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Series 63 Pass Rate: Lower Than You’d Think

series 63 pass rate high jump

You won’t find any official numbers from FINRA regarding the Series 63 pass rate. However, what we can tell you from years of experience tutoring the subject is that it’s lower than most people expect. In this post, we address why the Series 63 Exam has the reputation of being an “easy” exam, but still trips so many people up.

 

Series 63 Pass Rate: Don’t Underestimate the Exam

FINRA’s Series 63 is the Uniform Securities Agent State Law Exam. In plain English, the exam is meant to test your knowledge on a range of rules and regulations. These rules and regulations pertain to registered representatives, the securities they deal with, and the firms at which they work. The exam also deals with rules and regulations around Investment Advisers, and Investment Adviser representatives. One key reason students have issues with this exam is a simple psychological bias. By contrast the Series 7 Top-Off difficulty level is much higher than the Series 63. Students often underestimate the Series 63 difficulty level, and thus under-study. Keep your diligent study mode in high gear, even if the textbook is more narrow! We have witnessed too many students take this exam lightly after passing the Series 7 Top-Off.

 

Where Should You Focus?

The low hanging fruit is a must for this exam. Make sure to solidify concepts such as what defines a “security”, and what defines a “person.” Next, some important concepts seem to confuse some people. Get clarity around the difference between an Investment Adviser (firm) and an Investment Adviser Representative (a person). While separating these two may seem easy enough, to put it in to practice is not always obvious.

Also, make sure you know why an IA would have to register in a state if the IA is State-Registered as opposed to Federally Covered. Five or six example (or practice problems) should help clarify this. There are also a few more obscure terms and definitions that are worth committing to memory. For example, memorize the components of Form ADV Part 1, and Form ADV Part 2. You’ll be required to know the difference between them.

Finally, make sure you have a high level understanding of the Uniform Securities Act (blue-sky laws). It comes up many times throughout the text. The more you understand the “USA”, the better you will comprehend the detailed rules around it.

 

Double Negatives

While there is plenty more to talk about when it comes to the content, let’s talk about how the questions can be asked. Specifically, the last issue worth mentioning is the double negatives.

There are many opportunities in the Series 63 material to quiz a student’s ability to navigate double negatives. This is mostly due to the nature of the content. For example, after reading the text you may come to understand that an “exempt” security is one that does not need to register with the SEC. Therefore, a non-exempt security is a security that does need to register with the SEC. It tends to confuse people that the “non-exempt” security requires registration, and the exempt does not. FINRA is well aware of the confusion created here so potential questions could include something like this:

“Which of the following securities does not represent a non-exempt security…”

 

What this is actually saying is:

“Which of the following securities does not have to register with the SEC…”

 

Cross-eyed yet? Practice these a lot!

 

Overall, we recommend that you plan on at least two weeks to get to a point where you can pass this exam. We have seen some do it in 5 days or less, while others take over a month. This exam should not be as challenging as the SIE Exam, but don’t take it lightly. Ultimately, aim for the mid 80% range in your scores like the other FINRA exams and you should be ok! Good luck!

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