Study for the Series 6 Exam

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)                                                           ...

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 content is wide ranging, and includes knowledge of required disclosures about investment products and their characteristics, risks, services and expenses. For example, the Series 6 Exam covers the various cost and fees associated with investments such as markups, commissions, net transaction and fees of various share classes. FINRA's Test Specifications for the Series 6  Exam discuss these fees and expenses in Section 3.3. Bob Eder in his Study for the Series 6 Exam covers these fees and expenses in detail. Here is an example of Bob Eder's treatment: Asset-Based Charges (3.2) If a mutual fund has an asset-based charge under Section 12b-1 of the Investment Company Act of 1940, and uses the fees generated to pay for the maintenance of shareholder accounts ("service fees"), the maximum sales charge, including front-end and deferred sales charges, cannot exceed 6.25 percent of the amount invested. FINRA Rule on 12b-1 Charges (3.2) FINRA restricts ...

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...