Series 66 Difficulty: What Makes This Exam So Hard?

The Series 66 difficulty level needs a little addressing. Most of our students at Professional Exam Tutoring think that they are in the clear once they finish the Series 7 Top-Off exam. If you're also one of these people, then we hate to burst your bubble. But, you still have another hurdle over which to jump.

In today's post we are going to take you through what makes the Series 66 exam challenging. And specifically, why the Series 66 difficulty level may be even higher than you think.

Series 66 Difficulty: An Unexpected Challenge

Most students that we tutor take FINRA's exams in this order:

SIE
Series 7 Top-Off
Series 66 (or Series 65, or Series 63)

By the time the first two are done with, the third one is expected to be a "cake-walk". That said, you might not find it surprising then that we often see many more students fail the Series 66 or Series 63 than the SIE Exam. In fact, an old coworker of mine from years ago failed the 63 after passing three other FINRA exam no problem. The kicker was that he had undergraduate and graduate degrees from top-tier schools.

In a nutshell, we can't stress enough that it doesn't matter how smart you are, this exam requires some serious studying.

What Makes it So Hard?

First and foremost, the recurring complaint we hear as a Series 66 tutor is that the rules are hard to follow. What we mean by this is that the exam covers a large portion of rules that require memorization. It's not always easy to keep these rules and regulations straight. For example, you'll need to know the difference between what is defined as a security and what isn't. Next, what makes a security exempt from registration with the SEC vs one that is non-exempt? Similarly, what makes a transaction exempt vs non-exempt?

The double and triple negative questions that may be asked around these topics are enough to make you cross-eyed!

While the hardest questions from the Series 66 overlaps with the Series 63's hardest questions, the Series 66 contains even more content that makes it a challenge. There is a lot of content that overlaps with the Series 7, for instance. Variable annuities, fundamental analysis, stop orders, limit orders, are a few of the overlapping topics. Additionally, the Series 66 also has a section that focuses more on portfolio management. Some portfolio management indicators such as the Sharpe Ratio, and other corporate finance topics such as the Capital Asset Pricing Model (CAPM) are also discussed.

These topics, and more, lead to a fairly challenging exam.

What Can Be Done?

The short answer is that studying is unavoidable. There is no short cut with this exam. You may do better on this one if you already took the Series 63 exam. If you are going in fresh, then we highly encourage our students to create a study sheet. What's in said study sheet? Well, first you should take a few practice exams and take note of all of the definitions that you are getting wrong. Definitions, formulas, rules, and regulations that don't seem to stick are what you should prioritize. Then spend at least 30 minutes a day reviewing that study sheet. Memorizing as little as five words a day will get you into the habit of regular study, and solidify key concepts.

Overall, the Series 66 difficulty level is a step up from the SIE Exam difficulty, but it can be easily accomplished with a disciplined approach. Take your time, but more importantly, put the time in. Series 66 endurance is often more important intellect. Keep focused and in a routine and you'll do great!

Series 66 Exam Pass Rate: Our Best Guess at Your Odds of Success

The official Series 66 exam pass rate is not published anywhere. We have not found any mention of it by FINRA, NASAA, or any other official body. However, in today's post we breakdown what our best estimate is based on our students. We describe what we see, what we don't see, and how to boost your own score.

Let's dive in.

Series 66 Exam Pass Rate

Before we describe the pass rate we see among students at Professional Exam Tutoring, let's talk about the actual exam. Here are some quick takeaways for the Series 66 exam:

Questions Type: Multiple choice (typically with four choices)
Number of Questions: 100
Length: 2 hours and 3o minutes
Passing Score: 73%

While the passing score for the Series 66 exam is 73%, we don't believe that the Series 66 exam pass rate for students is that far off. For example, what we tend to see with our students is a higher pass rate (typically 80% and higher). This is due to a few reasons.

First, while we don't proclaim to be miracle workers, we do know how to teach, connect, and implement best practices to get results from our students. Removing us from the equation, we have also found that the type of student willing to seek out a tutor is generally self-motivated. A self-motivated student willing to put in the time is HUGE. Half the battle is discipline. Many students want to pass, but less want to put in the study time.

Lastly, our students do fairly well because they get "homework" and have accountability. We set goals for our students so they have some structure. They have targets to hit before the next lesson. This can be a major help in keeping students focused, on task, and able to prep in a timely manner for the exam.

