How to Become a Financial Advisor: Licenses, Exams, and Getting Started

If you're thinking about becoming a financial advisor, you've probably discovered that there are a lot of exams, licenses, and unfamiliar terms to figure out.

Series 6, Series 7, Series 63, Series 65, Series 66, SIE. What do all those numbers mean? Which exams do you need? And where do you begin?

The good news is that the process isn't nearly as complicated as it might seem. Once you understand how the industry works, the different licensing requirements start to make sense.

I entered the financial services industry in the late 1990s and got licensed while I was still in college. Since then, I've helped many people develop their careers as financial advisors.

One thing I've learned is that getting licensed and becoming a successful financial advisor are two very different things.

The exams are an important first step. Building a career takes experience, persistence, and the ability to earn people's trust.

Let's start with the basics.

1. Understanding the Different Types of Financial Advisors

Not all financial advisors work the same way. Some focus on investment products, others provide ongoing investment management and financial planning, and many do both.

The type of work an advisor performs helps determine which licenses and registrations are required.

There are three common arrangements you'll encounter.

Broker-Dealer Representatives

A broker-dealer is a firm registered to conduct securities transactions. The people who work through these firms are commonly called registered representatives.

Depending on their licenses, they may help clients invest in mutual funds, stocks, bonds, variable annuities, and other securities.

Representatives often earn commissions when clients purchase investment products, although compensation arrangements vary.

Broker-dealers and their representatives must follow Regulation Best Interest when recommending securities transactions or investment strategies to retail customers.

Investment Adviser Representatives (IARs)

A Registered Investment Adviser, or RIA, is a firm that provides investment advice. The professionals who provide advice on behalf of these firms are often called Investment Adviser Representatives, or IARs.

Their work may include financial planning, investment management, retirement planning, and ongoing investment advice.

Rather than receiving commissions on transactions, advisory firms commonly charge fees based on the assets they manage or for the planning services they provide.

Investment advisers have a fiduciary duty to their clients, which includes acting in their clients' best interests.

Dually Registered Financial Advisors

Some advisors work in both brokerage and advisory roles. This is known as dual registration.

These professionals can offer brokerage services and investment advisory services through appropriately registered firms, giving them access to different ways of serving clients.

The rules and responsibilities depend on which role the advisor is performing.

What's the Difference?

Here's a simple comparison:

Each arrangement has its own opportunities, responsibilities, and business considerations.

As you explore a career in financial services, you'll hear more about independent advisory firms, traditional brokerage firms, insurance-based financial services organizations, and firms that offer both brokerage and advisory services.

For now, the important thing is to understand that there are several ways to work in this industry. Learning about them will help you ask better questions as you explore training programs and career opportunities.

2. Financial Advisor Licenses and Exams Explained

Financial services is a highly regulated industry. Advisors work with people's investments, retirement savings, and financial futures, so there are important rules governing what they can do and how they conduct business.

To work in many financial advisory roles, you'll need to pass licensing exams and become properly registered.

The part that often confuses newcomers is that there isn't one universal financial advisor license.

Different exams qualify you for different activities.

Here's what the most common ones cover.

The Securities Industry Essentials Exam (SIE)

The SIE introduces you to the financial services industry.

It covers basic investment products, how securities markets work, regulatory agencies, and important industry rules.

You don't need to work for a financial services firm to take it, making it a great place to begin.

Series 6: Investment Company and Variable Contracts

The Series 6 qualifies registered representatives to work with certain investment products, including mutual funds and variable annuities.

It's commonly used by financial professionals whose work focuses on those products rather than individual stocks and bonds.

The exam requires sponsorship from a FINRA member firm.

Series 7: General Securities Representative

The Series 7 is a broader securities exam.

It covers a wide range of investment products and activities, including stocks, bonds, mutual funds, options, and other securities.

Like the Series 6, it requires firm sponsorship.

Series 63: State Securities Laws

The Series 63 focuses on state securities laws and ethical business practices.

Many broker-dealer representatives need it to meet state examination requirements.

You can take the exam without firm sponsorship.

Series 65: Investment Adviser Representatives

The Series 65 is commonly used by people who want to become investment adviser representatives.

It covers investment concepts, client recommendations, laws, regulations, and ethical responsibilities.

You can take the Series 65 without joining a firm.

Series 66: Combined State Law Exam

The Series 66 combines the examination qualifications covered by the Series 63 and Series 65.

It's often used by professionals who plan to work in both brokerage and advisory roles.

You can take the Series 66 without a sponsor, but you also need a valid Series 7 to satisfy the combined examination qualifications.

