Law Firm Series 7 Sponsorship: Is It Possible?

To take the Series 7 exam, you must be sponsored by a member firm or self-regulatory organization (SRO) that is regulated by the Financial Industry Regulatory Authority (FINRA). This means that a law firm can be a Series 7 sponsor if it is a FINRA member firm or SRO. The Series 7 exam is required for professionals in the securities industry and assesses the competency of an entry-level registered representative to perform their job. The exam covers various areas, including the sales of different types of securities, and after passing, individuals are allowed to sell a wide range of securities.

What is the Series 7 exam?

The Series 7 exam, also known as the General Securities Representative Qualification Examination, is a test that assesses the competency of an entry-level registered representative in performing their job as a general securities representative. It is an essential requirement for anyone looking to become a stockbroker or broker-dealer in the United States.

The exam covers a range of topics, including investment risk, taxation, equity and debt instruments, packaged securities, options, retirement plans, and interactions with clients. It is designed to ensure that candidates have a strong understanding of the basic securities industry information and the concepts fundamental to working in the industry. The Series 7 exam is also a prerequisite for other exams, such as the Series 52 exam, which is required for taking the Series 53 exam.

To be eligible to take the Series 7 exam, candidates must be sponsored by a member firm of the Financial Industry Regulatory Authority (FINRA) or a self-regulatory organization (SRO). This sponsorship requirement can be a challenge for those new to the industry, as it requires finding an employer or firm that is willing to sponsor them before they can even sit for the exam. Many mid-size firms are often willing to hire someone who has the qualifications for the job but has yet to take the exam. Once sponsored, the candidate can take the exam, which consists of 125 questions, and they must score at least 72% to pass.

The Series 7 exam is just one of the requirements for becoming a licensed securities representative. In addition to passing the exam, candidates must also pass the Securities Industry Essentials (SIE) exam, which was enacted by FINRA in 2018 as a co-requisite. The SIE exam covers basic securities industry knowledge, including the types of products and their risks, the structure of the securities industry markets, regulatory agencies and their functions, and prohibited practices.

Who can be a Series 7 sponsor?

To take the Series 7 exam, you must be sponsored by a Financial Industry Regulatory Authority (FINRA) member firm or a self-regulatory organisation (SRO). This is because FINRA requires an exam "sponsorship" before it will allow individuals to sit for the exam.

Broker-dealer sponsorships are also required, which can result in individuals seeking sponsors for the exam. GT Securities, for example, offers an interim sponsorship program that allows individuals to partner with an established broker-dealer and FINRA member firm as they go through the FINRA approval and exam process.

Sponsorships can often be found within the firms of friends or associates within the industry. Many mid-size firms are often willing to hire someone with the qualifications for the job but who has yet to sit for the exam. Positions in these companies that require the Series 7 exam as a base requirement may be more flexible with sponsorship if you can prove that you have done your research.

The sponsorship process begins with the candidate's completion of FINRA's Form U4, a 39-page form requesting detailed information. The sponsoring member firm then electronically submits the completed form and filing fees to FINRA. The firm must also complete background and public record checks to verify the accuracy of the U4 and ensure there have been no omissions of critical information.

After exam success, you become eligible for registration, and the sponsoring firm assumes responsibility for supervising your ongoing activities in the securities business.

What are the benefits of being a Series 7 sponsor?

To take the Series 7 exam, individuals must be sponsored by a member firm, a self-regulatory organization (SRO), or an exchange associated with the Financial Industry Regulatory Authority (FINRA). This often creates a catch-22 situation for aspiring professionals in the securities industry, as they need to pass the exam to become a professional but also need to be sponsored by an employer to take the exam.

Being a Series 7 sponsor allows organizations to attract and support talented individuals who are just starting in their careers and are highly motivated to pass the exam and become successful finance professionals. This can be a great way to build a loyal and skilled workforce.

As a sponsor, organizations can also benefit from the additional training they provide to their sponsored individuals. This training will be based on the skills and knowledge of broker dealers within the securities industry, and it will cover a wide range of topics, from general knowledge of the securities industry to specific areas such as knowledge of FINRA and its required exams.

Additionally, sponsors can offer regulatory bridges to their sponsored individuals, which can be a crucial benefit. A regulatory bridge is provided by the sponsoring firm to cover the time between the start of a new securities firm by the individual and the FINRA broker-dealer approval. This helps to cover the gap between business development and the necessary approvals to authorize the new firm.

Sponsors can also benefit from the connections and relationships formed with other professionals and organizations in the industry. This can lead to access to industry events, resources, and potential future partnerships.

How to find a Series 7 sponsor

To take the Series 7 exam, you must be sponsored by a Financial Industry Regulatory Authority (FINRA) member firm or a self-regulatory organization (SRO). An exam “sponsorship” is required before FINRA will allow individuals to sit for the exams. This can be frustrating for job seekers, as many seemingly low-level positions require the exam upfront.

You can find a Series 7 sponsor by:

• Checking with friends or associates within the industry.
• Checking with firms through the FINRA registry.
• Researching FINRA member firms on the North American Securities Administrators Association (NASAA) website.
• Networking with finance professionals or stockbrokers at events.
• Applying to companies that mention sponsorship in their company bio.
• Applying to mid-size firms, which are often willing to hire someone who has yet to sit for the exam.
• Applying to firms that are experiencing particular growth, as they will be most likely to look for new professionals.

If you are already employed in a position that requires the Series 7 exam, your firm will likely sponsor you.

Interim sponsorship programs are also available from companies like GT Securities to help individuals through the FINRA approval process. These programs allow you to partner with an established broker-dealer and FINRA member firm as you go through the FINRA approval and exams process.

What happens after a Series 7 sponsor is found?

To take the Series 7 exam, sponsorship by a member firm or self-regulatory organization (SRO) associated with the Financial Industry Regulatory Authority (FINRA) is required. This is because FINRA requires individuals to be sponsored before they can sit for the exam. As a result, individuals must seek sponsors to take the exam and obtain their General Securities Registered Representative license.

After securing sponsorship, the sponsoring firm will submit your personal information to FINRA's Central Registration Depository (CRD) and pay the testing fees required for your exam. They will also cover the cost of the exam on your behalf. Your testing window will then open, giving you 120 days to pass the exam without restarting the process and paying a new fee. The sponsorship training will cover a number of areas in the exam, including the general knowledge section and specific items detailed in the Series 7 exam. The training will prepare you for the levels of examination and the types of questions found within certain sectors of the exam.

In addition to the training, the sponsoring firm will provide support for multiple assignments and oversight of projects from inception to closure. This will likely be the place where you prepare for and become ready for an expanded role within the securities industry. The duration of time spent with a sponsorship securities firm will likely be the place where you will prepare for and be ready for a greatly expanded role within the securities industry.

After passing the exam, you will be allowed to sell a wide range of securities, including corporate stocks and bonds, municipal bonds, mutual funds, annuities, options, and direct participation program partnerships. You will also be allowed to sell packaged securities, such as collateralized mortgage obligations.

Frequently asked questions