When it comes to Series 66 focus areas, there are a few that stand out. In today’s post, we discuss these various areas, and where you should spend a little extra time in your studying. This exam, for some people, can be harder than the Series 7 Exam. We highly recommend to not take this one lightly.
Series 66 Exam Focus Areas…Agent vs Broker Dealer
Whether it is the Series 63 Exam, Series 65 Exam, or Series 66 Exam, all three of these include the same content around understanding when agents, broker-dealers, investment advisor representatives, or investment advisors need to register with a state administrator. You may find this to be confusing, but it is an important section. It gets tricky for a number of reasons.
First, there are very specific definitions of what makes someone an agent. Understanding this is critical for a few extra points. The simplest explanation is that an agent must be an individual, whereas a broker-dealer is an institution (or the firm). One caveat is that it is possible for an individual to have their own broker dealer, and be the only employee.
Deciding whether or not you have to register as an agent, is another very important topic for this exam. Whether or not you have to register as a broker dealer is equally salient. You will see that there is no “state registered” vs “federally covered” broker-dealer. This is slightly different than investment advisors (which we discuss below).
All in all, there are way too many nuances to go through in a quick blog post. That said, this is a very important section and one that we at Professional Exam Tutoring recommend studying thoroughly.
Investment Adviser Representative vs Investment Adviser
Next, we highly recommend that you get very comfortable with the differences between two other terms: Investment advisor representatives, much like agents, are individuals. An investment advisor, on the other hand, is an entity or institution.
One main reason that this section can be confusing for people is that in the real world, investment advisor reps, often referred to themselves, and their peers, as investment advisors. When it comes to the legal jargon however, this is inaccurate.
Aside from exact definitions, also understanding when they have to register with the state is important. For instance, you’ll want to know who the de minimis rule applies to. This is only applicable for state registered advisers for instance. When it comes to federally covered advisers, there is no de minimis rule.
The entire exam is full of many of these little differences. A few other smaller topics that tend to raise a lot of questions include net present value, IRR, Rule of 72, and exempt securities versus exempt transactions.
Overall, we highly recommend that you approach this exam by doing as many questions as possible. Seeing as many different scenarios as possible, will help you really understand the various situations to which state law and rules can apply. Again, it is not an easy exam, so feel free to reach out if you need any help.
We wish you a great holiday season, and good luck!