State Insurance Licenses

If you plan to offer certain insurance products, you'll also need the appropriate state insurance license.

For example, selling variable annuities generally requires both securities registration and an appropriate insurance producer license.

Common Financial Advisor Licensing Paths

Here are a few examples of how these exams fit together.

These are common examples. The required exams depend on your role, the services you provide, and the states where you register. Some professional designations may also satisfy certain state examination requirements.

Passing the exams is followed by the applicable registration process, which may include background checks, firm filings, and other requirements.

You can learn more about current requirements directly from FINRA and NASAA.

3. How to Prepare for Your Financial Advisor Licensing Exams

I got licensed during my senior year of college.

I've always been a pretty good test taker, so the exams came relatively easily to me. But I've worked with plenty of intelligent, capable people who had to work much harder to pass them.

Some of those people went on to become excellent financial advisors.

These exams aren't easy for everyone. There's a lot of material to learn, and much of it will be completely unfamiliar when you're getting started.

Fortunately, there are several good ways to prepare.

Self-study: You can use textbooks, online study programs, and practice exams to prepare at your own pace.

Instructor-led courses: If you prefer more structure, classroom and online courses can help you work through difficult subjects.

Practice questions: Answering sample questions is one of the best ways to become familiar with the material and identify areas where you need more study.

Firm training programs: Some firms provide study materials, instructors, and support to help new advisors prepare for licensing exams.

My advice is simple: Find a study method that works for you, set aside enough time, and take the exams seriously.

You don't have to be a natural test taker to succeed in this profession. You just need to put in the work.

Free Financial Advisor Exam Practice Questions

At Parsonex, we've made free practice questions available through Advisor Training.

You can practice questions covering the SIE, Series 7, Series 63, Series 65, Series 66, and other financial services exams.

It's a great way to get familiar with the material, test your knowledge, and see what the exams are like.

4. What the Licensing Exams Don't Teach You

Passing your exams is an accomplishment. But there's a big difference between knowing the rules of the business and knowing how to do the business.

The exams teach you about securities, investment products, regulations, and your responsibilities as a financial professional.

They don't teach you how to build a client base, develop meaningful relationships, or run a successful financial advisory practice.

They don't teach you how to have a productive client meeting or how to earn someone's confidence.

And they don't give you an investment philosophy you can believe in and explain to clients.

When I entered the industry, much of the investment guidance I encountered revolved around risk questionnaires and portfolio models based on Modern Portfolio Theory.

Those tools have their place, but I eventually learned that good financial advice involves much more than placing someone into an investment model.

It took me years to develop the investment philosophy I believe in today and to fully appreciate how much a client's behavior can influence long-term financial outcomes.

An advisor needs to understand not only how investments work, but also how to help people make good decisions throughout their lives.

The best advisors can explain their recommendations clearly, help clients understand their choices, and provide perspective when markets or personal circumstances change.

Those skills develop through education, experience, mentorship, and working directly with people.

That's when you begin learning what it really means to be a financial advisor.

5. Building a Financial Advisory Business Takes Time

Here's something that surprises a lot of people when they enter this profession.

You can be very knowledgeable about investments and still struggle to build a financial advisory business.

That's because knowing how to help someone financially and finding people who want your help are two different skills.

Early in your career, you'll probably spend a great deal of time meeting people, introducing yourself, and developing relationships.

This is commonly called prospecting, and it's one of the most important parts of building a practice.

Expect to Hear a Lot of No's

When you're starting out, not everyone you meet is going to become a client.

Some people already have an advisor. Some aren't interested. Others may enjoy talking with you but aren't ready to make a change.

You'll hear "no" quite often.

That's part of the process.

What matters is continuing to have conversations, learning from them, and getting better at what you do.

With experience, you'll learn how to ask better questions, listen more carefully, explain ideas more clearly, and identify opportunities to help people.

You won't become great at those things by reading about them. You'll get better by doing them.

Focus on Relationships, Not Just Accounts

In financial services, there's a regulatory concept called "Know Your Customer."

It's an important part of understanding a client's financial situation and making appropriate recommendations.

But knowing your clients should mean much more than completing a form or checking boxes.

It means understanding their lives.

What are they working toward? What keeps them up at night? What do they want for their families? How do they think about money? What decisions are they struggling with?

As you develop relationships, you'll learn more about the people you serve and how to help them make better financial decisions.

And over time, those relationships can become the foundation of your business.

A Financial Advisory Practice Grows Over Time

One of the attractive features of this profession is the opportunity to build a business around long-term client relationships.

