Financial License

Financial licenses are credentials that a person has with a Financial Authority in order to be able to provide Financial Product and/or Financial Services. 

A financial Product is defined as any form of product which consists of managing, buying, or investing money. Financial service is defined as any service that involves managing, buying, or investing money. 

Why Do I Need a Financial License?

In order to provide Financial Products and Financial Services, you need a Financial License. Financial Authorities will only issue Financial Licenses to credible and qualified individuals.

Financial Authorities also monitor and supervise Financial Licenses holders in order to prevent the Financial Market from getting into a crisis. Financial Licenses holders will receive Financial Diplomas after completing Financial Training courses. 

Who Can Get a Financial License?

The most common way to get a Financial License is by being appointed by the government. However, there are other ways to obtain a Financial License. 

Some Financial Authorities allow companies to provide Financial Products and Financial Services without an individual Financial License. The company must have a certain number of employees with financial licenses, and financial products and Financial services must be offered through those employees. 

How to Apply for a Financial License?

The application process for a Financial License can be different for each Financial Authority. 

The Financial Authority will require a Financial Licensee to take certain classes, pass an exam, and meet the minimum requirements set forth by Financial Authority. 

Major Financial Licenses Obtained By Advisors and Representatives

There are various licenses issued by different authorities. 

Licenses Offered by Financial Industry Regulatory Authority (FINRA)

FINRA offers several different types of licenses needed by both representatives and supervisors. Each license corresponds to a specific type of business or investment

There are three general licenses that the majority of advisors and representatives obtain from FINRA.

1.Series 6 – General Securities Representative

This license is also called a limited-investment securities license. This license authorizes individuals to register as a company’s representative and sell packaged securities.

In order to sit for the Series 6 exam, candidates for a Series 6 license are required to have a sponsor from a FINRA-member firm or a self-regulatory organization.

Someone who holds a Series 6 license is qualified for the solicitation, purchase, and/or sale of Mutual Funds, Variable Annuities, Variable Life Insurance, Unit Investment Trusts (UITs), and Municipal Fund Securities.

The Series 6 exam is 135 minutes long and covers basic information on seeking business for the broker-dealer, and on opening accounts.

It also covers the provision of information about investments, making suitable recommendations, transferring assets, and maintaining appropriate records. It also covers obtaining and verifying customers’ purchase and sales instructions.

2. Series 7 – General Securities Principal

This license is also called the general securities sales supervisor license. This license authorizes individuals to supervise representatives in the sale of all kinds of securities and investment products. 

In order to sit for the Series 7 exam, candidates for a Series 7 license are required to have a sponsor from a FINRA-member firm or a self-regulatory organization.

One who holds this license enables the holder to solicit, purchase and/or sell most securities products, such as stocks, mutual funds, options, municipal securities, and variable contracts.

The Series 7 exam is 225 minutes long and covers more in-depth knowledge than the Series 6. It covers all the topics of Series 6, as well as information on Financial Products such as options, futures, and debt securities.

3. Series 3 – National Commodities Futures Examination

The Series 3 exam is a prerequisite to gain Registration as an Associated Person with a futures commission merchant and to sell, solicit, or negotiate commodity interests. The test consists of 100 questions that must be completed in two hours.

The Series 3 Exam covers knowledge of the products and basic concepts related to the commodities futures markets. It also assesses the ability to identify potential market abuses and illegal activities.

Topics on the Series 3 exam include the structure of the futures markets, trading procedures, market analysis, and risk management. This is 120 multiple-choice questions in two parts.

Licenses Issued by North American Securities Administrators Association (NASAA)

Aside from FINRA, NASAA also oversees the licensing requirements of three key licenses.

1.Series 63 – Uniform Securities Agent License

Series 63 is a state-level securities license. It gives individuals the ability to transact business in any state, including the sale of municipal securities, among other things.

The Financial Industry Regulatory Authority (FINRA) administers the Series 63 exam. There are 60 multiple-choice questions on the exam which must be completed within the allotted time of 75 minutes.

2. Series 65 – Uniform Investment Adviser Law Examination

The Financial Industry Regulatory Authority (FINRA) also administers the Series 65 exam. This is a state-level securities license. It allows individuals to work as investment advisers, among other things.

The Series 65 examination contains 130 multiple-choice questions. Candidates have 180 minutes to complete the exam. 

It covers topics on Economic Factors and Business Information, Investment Vehicle Characteristics, Client Investment Recommendations and Strategies, as well as Laws, Regulations, and Guidelines, including Prohibition on Unethical Business Practices.

3. Series 66 – Uniform Combined State Law Examination

The Financial Industry Regulatory Authority (FINRA) also administers the Series 66 exam. This is given to qualify individuals as investment advisor representatives or securities agents.

The Series 66 examination contains 100 multiple-choice questions that are scored and 10 pretest questions that are not scored. Candidates have a maximum time of 150 minutes to complete the examination.

It covers the topics on Economic Factors and Business Information, Investment Vehicle Characteristics, Client/Customer Investment Recommendations and Strategies, and Laws, Regulations, and Guidelines, including Prohibition on Unethical Business Practices.

Key Takeaways 

Financial licenses are required by Financial Institutions for their employees who are involved in Financial transactions.

Each state sets its own requirements for Financial Licensing. Most Financial Institutions will accept the license that is issued by NASAA.

The Financial Industry Regulatory Authority (FINRA) also oversees Financial Licenses. FINRA is a not-for-profit organization that regulates member firms and exchange markets. 

When it comes to Financial Licenses, there are a variety of different licenses that one can obtain. The most common Financial Licenses are Series 3, 6, 7, 63, 65, and 66. 

Financial Institutions will accept the license that is issued by NASAA as long as the state requirements are met.

Financial Licenses are required by Financial Institutions for their employees who are involved in Financial transactions. These are given by different Financial Institutions depending on the state's regulations.
You may need to get a Financial license if you are trying to work for Financial Institutions, Investment Banks, or Financial Advisers that need a Financial license.
Individuals who are planning to work in Financial Institutions and Financial Advisers in the Financial Industry may need to obtain Financial Licenses depending on what state regulations they are working under.
All Financial Licenses are issued by Financial Institutions. They will issue Financial Licenses as long as the state's requirements are met.
The process of obtaining Financial Licenses may vary depending on what state you reside in and which Financial Institution you are applying with.

Disclaimer: The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.

True Tamplin, BSc, CEPF®

About the Author
True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.