toddgenger's  Instablog

Although individuals usually do not have to register separately with the Securities and Exchange Commission, individuals associated with a registered broker-dealer must also register as representatives of their firm with the Financial Industry Regulatory Authority (FINRA). According to Todd Genger, persons associated with a registered broker-dealer who are engaged in the investment banking or securities business, including the functions of supervision, solicitation, or conduct of business in securities or who are engaged in the training of associated persons, are designated as representatives and are required to satisfy certain registration and examination requirements.

A broker-dealer must file a Form U-4 with FINRA (or any other self-regulatory organization) for each associated person who will effect transactions in securities when that person is hired or otherwise becomes associated. Form U-4 is used to register individuals and to record an individuals' prior employment and disciplinary history.

To qualify as a registered representative, a professional must be employed by a registered firm for a minimum of 4 months and pass the Series 7 Exam (General Securities Registered Representative) that is administered by FINRA. The exam takes 6 hours and contains 250 multiple-choice questions; a score of 70 percent or above is required to pass the exam. This registration qualifies a candidate for the solicitation, purchase, and/or sale of all securities products, including corporate securities, municipal securities, municipal fund securities, options, direct participation programs, investment company products, and variable contracts.

Most states require a second examination, the Uniform Securities Agents State Law Examination (Series 63 or 66). This test measures a candidate’s knowledge of the securities business in general, customer protection requirements, and recordkeeping procedures.

Individuals associated with a registered broker-dealer who are actively engaged in the management of the firm’s investment banking or securities business, including supervision, solicitation, conduct of business, or the training of persons associated with a member for any of these functions are designated as principals and must pass an additional examination. According to Todd Genger, the Series 9 and 10 (General Securities Sales Supervisor) designation is appropriate for individuals who supervise sales activities in corporate, municipal, and options securities, investment company products, variable contracts, and direct participation programs.

There are many other licenses available, each of which gives an individual the privilege to offer and sell different investment products and services, such as options or municipal securities. Traders and some other sales representatives may also need additional licenses.

Although not always required, certifications enhance professional standing and are recommended by employers, explains Todd Genger. Brokers, investment advisors, and financial services sales agents can earn the Chartered Financial Analyst (CFA) designation, sponsored by the CFA Institute. To qualify for this designation, applicants need a bachelor's degree, four years of related work experience, and must pass three exams which requires several hundred hours of self-study. The exams cover accounting, economics, securities analysis, financial markets and instruments, corporate finance, asset valuation, and portfolio management.

Registered representatives must attend continuing education classes to maintain their licenses. FINRA administers the continuing education program for the securities industry. Continuing education consists of two mandatory programs: a Regulatory Element and a Firm Element.