Series 66 Exam Pass Rate Without a Tutor

For the students that don't use a tutor there is a wide disparity in success rates. For instance, there is a large contingent of test takers that never need a tutor and do just fine.

Most of these are highly educated people with business or finance backgrounds. Their pass rate tends to be quite high. Though we do not have any actual data on this group, we would estimate that their success rate is well over 80%.

However, there is another group that we don't see. This group is comprised of those with little, or no background, in business and finance, and minimal education. As you might guess, this group tends to have a low Series 66 exam pass rate. There is no doubt about it. The Series 66 difficulty level can be high for those without much background on the subject.

Depending on what category you may find yourself in, there are some ways to boost your score.

How to Boost Your Score

One thing that might really help you boost your score if you have no experience with these exams is to take the "corequisites" first: 1) SIE Exam, and; 2) Series 7 Top-Off Exam. While the corequisites do not overlap the Series 66 exam entirely, you will definitely see plenty of the same content between all three exams. The overlapping content will give you a major step-up in your study process. Not only that, but you will be familiar with how other FINRA exams are tested. If you have to take the Series 65 or 63 exam, you will also see serious overlap in both of those with the Series 66 exam.

In a nutshell, our best estimate is that the pass rate is somewhere around 60-70%. Many won't need help from a Series 66 tutor, while those without much background might find it helpful to seek us out. Either way, we wish you good luck!

Series 63 vs 66 Exam, Which is Harder, and What is the Difference?

I frequently get asked to explain the difference between the Series 63 vs 66 exam. In today's post we will take a look at each, and then both together. Why would you take one over the other? And why might your employer want you to take both? What do they include?

Series 63 vs 66 Exam

When it comes to the Series 63 vs 66 Exam, let's start with the basic differences.

Series 63 Exam:

Number of questions: 60
Test Time: 1 hour and 15 minutes
Test Type: Multiple choice
Number of Correct Questions Required to Pass: 43

Series 66 Exam:

Number of questions: 100
Test Time: 2 hour and 30 minutes
Test Type: Multiple choice
Number of Correct Questions Required to Pass: 73

The Series 63 is clearly the shorter exam. That said, even though it's shorter we've seen many students have issues with the trickery imposed by the exam writers. Both the Series 63 and the Series 66 create issues for students given the use of double negatives, due to the grueling memory work, and the numerous rules and regulations.

That said, the Series 66 significantly overlaps with the Series 63 when it comes to the rules and regulations. If you end up having to take both, start with the 63, because the 66 won't be that much extra work thereafter. However, the Series 66 certainly extends things. For instance, the Series 66 covers portfolio management and investment products - both aren't covered in the Series 63.

Our students often find that the portfolio management section is relatively new ground. While a lot of the investment products (e.g., Options, annuities, etc.) are covered in the Series 7 Top-Off exam, portfolio management topics such as Sharpe Ratio, Behavioral Finance, and Portfolio Construction are not.

Finally, if you get lost on the Series 66 discounted cash flow (DCF) section - or present/future value sections - then don't worry, you're note alone. These are the hardest subjects for almost every one of our students. The Series 63 on the other hand, has fewer technically (or mathematically) challenging topics. Most are difficult due to complex wording, or heavy use of jargon. With enough focus definition look-up, you can get through it.

Which One Should I Take?

If you're curious why your employer may want you to take one exam over the other, then let's take a look. First, the Series 63 exam is for agents that work at broker-dealers and plan to transact (or make offers to transact) in different states. On the other hand, the Series 66 exam is for agents that plan to transact (or make offers to transact), but ALSO plan to offer advice, and get compensated for it.

The Series 66, also known as the Uniform Combined State Law Exam has corequisites, unlike the Series 63 exam. The corequisites for the Series 66 exam are the SIE Exam and the Series 7 Top-Off exams. The Series 63 on the other hand, does not have corequisites. What does this mean? You can take the Series 63 at any time, and it does not have to be paired with any other exams.

Although you will find a lot of content discussing state requirements, these exams are not state specific. You will find useful material from STC and Kaplan. We recommend both. They do an equally excellent job in covering the material. Many of our students prefer Kaplan's more user friendly question bank, however STC is just as effective.

Overall, these exams are definitely doable if you can get through the Series 7 Top-Off exam. The Series 63 pass rate, and Series 66 pass rates are not officially published. Nevertheless, from our experience, the Series 7 Top-Off difficulty level is much higher for most students. With a little help and a little more perseverance, you'll be among the successful. If you need a tutor book one here. If not, we wish you good luck all the same!

