Going from the Securities Industry Essentials Exam to the Series 7 both is and is not a tremendous leap. Parts of the Series 7 exam simply mirror the SIE and will ask questions that seem very familiar to anyone who has passed the SIE—but then there will be very complex questions that are new and seem somewhat scary—at least if you aren’t prepared.
The Series 7 is greater in breadth and depth, and there are more math questions on it than the SIE, which really relies more on the test taker’s ability to recognize concepts and their definitions in the financial industry. The S7, on the other hand, will actually present you with questions on debenture valuation, options plays, and ask you to make some calculations. Fortunately, you do have a calculator for the exam and the math is not terribly difficult—but preparation is key.
The scary part of that task, however, is in the sheer size of the S7 exam. Textbooks for the exam are over 500 pages long, and the exam itself is 125 questions taken over an exhausting 3 hour and 45-minute time period.
The good news is that the exam is concentrated in one somewhat specific topic:
| Major Job Functions | Number of Exam Items |
| (F1) Seeks Business for the Broker-Dealer from Customers and Potential Customers | 9 |
| (F2) Opens Accounts after Obtaining and Evaluating Customers’ Financial Profile and Investment Objectives | 11 |
| (F3) Provides Customers with Information about Investments, Makes Recommendations, Transfers Assets and Maintains Appropriate Records | 91 |
| (F4) Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions | 14 |
| TOTAL | 125 |
It shouldn’t be too surprising that over 70% of the test revolves around giving customers accurate and appropriate information and keeping proper records of those interactions—after all, the exam is to test an aspiring financial representative whose job is to give investors the best and fairest information and opinions possible.
But what is this section actually comprised of?
An important part is simply knowing financial instruments and how to analyze them—the kind of stuff that, if you’re doing the Series 7, you should already be interested in doing. You should know about stocks, bonds, mutual funds, options, government securities, municipal securities, and other financial instruments—not just what they are but how to analyze them.
Then this section will ask test takers if they can apply that knowledge base to specific cases: can they determine, for instance, whether a municipal bond is better for a 20-year-old earning $30,000 per year than a 50-year-old earning $300,000 per year? Of course, the actual questions on the exam are much more difficult, and arguably the language of the exams makes these questions even harder to answer.
Finally, there’s a fair bit on the exam about how actual financial transactions are made and recorded—these are tests of law, and the nitty gritty of the 1933, 1934, and 1940 acts are key here. However, the Series 7 is not a test designed to fail test takers, so don’t expect a lot of questions where two possible answers are very close to another (i.e., is the cooling-off period after a summary prospectus issuance 20 days or 30 days? Such trick questions are thankfully not FINRA’s modus operandi). However, knowing the details of all of these rules is essential—after all, you need to follow them after you start working in the industry.