Series 6 and Annuities

By Compuquotes Team on September 11th, 2008


Most professions require individuals to take certifying exams before they can practice their trade; selling annuities is no exception. For an individual to be able to sell mutual funds and variable annuities, he or she needs to take an exam called Series 6.

Series 6: What it Covers

Series 6 is an exam administered by the National Association of Securities Dealers (NASD). As of August 2006, taking the exam cost $75.00. There are 100 questions, and the exam lasts about 2-1/2 hours. To pass the Series 6 exam, you need a score of at least 70%.
You can't take exam on your own. You have to be sponsored by your company that is a member of the NASD or by a Self Regulatory Organization (SRO). The exam is a multiple choice type of exam and is given any weekday. To obtain a list of exam centers in your area, visit the NASD web site at www.nasdr.com.

If you're going to be taking the Series 6 exam, you must show knowledge and competence in these major topics:

• product information - familiarize yourself with investment company securities and variable contracts;

• securities and tax regulations - be sure you have the most up-to-date regulations and be aware of any amendments or addenda to those amendments;

• marketing, prospecting and sales presentations - the do's and don'ts of marketing and prospecting as well as what to include in your sales presentations;

• evaluation of customers - what criteria go into evaluating customers and what weighting is given for each criteria?

• opening and servicing customer accounts - be aware of the code of ethics that financial institutions adhere to;

• securities markets, investment securities and economic factors - make sure you know how these concepts work. One good approach is to read the financial pages of your daily paper or to subscribe to a review or magazine that focuses on these topics.

Series 6: What if I Fail it?

Failing the Series 6 isn't the end of the world and does not mean that you are forever barred from selling variable annuities or mutual funds. If you fail the first exam, your employer can file another request for you to take it again, but you will not be able to write the exam until after 30 days following your first one. The exam fee must be paid.

If you fail the exam three times, you can still apply to take it again, but this time there is a six-month waiting period. The rationale for this six-month waiting period is to ensure that the examinee can prepare himself adequately. Note too that the sponsor shall have spent substantial fees by the third exam.

The good news is, there is no limit to the number of times you can take the Series 6. The process can continue indefinitely, but remember that each time you write the exam, a fee must be paid and your employer - the firm sponsoring you - may require you to reimburse the exam fees after the first fee is paid. This is between you and your employer, and the NASD has no say as to whether or not you should reimburse your company.

Successful Completion of Series 6. What Next?

Upon successful completion of your Series 6, what kinds of financial activities can you engage in? Based on NASD rules, you have the green light to execute transactions for closed-end mutual funds, variable annuities, life insurance, UITs (unit investment trusts), municipal fund securities and 529 (higher education plan) plans.

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