Financial advisors play an important role in helping individuals and businesses make sound investments and financial decisions. To become a financial advisor, one must acquire the necessary licenses and certifications required by the state in which they are working.
In order to become a licensed financial advisor, the individual must be registered with the Financial Industry Regulatory Authority (FINRA). FINRA is responsible for regulating brokerage firms and the professionals who work within those firms. All financial advisors must pass the FINRA Series 7, 66 and 65 exams. The Series 7 exam is the General Securities Representative Exam, the Series 66 exam is the Uniform Combined State Law Exam, and the Series 65 exam is the Uniform Investment Adviser Law Exam. In addition to these exams, financial advisors must also complete a certain number of hours of continuing education each year.
Once the individual has successfully completed the FINRA exams and obtained the necessary licenses and certifications, they must then register with the Securities and Exchange Commission (SEC). This registration is required for any professional who is advising clients about securities and investments. The SEC requires that the financial advisor provide their clients with a written disclosure statement that outlines their qualifications, services and fees.
In addition to the FINRA and SEC registrations, financial advisors may also be required to obtain state licenses. This is dependent on the state in which they are working, as each state has its own specific regulations. In some cases, financial advisors may need to obtain a state insurance license if they are providing advice on insurance products.
In some states, this is known as the Investment Adviser Representative license. This license requires that the financial advisor pass an exam and provide a written disclosure statement to their clients.
In summary, financial advisors must acquire the necessary licenses and certifications in order to legally provide investment advice. This includes registering with FINRA and the SEC, as well as obtaining any additional state licenses that may be required. Financial advisors must also complete a certain number of hours of continuing education each year. By acquiring the proper licenses and certifications, financial advisors can ensure that their clients are receiving quality advice.
