To qualify as a certified financial advisor, many states in the United States of America require individuals to avail a Financial Advisor License before they start practising. This requirement varies with the kind of asset handled by the financial advisor, but at the same, almost all licensure rules require individuals to successfully complete a set examination before they can apply for one. Also, depending on the amount of money a financial advisor is managing, he is required to register himself with the U.S Securities and Exchange Commission or any of the agencies in the state where he is operating.
Examples of financial advisor licenses include the license required for advisors who seek to sell or purchase financial securities such as corporate bonds. They are required to successfully qualify for the Series 7 licensing exam which is made mandatory by the Financial Industry Regulatory Authority.
The licensing requirements for a financial advisor must be met, if one wants to practise as a professional financial advisor. The individual must take specific exams relating to the kind of security or financial instrument he is handling or managing. When the individual becomes eligible to obtain the license, he is permitted to represent his clients and manage their money and assets. The license to practise is issued by the state where the individual works. Even though the requirements to obtain a license may vary between the different states, most require the individual to avail sponsorship from a brokerage firm before he can apply for a financial advisor license.
The National Association for Security Dealers conducts the licensing examination on a regular basis on behalf of the state. The examination that is conducted by NASD is actually known as the Series 7 Examination and officially referred to as the General Securities Registered Representative Examination. After the individual has successfully qualified for and passed the examination, he can start practising with a brokerage firm registered with the SEC. He is required to work for at least four months before he can start working with another company or practice individually.
Some of the states have the requirement for the candidate to pass a secondary examination, which is referred to as the Uniform Securities Agents State Law Examination. The USASLE is designed to examine the individual’s knowledge of financial securities and instruments and whether he has a clear understanding of corporate law, all other related business laws and customer protection laws. He also needs to have additional knowledge of accounting and management.
To start practising on his own, a financial advisor should have obtained the Series 7 and 66 licenses, together with the Life/Health/Accident license. Earning a college degree is recommended before applying for a financial advisor license. Also, it is a requirement for those candidates who deal with the sale of stocks to clear the Series 63 examination together with Series 7. He would also be required to pass the Series 66 examination if he plans to charge a fee for giving advice to his clients. You must prepare for the exams if you want to do well, even if you have a degree in a relevant field.