Most nations have strict regulations regarding the credentials of those who give financial advice. Financial advisors with the appropriate credentials can better guide their customers toward achieving their financial objectives and protecting their investments. Many countries, states, and provinces have different financial advisor licensing and certification requirements. To become a financial advisor in the United States, you need to pass the Series 7 test to become generally licensed to deal in securities. Then you must pass additional exams to get specifically approved to sell in mutual funds, options, and futures. Financial advisors in Canada must be licensed by a provincial securities regulator and demonstrate competency by completing the Canadian Securities Course (CSC). Besides obtaining a license, financial advisors may need to fulfill additional legal obligations.

Series 7 License

Advisors can sell stocks, bonds, options, and mutual funds once they get the Series 7 license, which resembles a general securities license. Most broker-dealer companies in the United States need this license issued by the Financial Industry Regulatory Authority (FINRA). A Series 7 license requires the holder to pass an examination consisting of 125 multiple-choice questions on securities markets, investment products, and customer accounts. Applicants are required to have a sponsoring broker-dealer firm that is a member of FINRA.

The Series 7 license is a stepping stone to several other financial industry licenses, such as the Series 63 (a state-specific license for securities agents) and the Series 24 (a supervisory license for branch managers). After two years, the Series 7 license expires and must be renewed by taking and passing the Securities Industry Essentials (SIE) exam and demonstrating continuous education.

Licenses In Series 65 And 66.

Financial advisors who charge clients for their services must have a Series 65 or Series 66 license. The Financial Industry Regulatory Authority (FINRA) is responsible for issuing and maintaining these licenses, which last forever. The Series 65 license stands alone and authorizes the holder to provide investment advice to customers in any state. The Series 66 license, on the other hand, combines the capabilities of the Series 63 and Series 65 licenses and can be used to sell securities in any state and to offer financial advice.

Candidates must pass the Series 65 or Series 66 exam and be sponsored by an RIA to become registered securities representatives. There are 130 multiple-choice questions on the Series 65 exam, which cover topics like economics, investment vehicles, and rules and regulations. There are 100 multiple-choice questions on the Series 66 exam, and the material is similar to that on the Series 65 exam, plus questions on securities products and sales methods.

State-Specific Licenses And Registrations

Depending on where they work and the type of financial advice they give, financial advisors may need additional state licenses and registrations beyond the requisite Series 7, 65, and 66 credentials. For instance, consultants who peddle insurance must be duly licensed in some jurisdictions. Tax advice providers may be required to have certifications such as that of a certified public accountant (CPA) or a registered tax return preparer (RTRP).

Advisors who oversee $100 million or more in assets may be required to become SEC-registered as a Registered Investment Adviser (RIA). Financial advisers whose clients' assets total less than $100 million may be required to register as Investment Advisor Representatives with their respective state securities regulators (IAR). RIAs and IARs must file Form ADV to become registered with the SEC. This document details the advisor's services, fees, and disciplinary history.

Conclusion

Those who wish to work as financial advisors must meet specific licensing and certification requirements. A financial advisor may need a license or certification from several organizations, some country-specific while others are more regionally specific. However, general securities licenses, mutual fund licenses, options licenses, futures licenses, and others are among the industry's most frequently encountered certificates and charges. Financial advisors with the appropriate credentials can better guide their customers toward achieving their financial objectives and protecting their investments. A financial advisor's compliance with regulatory standards extends beyond the scope of the license. It may include, for example, completing continuing education courses and disclosing any conflicts of interest. When hiring a financial advisor, consumers should ensure they are appropriately licensed and registered with the relevant regulatory agency.