frankly, I think a 3-60 minutes test that just tests the laws that will apply to you and almost nothing most how to actually requite competent financial advice, is woefully inadequate.
My expectation and hope on behalf of consumers is that, frankly, we lift the Serial 65 bar at some point downward the road. Just at a minimum, if you want to get down this route, information technology's certainly a test you should take seriously. For anybody that wants to give comprehensive financial advice to clients, the Series 65 should exist your ultra-minimum, bare starting signal. Across that, you should actually be working towards something like the CFP certification, and so that you really know what you're doing. Particularly because under a fiduciary rule, giving advice in the all-time interest of your client and screwing it up because you lot just didn't know plenty to know that the recommendation you were giving was wrong... that is still going to get you sued!
In other words, it's not just about acting in the customer's best involvement; yous have to actually be competent in what you're doing. And then Series 65 is a minimum licensing requirement, non a best exercise. Merely it'south something that you can work upward towards, and if you lot showtime with your Series 65, you lot tin motility on to your CFP. If you lot've washed your CFP first, or y'all're an advisor in the industry and you go get your CFP, it'll be easier when you do the switch to RIA, considering you won't even have to take the examination at that point, you lot'll be eligible for the waiver.
So I hopes that helps a little to understand the landscape of the Serial 65 exam, and some exam prep providers that offer self-study materials, live review, and practice exams.
This is "Role Hours" with Michael Kitces, Tuesdays at ane:00PM east coast time. Hope this has been helpful. Thank you for joining, everyone, and take a great day!
So what do you think? How did you written report and fix for the Serial 65 examination? What exam prep providers do yous recommend to use, or to avoid? Any tips for those yet preparing for the exam? Please share your thoughts in the comments below!
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Source: https://www.kitces.com/blog/series-65-exam-prep-tips-and-best-license-study-guide-materials/
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