When you first begin, you may have very few clients. Much of your effort goes into meeting people and earning their trust.

As your business develops, you gain experience, your reputation grows, and your relationships become stronger.

Depending on your business model, you may also begin developing recurring revenue from ongoing client relationships.

Satisfied clients may introduce you to friends, family members, or colleagues who need advice.

Over the years, that can help create a more established practice.

But it's important to understand that this growth takes time, and success is never guaranteed.

Plan for the Early Years

New financial advisors enter the profession under a variety of compensation arrangements.

Some begin in salaried positions, learning the business while working alongside experienced advisors.

Others start in commission-based roles or positions where their compensation depends largely on developing clients.

Some programs combine salary, training, and performance-based compensation.

Understanding how you'll support yourself while you learn and build relationships is an important part of getting started.

Your first year in the business may look very different from your fifth or tenth.

It's worth approaching the opportunity with patience and a long-term perspective.

Related article: Financial Advisor Business Plan: 5 Essentials.

6. Learn by Doing and Find Good Mentors

I've always believed that some of the most valuable lessons in this profession come from experience.

You can study investment products, read books about financial planning, and learn communication techniques.

All of that is useful.

But sooner or later, you need to sit across from people, ask questions, listen to their concerns, and learn how to help them.

The more conversations you have, the more comfortable and capable you'll become.

Good mentors can make a tremendous difference in that process.

Working with experienced advisors gives you an opportunity to observe how they conduct meetings, explain recommendations, solve problems, and develop client relationships.

You can learn from their successes and their mistakes.

As you explore firms and training programs, ask how they help new financial advisors develop these skills.

Look at the education they offer, the experience of the people you'll work with, and the opportunities to learn while doing the job.

The right environment can help you develop both the technical knowledge and the practical skills you'll need throughout your career.

Frequently Asked Questions About Becoming a Financial Advisor

What licenses do I need to become a financial advisor?

There is no single license required for every financial advisor. Common exams include the SIE, Series 6, Series 7, Series 63, Series 65, and Series 66. Your requirements depend on the services you provide and the type of firm you work with.

Can I become a financial advisor without a finance degree?

Yes. You don't need a finance degree to take the common securities licensing exams. People enter the financial services industry from many different educational and professional backgrounds.

Can I take the SIE exam without working for a financial firm?

Yes. Anyone age 18 or older can take the SIE without firm sponsorship. It's a good way to begin learning about the industry before joining a firm. Passing results are generally valid for four years.

Can I take the Series 7 without a sponsoring firm?

No. The Series 7 requires sponsorship through a FINRA member firm. You can, however, take the SIE before joining a firm.

What's the difference between the Series 7 and Series 65?

The Series 7 is a broad securities qualification exam for broker-dealer representatives. The Series 65 is commonly used to qualify investment adviser representatives who provide investment advice.

What's the difference between the Series 65 and Series 66?

The Series 65 is a standalone investment adviser representative examination. The Series 66 combines the state-law examination qualifications associated with the Series 63 and Series 65 when paired with a valid Series 7.

Do I need a CFP certification to become a financial advisor?

No. The Certified Financial Planner (CFP) certification is a separate professional credential. It isn't required for every financial advisory role, but it can be valuable for professionals who want additional education and credentials in financial planning.

How long does it take to become a financial advisor?

Many people complete their licensing exams in a few months. The time varies based on the exams required, how much time you can devote to studying, and the registration process.

Building experience and developing a successful client base generally takes years.

Is becoming a financial advisor difficult?

It can be challenging, especially in the early years. You'll need to learn a great deal, pass licensing exams, and develop the skills to find and serve clients.

For people who enjoy working with others, solving problems, and building long-term relationships, it can also be an incredibly rewarding career.

Getting Started in Your Financial Advisory Career

If you're considering becoming a financial advisor, the best place to begin is by learning how the industry works.

Get familiar with the different career paths, understand the licensing requirements, and explore the resources available to help you prepare.

You don't need to know everything before you get started. In fact, much of what makes someone a great financial advisor is learned through years of experience.

The exams qualify you to begin. The knowledge you develop, the work you put in, and the relationships you build are what shape your career.

It's a profession that offers the opportunity to keep learning, build a business, and make a meaningful difference in people's lives.

And for the right person, that's a pretty compelling combination.

Explore a Career in Financial Advice

Interested in learning more about financial advisor careers, training, and opportunities?

Explore Parsonex and discover the different paths available in financial services.

You can also try our free financial advisor licensing practice questions to begin preparing for your exams.