State vs Federal Licensing: Which Applies to You?

🧾 State vs Federal Licensing: Which Applies to You?
📘 Understanding the Differences and Determining Which Licensing You Need

When you begin your career in the securities industry, understanding the distinction between state and federal licensing requirements is crucial. These licenses determine what types of securities you can sell, the investment advice you can provide, and where you can operate. Below is a guide to help you understand the key differences between state and federal licensing and which one applies to you.

🎯 1. State Licensing: Requirements and Regulations

State licensing is generally required for professionals who are working within a specific state. State regulators govern the activities of investment professionals who are seeking to sell securities or provide investment advice in a particular state.

Key State Licenses:

1. Series 63 – Uniform Securities Agent State Law Exam
   • Who Needs It: This exam is required for individuals who wish to act as securities agents in most states. It focuses on state securities laws, ethics, and regulatory requirements.
   • What It Covers:
     • Regulatory framework for selling securities within a state.
     • State-specific regulations.
     • Ethical and legal responsibilities of a securities agent.
2. Series 66 – Uniform Combined State Law Exam
   • Who Needs It: This exam combines elements of the Series 63 and Series 65 and is required for those who want to become both securities agents and investment adviser representatives within a state.
   • What It Covers:
     • A combination of state securities laws and investment advisory laws.
     • Includes topics like ethics, client suitability, and portfolio management.

State Registration for Investment Advisers

• Series 65 – Uniform Investment Adviser Law Exam: This is required for individuals who wish to become investment advisers in a state. If you provide investment advice for a fee, you must pass the Series 65 exam and register as an investment adviser representative (IAR).
• State Registration Requirements: Each state has its own requirements for registering as an investment adviser. Some states allow individuals to operate as “state-registered advisers”, while others require federal registration (more on that below).

🎯 2. Federal Licensing: Requirements and Regulations

Federal licensing applies to professionals who want to operate at a national level and are regulated by federal authorities like the SEC (Securities and Exchange Commission). These licenses are required for individuals who want to work with large-scale securities and operate across multiple states.

Key Federal Licenses:

1. Series 7 – General Securities Representative Exam
   • Who Needs It: This is one of the most common federal licenses and is required for professionals who wish to sell a wide range of securities, including stocks, bonds, mutual funds, and options.
   • What It Covers:
     • General securities products.
     • Market regulations and ethical standards.
     • Trading practices, investment analysis, and customer suitability.
2. Series 24 – General Securities Principal Exam
   • Who Needs It: The Series 24 qualifies individuals who want to supervise and manage the activities of other securities representatives and professionals.
   • What It Covers:
     • Supervisory and regulatory roles.
     • Management of securities operations.
3. Series 65 – Uniform Investment Adviser Law Exam
   • Who Needs It: For individuals who want to provide investment advice for a fee and operate on a national scale.
   • What It Covers:
     • Investment strategies.
     • Portfolio management.
     • Federal regulations and ethics for investment advisers.
4. Series 66 – Uniform Combined State Law Exam
   • Who Needs It: Individuals who wish to act as both securities agents and investment adviser representatives across multiple states.
   • What It Covers:
     • A combination of state and federal regulations.

🎯 3. State vs Federal: What’s the Difference?

🎯 4. How to Decide Which Licensing Applies to You?

1. Determine Your Role:

• Are you providing investment advice for a fee? You may need the Series 65 or Series 66 exam.
• Are you selling securities like stocks, bonds, or mutual funds? The Series 7 exam will be required.
• Do you plan to manage or supervise other securities professionals? You’ll need the Series 24 exam.

2. Evaluate Your Geographic Scope:

• If you plan to operate in one state: You will likely need state licensing (Series 63, Series 65, Series 66).
• If you plan to operate across multiple states: You will need federal licensing (Series 7, Series 65, Series 66).

3. Consider Your Career Goals:

• For brokers and investment agents: The Series 7 is typically required.
• For investment advisers: You will need the Series 65 or Series 66 exam depending on the scale of your operations.
• For supervisors: The Series 24 will allow you to oversee other securities professionals.

🚀 Conclusion: State vs Federal Licensing

Choosing between state and federal licensing largely depends on your career role and the geographic scope of your practice. If you’re working locally, state licensing will generally apply, whereas federal licensing is required for those who wish to operate across multiple states or in a more national capacity.

🎓 Need guidance on which licensing exam to take next?
Explore expert-led study resources for both state and federal exams at
👉 https://finra-exam-mastery.com

Prepare, pass, and build your career with the right licenses!