There is a new Series 7 exam coming to town. It’s been in the works for a while now but it’s about to become a reality starting October 1, 2018. Are you studying for the current Series 7 exam and wondering what might be different by the time October rolls around? I’ll answer that for you in this blog post.
The New Series 7 Exam: What to Expect
I have some good news, and some bad news. First, the good news: The new exam is going to be shorter. It’s going to comprise of 125 questions, as opposed to the 250 questions currently (10 of which don’t count toward your score). Of course, fewer questions does not preclude you from winding up with a failed Series 7 exam.
The bad news: The exam will have a “corequisite” exam. Meaning, you will also have to pass FINRA’s Securities Industry Essentials (SIE) exam in ordered to still qualify as a registered representative. The SIE exam is made up of 75 questions and will also begin on October 1, 2018. The SIE exam is meant to reduce redundant testing and knowledge when taking exams for registration in various categories. The exam is also meant to make it easier to enter the securities industry.
| Number of Items | 125 |
| Format | Multiple Choice |
| Duration | 225 minutes |
| Passing Score | TBD |
| Corequisite | SIE exam |
| Cost | TBD |
Source: FINRA
What’s in the New Exam?
As you can see below the new exam has a major focus on suitability. As the time to October 1 winds down, don’t be surprised that the current exam has more Series 7 suitability questions than it has historically. FINRA appears to be phasing in the new curriculum. In a clear attempt to ensure a successful Series 7 candidate can master suitable and appropriate recommendations for a customer, FINRA focuses 73% of the new fexam on this topic (see below). The rest of the exam includes familiar topics from the current Series 7 exam such as opening accounts, solicitation of business, processing transactions, etc.
| Major Job Functions | Percentage of Test Questions | Number of Test Questions |
|---|---|---|
| (F1) Seeks Business for the Broker-Dealer from Customers and Potential Customers | 7% | 9 |
| (F2) Opens Accounts after Obtaining and Evaluating Customers’ Financial Profile and Investment Objectives | 9% | 11 |
| (F3) Provides Customers with Information about Investments, Makes Suitable Recommendations, Transfers Assets and Maintains Appropriate Records | 73% | 91 |
| (F4) Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions | 11% | 14 |
| TOTAL | 100% | 125 |
Source: FINRA
Two Tests Instead of One
Although the Series 7 Top-Off exam starting in October 2018 will be shorter than the old one, you will also have to study for, and pass, the SIE. Both of these exams are shorter combined, than the current Series 7 exam in total. That said, you will need to study two totally different textbooks, and schedule two totally different exam days. The SIE will be more focused on investment products and their risks, the structure of markets, prohibited activities, among other things. In other words, this will be the exam where you’ll learn about debt securities, annuities, equities, etc.
| Number of Items | 75 |
| Format | Multiple Choice |
| Duration | 105 minutes |
| Passing Score | TBD |
| Cost | $60 (proposed) |
Source: FINRA
Will P.E.T. Tutor the New Series 7 Exam?
Yes. And now, for a shameless plug…Although you’ll have to take a new exam, you won’t have to get a new Series 7 tutor! Woohoo! I will continue as an online Series 7 tutor as well as an in-person in New York City. I will also be tutoring for the SIE exam. Feel free to drop me a line at my email or click book a tutor.