Study for the Series 6 Exam

      If you intend to sit for the Series 6 Exam, make sure that you are familiar with securities in the Money Market and the Capital Markets. The Money Market means the market for short-term debt securities, such as T Bills, commercial paper, brokered certificates of deposit, and bankers acceptances. In contrast the Capital Markets designate the markets for long-term debt and equity securities. FINRA publishes a Content Outline for the Series 6 Exam, and in Section 3.2, FINRA requires  knowledge of Treasury securities, other money market instruments, and U.S. government agency securities. Bob Eder in his Study for the Series 6 Exam devotes Chapter 7 to  Equity Securities, Debt Securities, Options, Treasury Securities, U.S. Agency Securities, Money Market Instruments, Corporate Debt, and Money Market Instruments.  Study for the  Series 6  Exam  is available from Amazon in both paperback and Kindle e-book versions.  Here is the link...

Planning to sit for the Series 6 Exam? Then be prepared for questions on Opening Customer Accounts, including the necessary items required for accepting a new customer. FINRA publishes a Content Outline for the Series 6 Exam, and Section 2.1 specifically talks about the requirements for opening customer accounts. Therefore FINRA is telling us that the Series 6 Exam will include questions on opening such accounts. Bob Eder in his Study for the Series 6 Exam discusses the customer account  requirements in Chapter Four. The SEC also publishes a list of these requirements. Here is what the SEC says at  (https://www.sec.gov/oiea/investor-alerts-bulletins/investoralertsib_openbrokerageaccount): "Information You Will Need to Provide "Brokers generally request personal information from their customers, including financial and tax identification information. Brokers need this information to comply with laws and other regulations. Some of the information a broker will likely ask you t...

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...

Several weeks ago, Bob Eder's blog discussed RILAS or Registered Index Linked Annuities. In this blog Bob discusses the major penalties and charges that can reduce a client's return. These penalties include, but are not limited to, surrender charges; interim value adjustments and mid-term investment withdrawals; and tax penalties. This information is based on a publication of the SEC's Office of the Investor Advocate entitled "Report on Activities Fiscal Year 2023." A "RILA" has both insurance components and investment components. An investor puts money into a RILA, generally with a minimum requirement of $10,000 to $20,000.  After making this initial investment, the RILA purchaser then decides how much premium to put into investment options. These investments are relatively short-term, generally not exceeding six years.  This short-term character of RILA investments means that the investment options generally will not exceed the life of the RILA contrac...

Several blogs ago, I discussed RILA's, or Registered Index-Linked Annuities. FINRA's Series 6 Content Outline lists Annuities under Section 3.2, meaning that the Series 6 Exam covers these alternative investments and asks questions about them. Today on the SEC website, I see that the SEC is paying close attention to the complex structure and details of RILA's in its   SEC OIAD Report on Activities—Fiscal Year 2023 . Here is just one paragraph from this SEC publication in regard to RILA's. I intend to present more segments in future blogs from this SEC Report on RILA's. " REGISTERED INDEX-LINKED ANNUITIES (RILAs)  "What Are RILA's and How Do They Work?  "RILA's are tax-deferred retirement savings vehicles that advertise potentially reduced market risk relative to investing directly in financial markets. Like many other retirement savings vehicles, money is first added to the overall vehicle and then the investor allocates that money to specific...

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...

Taking the Series 6 Exam in the near future? Yes? Then be prepared for questions about annuities, not only fixed and variable annuities, but also indexed annuities, including Equity Indexed Annuities (EIA) and Registered Index-Linked Annuities (RILA). How do I know that the Series 6 Exam includes questions on Indexed Annuities? I know this because FINRA publishes  a Content Outline for the Series 6  that includes Section 3.2 that lists characteristics and types of annuities.  Bob Eder in his Study for the Series 6 Exam treats Indexed Annuities with specificity and detail. Here is an example of Bob Eder's treatment: Equity Index Annuities (EIA)                                                           ...

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...

FINRA makes available a Series 6 Content Outline for those planning to sit for the Series 6. This Content Outline describes the subject matter of the Series 6 Exam. The Series 6 Content Outline includes Section 3.4, covering correspondence with clients and mentioning books and records retention requirements. From time to time, the SEC issues press releases about penalties and charges brought against broker/dealers and advisers. Here is one that imposes penalties on 10 firms for inadequate record-keeping of electronic communications with clients, called "off-channel communications." I include the SEC Release here because it demonstrates that a broker or adviser must treat the rules as having real life consequences, potentially bringing serious penalties and large fines for non-observance. Bob Eder in his  Study for the Series 6 Exam  covers correspondence and advertising regulations, with a special emphasis on keeping records, including electronic and off-channel communica...

The Series 6 requires knowledge of employee stock options, both qualified and non-qualified. How do I know this? FINRA publishes a Series 6 Content Outline that lists all the areas covered by the Series 6 Exam, and it lists Employer-Sponsored Plans and Stock Options as Required Knowledge in Section 2.1. Therefore, before sitting for the Series 6 Exam, make sure that you have studied and understand these stock options. Bob Eder in his  Study for the Series 6 Exam has a full treatment of the differences between qualified options, called incentive stock options (ISO), and non-qualified stock options (NQSO). Here is a sample of Bob Eder's discussion: Incentive Stock Options (ISO)                                      (2.1) A recipient of incentive stock options (ISO) must be an employee of the granting cor...