Series 65 Information

The Series 65 exam is designed to qualify candidates as investment adviser representatives. It is comprised of 130 questions and is administered within a 3 hour time limit. Your results are available immediately at the conclusion of the exam.

The examination is administered by FINRA. To schedule the examination, you should file a Form U-10 and pay the $120 examination fee directly to FINRA. FINRA will then send you a letter explaining the window of time they have allowed for you to sit for the exam along with instructions for setting an examination appointment. There is no need to return the Form U-10 to MarketCounsel.

To assist you with preparing for the exam, we offer comprehensive study materials. Although successful completion of the examination may satisfy a portion of the requirements of a particular state, it does not convey the right to transact business prior to being granted a license or registration by that state.

The following study outline is designed to provide an overview of the exam’s general content and format. The Series 65 exam and the study outline were both developed by the North American Securities Administrators Association, Inc. (“NASAA”).

Uniform Combined State Law Examination
(Series 66)
Exam Specifications
CONTENT AREA #OF ITEMS
1. Economics and Analysis 20
1. Understand basic economic concepts

  1. Inflation/deflation
    1. Definitions
    2. Causes of inflation/deflation
  2. Interest rates and yield curves
    1. Graphs
    2. Definitions
    3. Interest rate = cost of money
  3. Basic economic indicators
    1. GDP
    2. Employment indicators
    3. Trade deficit
    4. Balance of payments
    5. CPI
2. Identify components of a business’s financial statements to determine investment merits

  1. Income statement
    1. Revenues
    2. Cost of goods sold
    3. Pre-tax margins
    4. Cash flow
  2. Balance sheet
    1. Assets
    2. Liabilities
    3. Working capital
    4. Owner’s equity
    5. Footnotes
3. Demonstrate understanding of quantitative methods to evaluate investments

  1. Time value of money
  2. Expected return
  3. Net present value
  4. Internal rate of return
  5. Inflation-adjusted return (real return)
  6. After-tax return/yield
  7. Risk-adjusted return
  8. Total return
  9. Holding period return
  10. Yield-to-maturity
  11. Yield-to-call
  12. Current yield
  13. Risk measurements (e.g., Beta, standard deviation, duration)
  14. Valuation ratios (e.g., P/E, price-to-book)
  15. Benchmark portfolios
  16. Annualized return
4.Identify risks (i.e. definitions, impact on the market, companies, and personal investments)

  1. Business
  2. Market
  3. Interest rate
  4. Inflation
  5. Regulatory (e.g., tax law changes)
  6. Liquidity
  7. Opportunity cost
2.Investment Vehicles 26
1.Evaluate cash and cash equivalents

  1. Types and characteristics of cash and cash equivalents
    1. Certificates of deposit
    2. Money market funds
    3. Treasury bills
  2. Benefits/risks of owning cash and cash equivalents
2.Evaluate cash and cash equivalents

  1. Types and characteristics of fixed income securities
    1. U.S. government and agency securities
    2. Mortgage-backed securities
    3. Corporate bonds (i.e., investment grade and high yield)
    4. Convertible bonds
    5. Municipal bonds
    6. Zero-coupon bonds
  2. Benefits/risks of owning fixed income securities
3.Evaluate equity securities

  1. Types and characteristics of cash and cash equivalents
    1. Certificates of deposit
    2. Money market funds
    3. Treasury bills
  2. Benefits/risks of owning cash and cash equivalents
4.Evaluate investment company securities

  1. Types and characteristics of investment companies
    1. Open-end investment companies
      (mutual funds)
    2. Closed-end investment companies
    3. Classes of shareholders, expense ratios, sales load, breakpoints, 12b-1 fees
  2. Benefits/risks of owning investment company securities
5.Recognize derivative securities and their benefits/risks
6.Understand unique aspects of international investing

  1. Emerging vs. developed markets
  2. American Depository Receipts (ADRs)
  3. Currency influences (concept of risk)
7.Understand real estate partnerships and investment trusts (REITs) and variable annuities

  1. Definitions
  2. Benefits/risks
3. Investment Recommendations and Strategies
1. Determine and analyze the financial profile of the client to develop a suitable investment policy and strategy

  1. Type of client
    1. Individual
    2. Sole proprietorship
    3. General partnership
    4. Limited partnership (including family limited partnership)
    5. Limited liability company
    6. C corporation
    7. S corporation
    8. Trust
    9. Estate
  2. Financial goals
  3. Current financial status (e.g., cash flow, balance sheet)
  4. Capital needs (e.g., current, retirement, death, disability)
  5. Current investments and strategies
  6. Time horizon
  7. Non-financial investment considerations (e.g., values, attitudes, experience, demographic characteristics)
  8. Risk tolerance
  9. Tax situation
2. Understand portfolio management strategies, styles, and techniques (fixed income and equities)

  1. Portfolio management styles and strategies
    1. Strategic and tactical asset allocation (e.g., style, asset class, rebalancing)
    2. Active vs. passive
    3. Growth vs. value
    4. Market capitalization (micro, small, mid, large)
    5. Buy/hold
    6. Indexing
    7. Diversification
  2. Funding techniques
    1. Dollar-cost averaging
    2. Income reinvestment (e.g., dividend, interest, cap gain)
3.Recognize fundamental taxation issues

  1. Individual income tax (e.g., capital gains, tax basis, retirement distribution, alternative minimum tax)
  2. Corporate, trust, and estate income tax
  3. Estate and gift tax
4. Recognize types of retirement plans and related issues

  1. Retirement plans
    1. Individual Retirement Arrangements (IRA)
    2. 403(b) plans
    3. Qualified retirement plans (e.g., pension and profit sharing, 401(k))
    4. Nonqualified retirement plans
  2. Important ERISA issues
    1. Fiduciary responsibility (e.g., 404(c))
    2. Investment policy statement
    3. Prohibited transactions
5 .Define the fundamental terms and concepts of trading securities

  1. Terminology (e.g., bids, offers, quotes)
  2. Role of broker-dealers, specialists, market-makers
  3. Types of orders (e.g., market, limit, stop, short sale)
  4. Types of accounts (e.g., cash, margin, option)
  5. Commissions, markups, spread
6.Calculate performance

  1. Calculate performance
    1. Total return (i.e., yield plus growth)
    2. Inflation-adjusted return
    3. After-tax return/yield
    4. Current yield
4. Ethics and Legal Guidelines 45
1. Understand relevant aspects of securities acts and other rules and regulations in order to comply as an investment adviser representative

  1. Investment Company Act of 1940
  2. Investment Advisers Act of 1940
  3. Securities Act of 1933 and Securities Exchange Act of 1934 (as applicable to investment adviser issues)
  4. SEC Release No. IA-1092 (applicability of the Investment Advisers Act to financial planners and others)
  5. State securities laws (i.e., Blue Sky)
  6. NASAA rules prohibiting dishonest and unethical business practices
  7. Limitations on permissible practice (i.e., technical licensing requirements)
2.Demonstrate ability to apply ethical practices

  1. Fiduciary responsibility
  2. Conflict of interest
  3. Prudent Investor standards
  4. Limitations on advice and activities (i.e., when to consult other professionals)