Study for the Series 6 Exam

Are you planning to take the Series 6 Exam to qualify as representatives registered to sell mutual funds and variable annuities? Then be forewarned that FINRA's Content Outline for the Series 6 Exam includes account registration types in Section 2.1. These account registration types include  tenancy in common (TIC), tenancy by the entirety, joint tenancy with rights of survivorship (JTWROS), and others. Bob Eder has a full treatment of the types of account registration in his Study for the Series 6 Exam . Here is a sample of Bob Eder's discussion: Tenancy by the Entirety (2.1) This form of ownership is available only between married couples. About 20 states still permit tenancy by the entirety. It grants the wife equal right to the use of the property ab initio , i.e., from the very beginning of the partnership, for example, the family home. Tenancy by the entirety considers husband and wife to be one legal unit. It does not permit creditors to attach the interests of one of...

Series 6 Exam candidates should expect  that several Series 6 Exam questions deal with FINRA and SEC rules on proper communications with retail customers and keeping written records of such communications. The  Record-Keeping Rules state that a brokerage firm has an obligation to keep written records of advertising material sent to customers by its registered reps. Such records must be in writing or electronic form, and be signed and dated by a registered principal of the broker/dealer.  But many reps do not know that the brokerage firm is also bound to keep records of all communications, even those that are sent or received through social media, such as Facebook, Twitter, et al. Yes, the Record-Keeping Rule covers communications with customers through social media, e-mail, digital messaging, and all other website and internet platforms. (These communications are known as "off channel.") That this is an important topic on the Series 6 Exam is underscored by an SEC Press R...

I f you plan to sit for the Series 6 Exam, make sure that you thoroughly study and know the provisions of FINRA's rule on Retail Communications, Rule 2210. It is not necessary to identify Rule 2210 by its number, but it is necessary to know its major rule provisions.Why is Rule 2210 so important for the exam? The reason is that FINRA tells us that it is important in its Series 6 Content Outline in Section 1.1. Bob Eder devotes Chapter One of his Study for the Series 6 Exam to Rule 2210 and Retail Communications. Here is a sample of Bob Eder's treatment: EXAMPLE If Suzanne, a representative, recommends shares of a mutual fund, such as the XYZ Fund, in a public talk, she must have a reasonable basis for her recommendation; and Suzanne must disclose if she has a financial interest in XYZ Fund that she endorses. If she does have a financial interest, e.g., owning 500 shares of XYZ Fund, Suzanne must disclose and describe this interest. Furthermore, Suzanne must dis...

Here is an important rule to study and know for anyone planning to take the Series 6 Exam. FINRA Rule 3110 (b) (4) requires supervision of all correspondence both incoming and outgoing. It covers the  review of incoming and outgoing written correspondence involving retail customers and internal communications relating to a broker/dealer's investment banking or securities business.  Note as important that this rule also covers electronic communications, both incoming and outgoing.  A registered principal of a broker/dealer must review and approve or disapprove all: (a) incoming and outgoing written (including electronic) correspondence to properly identify and handle in accordance with firm procedures, customer complaints, instructions, funds and securities, and communications that are of a subject matter that require review under FINRA rules and federal securities laws. (b) internal communications that require review under FINRA rules and federal securities laws. A regist...

Planning to sit for the Series 6 Exam in the future? If so, make sure that you can explain and recognize the FINRA rule differences between correspondence, retail communications, and institutional correspondences. How do I know that questions on these topics may show up on your Series 6 Exam? I know this because FINRA publishes a Series 6 Exam Content Outline , and Section 1.1 specifically states that Series 6 candidates should know standards and types of various Public Communications.  Bob Eder in his Study for the Series 6 Exam presents a detailed discussion of Public Communications, including standards and required approvals. Here is a sample of Bob Eder's treatment: Correspondence (1.1) FINRA defines "correspondence" as any written or electronic communication that a brokerage firm or representative sends, distributes, or makes available to 25 or fewer retail investors, within any 30-calendar-day period. If a representative sends material to more than 25 retail cust...

If you plan on sitting for the Series 6 Exam, be prepared for test questions that ask about the various Share Classes for Mutual Funds. FINRA publishes a Content Outline for the Series 6 Exam, and it specifically lists knowledge of Share Classes in Sections 3.2 and 3.3. Bob Eder in his  Study for the Series 6 Exam  discusses Share Classes of Mutual Funds in detail. Here is an example of Bob Eder's treatment: "Share Classes                                                                                          (3.2) Many mutual fund families (i.e., sponsored by the same o...

