Chapter 1

Introducing the SIE (Securities Industry Essentials) Exam

IN THIS CHAPTER

Introducing the SIE

Taking a look at companion tests

Registering to take the exam

Uncovering topics tested on the SIE exam

Mastering the computerized exam format

Congratulations on your interest in becoming a financial professional! But before you can lose yourself in the energy of the office, the eager voices of your clients, and the warm glow of success, you have to face the SIE as well as one of the top-off (qualification) exams such as the Series 7 or Series 6. In this chapter, I give you an overview of the SIE exam, including its purpose, structure, format, scoring, and some helpful tips to guide you through the registration procedure.

This book’s first four chapters go over things like what the exam is, how to study for it, how to take the test, and so on. If you feel that you have a handle on those things, feel free to jump to Chapter 5 to get right into the meat and potatoes of what you need to learn.

What Is the SIE Exam, Anyway?

Initially, the information in the SIE (Securities Industry Essentials) exam was included in books that covered the Series 6, Series 7, Series 22, and so on. The Financial Industry Regulatory Authority (FINRA) had the idea to strip similar information from these exams and create the SIE exam. What I’ve found is that besides stripping the information from these other exams, unfortunately for you and other exam-takers, FINRA added a lot more information. What this means is that you’ll have to study a lot of information to answer 75 randomized questions.

The SIE is an introductory-level exam designed to test your basic knowledge of the securities industry and is open to anyone age 18 or older. Fortunately, association with a securities firm isn’t required; individuals may take the SIE exam before or after being hired by a firm. You need to know certain terminology used in the securities industry, different securities products, how the market is structured, how the market functions, different regulatory agencies and their purposes, as well as regulated and prohibited practices.

Because unsponsored individuals are allowed to take the exam, you can take a step toward becoming a securities professional prior to being hired. (Although you can take the SIE exam and one of the corequisite exams in any order, for most people it makes sense to take the SIE first.)

The purpose of this exam and the corequisite exams is to protect the investing public by ensuring that the individuals who sell or give information about securities have mastered the skills and general knowledge that competent practicing representatives need to have.

The SIE exam itself is a computer-based exam given by Prometric (www.prometric.com/finra), the testing company chosen by FINRA to provide and oversee their exams. You can take your exam at a Prometric test center throughout the United States or online. (See the “So you want to take the test at your location” sidebar later in this chapter.) The 75-question exam, administered by FINRA, is 105 minutes in duration. A score of 70 percent or better will get you a passing grade and put a big smile on your face. After you pass the SIE, the results remain valid for four years from the date you pass. The passing rate for those taking the SIE exam for the first time is around 74 percent. If you include those who have taken the exam more than once, it’s closer to 82 percent.

The sections later in this chapter explain the setup of the SIE exam and give a rundown of how to register for the exam. If you have other questions, call the FINRA support team at (240) 386-4040 or visit www.finra.org/industry/qualification-exams.

Profiling the SIE Exam-Taker

The SIE exam is for people who want to become investment company reps, general securities reps, direct participation program (DPP) reps, securities traders, investment banking reps, private securities offerings reps, research analysts, or operations professionals.

When the SIE exam was first proposed, the idea was to strip the information that was similar in all the exams that had come before (Series 6, Series 7, Series 22, and so) and put it in one place, thus making it easier for people to add licenses to their résumés. So, to become a securities professional, you need to pass the SIE exam, one of the exams listed in the next section, and typically the North American Securities Administrators Association (NASAA) Series 63 or 66 exam. The Series 63 and Series 66 exams can also be taken without sponsorship, but individuals typically wait until they’ve passed one of the corequisite exams before tackling one of these.

People who have a long and sordid history of embezzlement, forgery, and fraud are generally disqualified and precluded from taking the exam. Candidates must disclose any criminal records, and the FINRA reviews applications on a case-by-case basis.

One’s Not Enough: Tackling the Corequisite (Top-Off) Exams

The SIE exam is just your starting point. To become an industry professional, you have to take one of the top-off exams and, in most cases, the Series 63 or Series 66 state exam as well. As far as which top-off exam(s) you’ll have to take, the answer depends on the job you want and/or are hired to do. After you pass the SIE exam, the financial institution that hires you will tell you which exams you need to take and will help you schedule them.

In addition to taking the SIE exam and one of the top-off or corequisite exams listed in the following sections, you’ll likely have to take either the NASAA Series 63 exam or the NASAA Series 66 exam. These exams go into state securities laws as opposed to federal securities laws, which are the focus of exams like the SIE. The difference between the Series 63 and Series 66 is that the Series 66 allows holders to become investment advisers as well. Your employer will let you know which exam to take. More and more broker-dealers want their agents to take the Series 66. Don’t worry too much; neither of these exams are the beasts that some of the other listed exams are.

Series 6: Investment Company and Variable Products Representative Exam

Series 6 is the license required by most banks and insurance companies. This license allows the holder to sell products such as mutual funds, variable annuities, and variable life insurance (along with having an insurance license). To see the complete outline of what’s covered, go to www.finra.org/sites/default/files/Series_6_Content_Outline.pdf.

Series 7: General Securities Representative Exam

Series 7 is the license exam that most people will be taking. This license is required by most broker-dealers. The Series 7 allows you to sell equity securities, mutual funds, bonds, direct participation programs, options, and so on. To see the complete outline of what’s covered, go to www.finra.org/sites/default/files/Series_7_Content_Outline.pdf.

As a side note, if you’re taking the Series 7 exam after taking the SIE, I’ve also written Series 7 Exam 2024–2025 For Dummies, 6th Edition (John Wiley & Sons, Inc.), which is laid out in the same logical way as this book for ease of studying.

Series 22: DPP Representative Exam

If you’re planning to focus your career on selling direct participation programs (DPPs), the Series 22 exam is the one for you. This license allows you to solicit and sell limited partnership interest in DPPs such as real estate, oil and gas, and equipment leasing. To see the complete outline of what’s covered, go to www.finra.org/sites/default/files/Series_22_Content_Outline.pdf.

Series 57: Securities Trader Exam

The Series 57 license allows holders to execute trades in securities. Typically, a Series 57–licensed person works in the trading department, executing trades for individuals or firms. To see the complete outline of what’s covered, go to www.finra.org/sites/default/files/Series_57_Content_Outline.pdf.

Series 79: Investment Banking Representative Exam

The Series 79 Investment Banking Representative exam allows holders to work in the investment banking realm. As such, the holders’ functions may include advising or facilitating equity or debt securities offerings through public offerings, private placements, and mergers and acquisitions. To see the complete outline of what’s covered, go to www.finra.org/sites/default/files/Series_79_Content_Outline.pdf.

Series 82: Private Securities Offerings Representative Exam

If you’re planning to sell securities privately as opposed to publicly, Series 82 is the exam you’ll need to pass. This exam tests you on the knowledge needed to perform functions of a private securities offerings rep, including the solicitation and sale of Regulation D private placement securities as part of a primary offering. To see the complete outline of what’s covered, go to www.finra.org/sites/default/files/Series_82_Content_Outline.pdf.

Series 7 + Series 86 + Series 87: Research Analyst Exam

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