Today, I was presenting an investment seminar on indexed investing to a group of South East Asian based school teachers.
Most of them were Americans.
I mentioned that the minimum requirement in the United States, in order to sell investment products, was a Series 7 certification.
Two financial sales representatives were among the attendees. And they became very defensive when I stated that the Series 7 study period was just three weeks long.
One of them suggested that the exam itself takes 3 weeks to complete, and that I was “confused.”
Pasted from the American Training Centre you can see that the study time required is minimal.
The suggested “home study” time requirement to prepare for the exam is 6-8 weeks, based on 1-2 hours per day.
Keen students wishing to expedite the process could study for 2-4 hours daily, feasibly being prepared for the exam in 3-4 weeks.
The exam itself consists of 250 multiple choice questions.
The passing grade is 70%.
I’ve pasted the details below from the American Training Centre website.
SERIES 7 LICENSE
The Series 7 Exam is the NASD (FINRA) license for general securities representative. Our Series 7 training course covers all of the topics that are needed to pass the Series 7 exam.
The Series 7 test covers topics including:
| Topics: | |
| Equity Securities | Prerequisite License: None |
| Debt Securities | Questions on Exam: 250 |
| Options and Derivatives | Time to Complete: 360 Minutes |
| Securities Markets and Regulations | Format: Multiple Choice |
| Retirement Plans | Passing Grade: 70% |
| Investment Companies | Availability: Test is given daily (Mon-Sat) |
| Taxation | Where: Prometric or Pearson Test Centers |
| Home Study Time: Generally 6-8 weeks (1-2hrs daily) |
An additional online search complements the short duration of study time:
- This suggestion recommends a 5 week completion time to study for the Series 7. …read more
- Here’s an online suggestion recommending 3-5 weeks of study time for preparation. …read more
- Global Career Schools recommends 6-8 weeks of study time: 1-2 hours daily. …read more
And that’s it folks.
If you want to become a financial service representative, the minimum requirement in the U.S. is a Series 7 certification.
And from knowing nothing about money, you can complete the course in less than one month (if you’re keen) and then become certified after passing the 250 question multiple choice exam.
Although no prerequisite academic training is required for this certification, those taking the exam are required to be sponsored by a financial services institution.
What do you think?
Should a mutual fund salesperson be required to take additional courses on market history, asset allocation, and a course detailing how investment costs impact returns?
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10 comments
DIY Investor says:
March 26, 2011 at 4:06 am (UTC 8 )
They should be required to take the additional courses but they won’t be- especially the last one. The cost issue is big. Sometimes I think the industry goes out of its way to make sure the cost issue is swept under the rug so they are able to hire reps who are clueless. Bernstein’s table showing typical fund costs is something the industry doesn’t want to get around.
I am very interested in how the requirement of 401ks in the U.S. to disclose all costs to participants works out.
Andrew Hallam says:
March 26, 2011 at 7:14 am (UTC 8 )
Hey DIY Investor (aka Robert)
When the costs are disclosed, I wonder if the meaning of those costs will fly over most people’s heads. I mean, a 2% annual cost doesn’t sound like much, until the investor compounds how damaging a 2% annual fee can be over an investment lifetime.
pgreensoup says:
March 26, 2011 at 11:09 pm (UTC 8 )
The only people who are “confused” are the people that willingly overpay “qualified” people to manage their money. Full disclosure: I was formerly “confused”, but was shown they light. Thanks, Andrew.
Andrew Hallam says:
March 26, 2011 at 11:21 pm (UTC 8 )
Hey P Green Soup:
If everyone knew how minimal the educational standards were for most financial sales reps, we’d all be a bit more skeptical. And considering the industry’s conflict of interest (in most cases) it’s sad that cognizance of such a thing isn’t more widely spread. That said, thanks for thanking me. I’m glad I could help.
The Dividend Ninja says:
April 2, 2011 at 11:00 am (UTC 8 )
Hey Andrew,
Good post! The financial industry (specifically the mutual fund sales industry) is a well oiled machine. It’s based on a foundation of deception, aggressive sales techniques, and ultimately poor investments for it’s clients. Commissions, trailer fees, and incentives – the list goes on!
People assume that when they see a mutual fund or investment dealer they are sitting across from a financial professional – but nothing could be further from the truth. I’m sure some of these people are well educated and do have their client’s interests at heart, but I doubt most do.
But then again the point of selling investments is sales, right? I wonder what the certification is here in Canada – probably much of the same. If at least one reader sees this post and goes to a fee only planner instead of a commision based mutual fund dealer – then your work is done!
Andrew Hallam says:
July 25, 2011 at 8:30 am (UTC 8 )
Hey Ninja,
I found out later that one of the financial sales reps who attended the session speaks very highly of her status as a Series 7 professional. It’s no wonder I ruffled her feathers! Her clients–who probably think her Series 7 certification is equivalent to some kind of degree—certainly wouldn’t want to hear how insignificant it is.
Jason Navallo says:
April 11, 2011 at 7:34 am (UTC 8 )
I passed the Series 7 examination when I was 18 with only a couple weeks of studying and I scored way above the 80% mark.
Andrew Hallam says:
April 12, 2011 at 9:07 pm (UTC 8 )
Hey Jason,
Thanks for sharing that.
Without knowing it, when giving a presentation at a recent conference, I metaphorically stabbed a financial saleswoman where it hurts, when I suggested that a Series 7 exam could be passed after just 3 weeks of studying. I didn’t even know she was there, or I may not have said it. I don’t want to be hurtful, after all.
I realized, later, why she was so struck by what I said, and keen to lash out a bit. She brandishes her Series 7 certification to teachers where I work— as if it’s a PhD in personal financial management.
And you passed the Series 7 as an 18 year old after studying for just 2 weeks? Sweet!!
Thanks again for sharing that!
Tony says:
January 30, 2012 at 12:44 pm (UTC 8 )
Only thing Series 7 does is make a used car salesman suddenly qualified to sell securities. Those types of tests are pure memorization – no thinking required. Go over the question banks a few times, and then on the test a lot of the questions are the same, just with answers switched around.
Licensing exams are the lowest bars the industry sets up. They’re more for show than anything else.
Muhammad Saeed says:
July 6, 2012 at 7:17 am (UTC 8 )
I have a bachelors degree in Business and would like to take the Series 7 exam. I have recently relocated to Toronto from Dubai where I used to work as a Financial Application Support Analyst at Thomson Reuters. I have no sponsor to back me. Can you please advise what are the pre-requisites for Series 7.
Sincerely,
Muhammad Saeed