Study for the Series 6 Exam

Taking the Series 6 Exam? Have you studied the various types of accounts so that you can explain the similarities and differences? FINRA publishes a Content Outline for the Series 6 Exam, and Section 2.1 mentions testing knowledge of Types of Accounts ("e.g., prime brokerage, advisory, or fee based"). Thus FINRA is telling the Series 6 candidate that questions on this subject could appear on the Series 6 Exam. Bob Eder devotes several pages to the various Types of Accounts in his Study for the Series 6 Exam . Here is a sample of Bob Eder's treatment: Note on Clearing Brokers As far as introducing brokers and clearing brokers, the clearing broker handles the back office for the introducing broker, saving the introducing broker from having to staff and fund its own back office. In effect, the clearing broker is the main office, doing all the trade executions, record-keeping, sending out confirmations and monthly statements. The introducing broker is analogous to the branc...

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 ...

Candidates for the Series 6 Exam must use care in studying FINRA's rules on Communications with Customers. These rules are involved and must be studied carefully. For example, can you explain the difference between retail communications and correspondence? Or are they the same thing treated in the same way?  Retail communications need to be filed with FINRA's Advertising Regulation Department, but correspondence does not need to be filed. However, both retail communications and correspondence need the written and dated approval of a principal of the brokerage firm before they may be used. So communications with the retail public gets complicated! Bob Eder in his Study for the Series 6 Exam devotes all of Chapter One to Communications with Customers. Here is a sample of Bob Eder's treatment and discussion: PRACTICE QUESTION FINRA has specific strict rules regarding the use of retail communications. June is a representative. She considers some of the definitions included i...

  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                            ...

  If you plan to sit for the Series 6 Exam, know in advance that the Series 6 contains questions on Capital Market Theory and Capital Asset Pricing Model (CAPM). How do I know this? I know it because FINRA Series 6 Content Outline clearly indicates in Section 3.1 that there are possible questions that ask about portfolio theories, such as Capital Market Theory, Capital Asset Pricing Model, Modern Portfolio Theory, and Efficient Market Hypothesis. Bob Eder in his  Study for the Series 6 Exam  discusses Capital Market Theory and Capital Asset Pricing Model (CAPM) in detail. Here is an example of Bob Eder's treatment: Capital Market Theory                                                                ...

Picture yourself CCO (Chief Compliance Officer) of ABC Advisory Firm. One of your I.A. representatives makes use of her personal smart phone to stay in contact with clients by texting, as she finds it easier to communicate in writing on her personal phone when she is out of the office. Does the SEC's Rule on Keeping Written Records of Client Communications include such electronic written messages or SMS if they are sent via personal computers, cell phones, et al? The answer is emphatically yes! The Record Keeping Rule applies, even though the rep or registered associate uses his or her own electronic device or smart phone to send the written communication or message. The SEC recently brought charges against Scotia Capital and HBSC for widespread record-keeping failures, attributed to permitting associates to send written communications via their personal devices. (See SEC Press Release 2023-91.) Here's what the SEC said in this case: "The SEC’s investigation of HSBC Securi...

   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...