It’s a niche in the market that is the “Wild, Wild West” all over again: who are all these people calling themselves financial advisors, what are their credentials and with what can they help me? There are hundreds and hundreds of individuals in the field of financial products in the Quad-Cities proper and there are no clear-cut, iron-clad laws established on who can hang out a shingle professing themselves to be a “financial advisor” and what they are able to do. Please join me here to sift through the different securities licenses required for different levels of expertise and the questions to ask when you first meet a new provider to see if you want to do business with them.
The most common type of expert is an insurance professional who has taken her or his life and health insurance exams from their state of resident and perhaps registered as a non-resident agent in other states by paying a fee to that state. You’ll find them at insurance companies or agencies and can sell you life insurance and health insurance like Medicare supplements, disability insurance, long -term care insurance, cancer insurance, etc. as long as they have taken specialized studies for the particular products mentioned. Some insurance professionals have also taken securities exams that allow them to sell consumers more products. Possibly, those could include the Securities Industry Essentials (SIE) Exam, the Series 6 securities exam and the Series 63 exam to sell securities in a particular state.
Let’s talk about the SIE, the Series 6 and the Series 63. That sequence of exams is taken by both insurance agents and brokerage securities personnel who want to sell mutual funds and insurance company products called variable annuities. Mutual funds are some of the most popular investment products available to everyday investors, with 52% of households in the U.S. in 2022 owning them according to Statista.com. Mutual funds are like a “basket” of different securities and might provide in one place shares of six different oil and gas companies along with three different beverage companies as well as ten different technology companies, as an example. The thought is that if something is going down in value, something very well could be going up. Mutual funds are the only option in most retirement plans and provide an investor with diversity as “not all their eggs are in one basket”. Variable annuities, again insurance company products, can provide a stream of money an investor can’t outlive, but also may have higher fees than a lot of financial investments and may tie an investor’s money up for an extended number of years until it is available to the consumer for withdrawal.
The next tier of expertise is the Series 7 securities license. Most insurance agents don’t seek to claim this license and there are some in the brokerage world who are content to only hold the SIE, Series 6 and Series 63. The Series 7, though, allows financial personnel to sell all the various types of assets available like stocks, bonds, municipal bonds, Real Estate Investment Trusts (REITs), etc. along with mutual funds and all annuities.
Series 7 investment professionals have a choice as to whether they take the Series 63, the Series 63 and Series 65 or the Series 66 license exam. If they take the Series 63, they are allowed to sell securities in a particular state. According to Investopedia, the Series 65 exam tests “…ethics, economics, investment strategies and analysis.” Taking the Series 65 allows an investment person to call themselves an Investment Advisor Representative (IAR) and provide financial planning services for a fee. The Series 66 exam and certificate is a combination of both the Series 63 and Series 65 and also allows that person to call themselves an IAR and provide investment-related advice for a fee.
Do you have further questions? I have my Series 7 & Series 66 licenses and would love to sit down with you today for a complimentary conversation about your needs. Please call 563-949-4705 or email [email protected] to make an appointment.
Securities offered through J.W. Cole Financial, Inc. (JWC) Member FINRA/SIPC. Advisory services offered through J.W. Cole Advisors, Inc. (JWCA). Huiskamp Collins Investments, LLC and JWC/JWCA are unaffiliated entities.