Compliance FAQs: The Series 65 Exam

Posted on June 27th, 2013 in Compliance Corner

In addition to our quarterly compliance webinar series. we provide frequently asked compliance-related questions on a monthly basis.

The answers to these questions, provided by Lexington Compliance, give insight into compliance concerns of registered investment advisors.

For example:

Is the Series 65 (S65) a license?

No. The S65 is an examination that is a prerequisite for becoming a representative of an RIA firm. Unfortunately, you cannot maintain any previous licenses as part of your RIA (e.g. Series 7). The S65 by itself does not allow you to give advice, charge fees, etc. You are required to file your individual registration document with your applicable state jurisdiction, a Form U-4 (in most states) and be approved by that jurisdiction before you can sign any clients or provide advice for a fee. Please note that New York uses a registration document called an NY-IAQ and Wyoming does not register investment advisor representatives (IARs).

How difficult is the S65 exam and what are the costs associated with taking the exam?

Spending 10 to 12 hours studying should give you a good chance to pass. A member of the Lexington Compliance staff helps NASAA (North American Securities Administrators Association) write and review its bank of test questions. NASAA is responsible for the S63, S65 and S66 exams. According to the Lexington Compliance staff member, while the exam questions are written to be entry level in nature, they are not easy. If you fail to pass the exam, you will have to wait 30 days and pay the $165 exam fee. NASAA provides a S65 exam outline which highlights the types of questions found on the exam.

Are there any exemptions to taking the S65 exam?

There are a number of professional designations that will often be accepted in lieu of taking the exam. These designations include the Certified Financial Planner (CFP®), Chartered Financial Analyst (CFA), Certified Insurance Counselor (ChFC®) or Personal Financial Specialist (PFS).

How does a representative schedule their S65 exam?

Either the representative files a Form U10 or the representatives firm files a Form U4. Once registered, a 120-day window will open, allowing the representative to schedule the exam.

Is there a continuing education requirement?

No, neither the firm nor firm representatives, including the CCO (chief compliance officer) are required to take continuing education courses. While there are no continuing education requirements, if an IAR is also a registered representative (RR) of a broker-dealer firm, he or she will typically have both a firm element and outside provider continuing education requirement as part of their RR affiliation.

To learn how Lexington Compliance can help you with your ongoing compliance needs, please visit www.lexcompliance.com. Talk to your dedicated relationship team, 877-726-8741 or advisorservices@scottrade.com, about the free basic compliance hotline* provided to Scottrade advisors by Lexington Compliance.

Regulation and compliance are complex and ever-changing, so you should consult your compliance officer or legal counsel for advice specific to the needs of your practice.

*The scope of this service will include basic questions about the operation of a registered investment advisor and related compliance and registration areas. If an inquiry requires extensive research, significant review of materials or drafting of materials, then Lexington will offer its standard compliance consulting packages for a fee. If you choose to retain Lexington for compliance consulting services that are outside the scope of the hotline, you are responsible for making all required payments. Scottrade and Lexington are not affiliated. Scottrade is not responsible for statements, offers or products issued by Lexington. Please research any product or service carefully before making a purchase.

Are you missing Advocate notification emails? Add advisorservices@e-mail.scottrade.com to your address book.

If you are not currently using the Scottrade® Advisor Services platform and would like more information about our products and services, visit us online .

2013 Scottrade FINRA /SIPC

Scottrade Inc. provides self-directed investors with online investing services, and does not make recommendations or offer investment advice of any kind. Scottrade Advisor Services is a business unit of Scottrade, Inc. All products and services are offered by Scottrade, Inc. Member FINRA /SIPC.

Online market and limit stock/ETF trades are just $7 for stocks/ETFs priced $1 and above. Additional charges may apply for stocks priced under $1, mutual fund, and option transactions. Click here for a full explanation of our fees.

Market volatility, volume, and system availability may impact account access and trade execution.

Hyperlinks to third party websites contain information that may be of interest or use to the reader. Third-party websites, research, and tools are from sources deemed reliable. Scottrade does not guarantee accuracy or completeness of the information and makes no assurances with respect to results to be obtained from their use.

Keep in mind that while diversification may help spread risk it does not assure a profit, or protect against loss, in a down market.

Bonds involve risks including, but not limited to interest rate risk, reinvestment risk, inflation risk, call risk, liquidity risk and a risk of loss of principal. New issue offerings are sold by prospectus or offering circular available at www.scottrade.com. Investors should read these carefully.

The information and content provided in the Scottrade Advisor Services Advisor Advocate is for informational and/or educational purposes only. The information presented or discussed is not, and should not be considered, a recommendation or an offer of, or solicitation of an offer by, Scottrade or its affiliates to buy, sell or hold any security or other financial product or an endorsement or affirmation of any specific investment strategy. You are fully responsible for your investment decisions. Your choice to engage in a particular investment or investment strategy should be based solely on your own research and evaluation of the risks involved, your financial circumstances and your investment objectives. Scottrade, Inc. and its affiliates are not offering or providing, and will not offer or provide, any advice, opinion or recommendation of the suitability, value or profitability of any particular investment or investment strategy. Past performance does not guarantee future results. Securities are subject to market fluctuation and may lose value.

Scottrade does not provide tax advice. The material provided is for informational purposes only. Please consult your tax, or legal, advisor for questions concerning your personal tax or financial situation.

Hyperlinks to third party websites contain information that may be of interest or use to the reader. Third-party websites, research, and tools are from sources deemed reliable. Scottrade does not guarantee accuracy or completeness of the information and makes no assurances with respect to results to be obtained from their use.

Testimonials may not be representative of the experience of other clients and are no guarantee of future performance or success.

Scottrade, the Scottrade logo and Scottrade Advisor Services are the registered trademarks of Scottrade, Inc. and its affiliates.

2014 Scottrade, Inc. All rights reserved.