The Series 6 Exam asks questions about gift and estate taxes, including the annual gift limit, the lifetime exclusion, and the taxations of securities received as a gift or by inheritance. How do I know this? I know that there are tax questions on the Series 6 because FINRA publishes Content Outline for the Series 6 that list these tax considerations in Section 3.3. Bob Eder in his Study for the Series 6 Exam presents a detailed discussion of gift and estate taxes in Chapter 8. Here is a sample of Bob Eder's discussion and treatment: Unification of Estate and Gift Exemption (3.3) When talking about the $12.92 million life time exclusion, we must remember that this amount applies to not only the size of one's estate but also to the amount of gifts that a person gives during his or her lifetime that exceed the exempted amount. Currently, for tax year 2023, a taxpayer may give up to $17,000 per year to another person without having to pay tax on this amount. This amount does no...

Taking the Series 6 Exam? Be careful that you study FINRA's Rule 2330 governing the ethics and propriety of recommending to a client that he/she exchange one deferred variable annuity for a new one. Take a look at the actual wording of FINRA's Rule 2330: "(1) No member or person associated with a member shall recommend to any customer the purchase or exchange of a deferred variable annuity unless such member or person associated with a member has a reasonable basis to believe (A) that the transaction is suitable in accordance with  Rule 2111  and, in particular, that there is a reasonable basis to believe that (i) the customer has been informed, in general terms, of various features of deferred variable annuities, such as the potential surrender period and surrender charge; potential tax penalty if customers sell or redeem deferred variable annuities before reaching the age of 59½; mortality and expense fees; investment advisory fees; potential charges for and features of ...

  When preparing for the Series 6 Exam, don't overlook Municipal Fund Securities. More than one Series 6 candidate has sat for test only to be surprised that there were questions on Municipal Fund Securities. First of all, you need to know the different types of these securities, such as 529 Plans, Local Government Investment Pools, and ABLE accounts. Then you need to know the different characteristics of each of these three types. How do I know that the Series 6 Exam contains questions on Municipal Fund Securities? I know this because FINRA's Content Outline for the Series 6 Exam specifically identifies these securities in Section 3.2 as covered by the test. Bob Eder in his  Study for the Series 6 Exam  discusses Municipal Fund Securities in detail. Here is a sample of Bob Eder's treatment: Municipal Fund Securities                            ...

   Thinking of taking the Series 6 Exam? Then make sure that you study the characteristics of Private Placements and Private Offerings because you are likely to see questions about these topics on the Series 6 Exam. How do I know this? FINRA list these topics In its Content Outline for the Series 6 Exam in Section 1.2, entitled "Describe Investment Products and Services . . . " Bob Eder in his Series 6 study guide,  Study for the  Series 6  Exam , discusses Private Placements and Offerings in detail. Here is a sample of Bob Eder's discussion: Rule 506 Under Rule 506 of Reg. D, there is no dollar limit on the size of the private offering. Moreover, there may not be more than 35 investors. In addition, Reg. D allows an unlimited number of accredited investors, generally those with sizeable assets or income. In a Rule 506 offering, all purchasers, accredited or non-accredited, must be knowledgeable and sophisticated investors, meaning that they are both famili...

The Series 6 Exam asks questions regarding Options and their Characteristics. FINRA's Content Outline for the SIE Exam includes Options in Section 3.2, and Option Characteristics, such as when options are "in-the-money," "out-of-the-money," or "at-the-money." Bob Eder discusses Options and their Characteristics in his  Study for the Series 6 Exam . Here is a sample of Bob Eder's treatment: "When Options Are "In the Money" (3.2) A call option is in-the-money when the stock price is above the strike price of the call. A put option is in-the-money when the stock price is below the strike price of the put. "EXAMPLE #1 Johnny purchases three calls XYZ June 60 for three when XYZ stock is at 62. This call is in the money because the stock price (62) is higher than the strike price of XYZ call (60).   "EXAMPLE #2 Joan purchases one put ABC Aug 50 for four when ABC stock is at 49. This put is in the money because ABC stock price (49...