Today's "clickable" title will take you to FINRA'S run-down on the various license exams, but let's also do a quick and generalized breakdown here:
Series 6: this license exam is typically taken by insurance agents who also "want" to (have to) sell variable annuities, variable life insurance, and mutual funds in addition to their bread-and-butter business of whole/term life insurance, fixed annuities, etc . This is a securities agent/rep exam, so, by definition, the individual must be hired and sponsored by a broker-dealer. This "broker-dealer" would typically be a related subsidiary to a firm such as Met-Life, Northwestern Mutual, Country Insurance & Financial Services, State Farm, Allstate, etc (not to leave anybody out). The company strategy here goes something like this: let's hire a large crop of potential salespeople and get them selling insurance, annuities, and mutual funds as fast as possible. The Series 6 is "only" 100 questions and does not hit as hard as the other exams, although--have no doubt about this--the Series 6 is a tough exam. I'm just saying that some of the other tests I'm going to look at are longer and generally trickier. Most states require an individual to pass the Series 6 and the Series 63 before obtaining a state license to sell securities. So, let's look at the 63 next.
Series 63: this is the state law exam. It focuses on legalistic definitions, sophisticated exemptions for securities registration and registration of agents, broker-dealers, and advisory personnel. Not surprisingly, if given a choice, 74.8% of candidates recently surveyed chose to undergo oral surgery without anaesthetic than take a difficult, frustrating exam about "unregistered, non-exempt securities being offered to non-institutional investors." The exam's main focus is business practices--21 of the 60 questions focus on what is ethical, prohibited, etc. No one asked my opinion, but I've taken the exam twice, kicked its sorry ass twice, and still fail to see the point of making anyone take it. I could take 10 important points from the whole body of material, insert it into the Series 6, and call it a day. But then, the regulators would only collect one set of testing fees, and where's the fun in that. The next license we'll discuss is the Series 7--remember that the Series 63 is also required with that one.
Series 7: this is the exam to take if you want to be the traditional "stockbroker" like Charlie Sheen in "Wall Street," straddling phones, swearing up a storm, and entering buy and sell orders for commissions. With the Series 7, you can sell what a Series 6 person can sell, plus just about everything else imaginable: corporate bonds, municipal bonds, US Government bonds, options, stocks, direct participation programs, etc. The test is 250 questions long and lasts up to 6 hours for those who need the time and can also take the punishment. As with the Series 6, the individual has to be hired and sponsored by a broker-dealer just to take the test.
Is the Series 7 harder than the 6? Tough to say--the national pass rate is much higher on the Series 7, actually. But, the Series 7 is 250 questions in 6 hours, versus the Series 6's 100 questions in 2 hours and 15 minutes. That has to add to the difficulty factor. But, all I can say for sure is that the Series 7 is longer than the Series 6. Also, I find the Series 6 material to be rather boring compared to the Series 7 , which goes into many more topics that I care about and goes into them in depth. Then again, as I may have mentioned in earlier posts, when I struggled for 10 minutes to first understand a "debit call spread," I felt as if I were getting a really good brain massage, and when the breakthrough came, I actually jumped up and nearly scared my next-door neighbor, the cat lady, to death. "Ah-hah! Of course the debit call spread investor wants both options to go in-the-money! That way, he'll be forced to buy low and sell high every time! Awesome!"
Hmm? Oh, no thanks. I've already been recommended a good therapist.
Seriously, though, the Series 7 involves a lot of time to study, and that's what makes it "hard." It involves more vocabulary than the Series 6 and goes into more detail on many topics. On the other hand, the Series 6 goes deep into mutual funds, variable annuities, and taxation in a way that either rivals or exceeds the dreaded Series 7.
To sum up, then, whether you take the Series 6 to sell "packaged products" including annuities and mutual funds, or the Series 7 to sell that plus virtually every other type of security, you will also take the Series 63 in most cases. To make things more confusing, a Series 7 holder can take the Series 66 in lieu of the Series 63, but let's save the advisory side for another post. It's 6 o'clock on a Tuesday morning, and I'm afraid I'm going to over-excite us if I dig too deep into the material at this time.