Series 66 Discounted Cash Flow, Rules, Regulations, and More Tough Topics

Are you haunted by the Series 66? Below I'm going to address some of the toughest topics for the Series 66 exam. The Series 66 discounted cash flow is up there as one of the most difficult. To clarify, this is not our opinion, but actually a consensus of what we hear from our students. The Series 66 is a broad exam covering a range of subjects. If you're someone that has found at least one topic in this exam new, confusing, or downright like another language, then this post is for you.

Series 66 Discounted Cash Flow: Let Me Count the Ways...

The Series 66 difficulty level is relatively high compared to the other exams required to become a fully licensed investment advisor rep. There are a few concepts that you might agree make it particularly challenging (which we detail below). The large majority of our students get through the exam whether it's on the first or second try. If you're down to your third try, this is where we highly recommend you reach out. While we know tutoring isn't for everyone, it's quite common that if you haven't passed the second time there are some definite gaps that may not seem obvious. A Series 66 tutor may be what you need.

What Subjects Make this Exam So Challenging? One Stands Out

Let's start with the most glaring. The time value of money is a concept that often confuses people. This topic can be found in the present value section of the text. The various topics covered here include everything from the internal rate of return (IRR), present value, future value, net present value, and the discounted cash flow (plus more!). The discounted cash flow, or DCF, is the most difficult for students from what we see. It is the idea that cash received many years from now, is worth a different amount of money today.

For example, consider the lottery. A jackpot of, say, $500 million sounds like an enticing prize. But often times the fine print will indicate that the $500 million is the total cash payout that you will receive over a period of years. And, since we all know that $100 30 years from now, is worth less than $100 today, then we can extend that to the lottery example. If the winner of the lottery decides to take all of the winnings in a lump-sum payout today, then they will receive the "present value" of the $500 million worth of payments - which will be some number significantly less than $500 million (perhaps $250 million). The lower number is not typically arbitrary. It is based on a series of calculations not too dissimilar to the DCF formula.

In short, the present value, and DCF, are used to value dollar amounts in a single period (usually in "today's" period).

Series 66 Efficient Market Hypothesis; Let's Untangle this Concept

The Series 66 Efficient Market Hypothesis questions consistently confound many of our students.

Rightly so.

On its face, the idea of perfectly (strong form) efficient markets has been widely debunked at this point. So without much practical application then why is NASAA still teaching this decades-old idea?

Well, we don't try to answer these questions for our students (though we question them ourselves).

But, let's try to help you with passing the Series 66 by understanding the different types: Weak Form, Semi-Strong Form, and Strong Form.

Series 66 Efficient Market Hypothesis

The efficient market hypothesis as explained in the Series 66 and Series 65 exam is based on the notion that markets can have different levels of efficiency. By "efficiency" the text means that there is no way to "beat the market" with certain information available to you.

In other words, information that may drive the price of stocks and bonds are already incorporated into prices in certain types of markets. So, once that information is available, prices instantly adjust.

For example, if Apple released positive statistics related to its iPhone sales in the most recent quarter, the semi-strong form efficient market hypothesis espouses that the price would instantly adjust upward at the time of the press release.

As mentioned however, there are different grades of the efficient market hypothesis. Therefore, you can beat the market with a certain type of info in one market, but not others.

As tutors, we know this might sound a little tricky, so let's review.

Weak Form

When determining market prices, the market only considers price history and volume data.
You can beat the "Weak Form" market if you do some fundamental analysis (e.g., analyze a company like Warren Buffett)
You can beat the "Weak Form" market if you know some insider information (e.g., private, non-public, material information)

Semi Strong Form

When determining market prices, the market considers price history and volume data, AND all public information about the company.
You can beat the "Semi Strong Form" market with insider information.

Strong Form

When determining market prices, the market considers price history, volume data, public information about the company AND insider (private) information.
There is no way to beat this market.

Overall, the important takeaway is that some form of available information can beat the market in certain forms of the market, EXCEPT for the Strong Form market. All information is priced into that market (including insider information) - which is why there is presumably no way to beat this market for an investor.

Try to memorize these as best you can. This is a popular topic that could be covered on the exam. We highly recommend that you get comfortable with this section as it trips up many of our students.

As always, if you need help with it, or any other topics feel free to reach out to a Series 66 tutor (or Series 65 tutor).