Everything You Need to Know About the Securities Industry Essentials Exam (SIE)

SIE AT A GLANCE

What is the Securities Industry Essentials (SIE) Exam?

On October 1, 2018, FINRA, the securities industry regulator, completely restructured their qualification exams and launched the Securities Industry Essentials (SIE) Exam. The SIE Exam represents a major change from FINRA’s other examinations because firm sponsorship is not required, meaning anyone can take this test. According to FINRA, the SIE Exam is the first step to a career in the securities industry.

The exam is broad-based, testing candidates on basic securities industry information and the fundamental concepts one needs to know to work in the industry. This includes information on investing, securities products and markets, and the rules and regulations governing the industry and its participants.

With the introduction of the SIE, FINRA’s new registration process requires two exams: the SIE, which tests on general knowledge, plus a specialized knowledge exam (called a “top-off”) based on an individual’s specific job function. The top-off exams, needed to obtain full registration, still require sponsorship by a FINRA member firm.

Why Should I Care About the SIE?

The most exciting aspect about the SIE, as compared to the current FINRA exams, is that anyone can take it. For the first time ever, you can choose to start on the path to a career in the securities industry without association or employment by a FINRA member firm (e.g. a broker-dealer or bank). This is big for college and graduate students or career changers who can now demonstrate their knowledge, competency, and commitment to joining the financial services industry by passing the SIE. In this hyper-competitive job market, distinguishing yourself and standing-out is critical to securing your most desired position.

As someone who may be interested in a career in financial services, the SIE allows you to open the door and begin that process. Here’s what FINRA has said about the SIE:

The SIE credential will be an important first step to entering the securities industry, especially for individuals with no prior securities industry experience - an investor, a recent college graduate, or a professional seeking a second career.

-FINRA, March 2017 Press Release

Top 4 Reasons to Take the SIE:

1. It demonstrates an enthusiasm and commitment to joining the industry
2. It distinguishes you from other potential candidates who do not have the SIE
3. It suggests that you will be able to pass your top-off exams, which are necessary for full registration.
4. It allows you to “hit the desk” and start working sooner by reducing training and exam prep time (you only need to take one exam instead of two)

What is tested on the SIE?

The SIE tests candidates on general securities industry knowledge. With a content outline of nearly 13 pages, candidates need to be prepared to answer questions on a wide range of topics including:

In addition to the 75 graded questions, the exam will include 10 randomly distributed pre-test questions. These 10 questions do not count towards the score on the exam but will not be distinguishable from the graded questions – and therefore should be treated as if they count.

Candidates have one hour and forty-five minutes to complete the exam. Each exam is uniquely generated and delivers different questions to each SIE candidate. To keep things fair, FINRA will scale and adjust the final score to reflect the difficulty and order of the specific questions received.

How do I sign-up to take the SIE Exam?

To enroll on your own (you are unaffiliated with a firm), follow these steps:

1. Go to https://www.finra.org/industry/enroll-for-sie
2. Click “enroll for SIE” at the bottom of the page
3. Click “Register New User” and create an account
4. Purchase an SIE enrollment (or redeem your voucher)
5. Schedule your exam date at Prometric

If you are affiliated with a member firm, contact your compliance department.

How do I prepare for the SIE Exam? 

Knopman Marks, the industry leader in FINRA exam prep, recommends the following general process to fully prepare for the SIE Exam.

1. Read the SIE textbook for familiarity and exposure to the content. Get started now by reading this tutorial.
2. Watch video lectures or attend a live class to learn essential and advanced SIE content. Refine your knowledge with instructor-led Q&A after each lesson.  
3. Drill and practice with online exams to build retention and master testable content.

When preparing for the SIE Exam, make sure you have comprehensive and up-to-date study materials. You want to study once and study right.

Partner with Knopman Marks on the SIE Exam.

Frequently Asked Questions About SIE Exam

What should I expect on exam day?

When to arrive: On your test day plan to arrive 30 minutes prior to your scheduled appointment time. 

What to bring:

• Be sure you have one valid, unexpired government-issued identification with a signature and picture, such as a driver’s license, passport or military ID. The name on your photo ID must be identical to your name as it appears on your appointment confirmation.
• Any personal items you bring (phone, wallet, backpack, notes!) will be locked in a locker and you will undergo a security screen. 

Exam Resources: You are issued a basic, four-function calculator, a dry-erase marker, and laminated scratch paper. 

Breaks: The SIE does not include any scheduled breaks, but if needed, an unscheduled break may be taken permitting you to use the restroom. If you take an unscheduled break your time continues to run.

Exam Software Demo: Before starting, you will participate in an interactive tutorial demonstrating how the testing software works and can then begin your exam. To preview the software now see here.

Results: Candidates who pass will not receive an actual score (just a passing mark – woo-hoo!). However, those who do not pass will receive their numerical result along with a breakdown of scores by section.

What is required to be fully-registered securities professional?

As of October 1, 2018, full registration requires completing the SIE plus an appropriate top-off exam.  The registration categories and required exams are set out in the table below. Note that most top-off exams are only 50 questions, though the general securities representative (Series 7), investment banking representative (Series 79), and research analyst (Series 86) are slightly longer.

The graphic below illustrates the new path to registration.  Regardless of the ultimate position, one lands, whether in investment banking, retail brokerage, trading, or otherwise, the first step for everyone is the SIE Exam.  Over the course of one’s career an individual may take multiple top-off exams as their role and position changes but will only need to complete the SIE once.

FINRA is also retiring certain exams, including the Series 11, Series 17, Series 37 and 38, Series 42, Series 62, and Series 72. Individuals who hold these registrations, however, will remain licensed and able to continue functioning in their roles without completing additional exams.

Will the SIE Exam affect me if I am currently (or was recently) registered?

If you are currently registered as a representative, you are considered to have passed the SIE exam and no additional exams are required. If you leave (or have already left) the industry your registration will expire in two phases, the top-off portion of your registration after two years and your SIE registration after four years.

For example, if a Series 7 registered rep leaves the industry and re-associates with a firm after…

• 1 year – both the SIE and Series 7 top-off can be reinstated
• 3 years – the SIE registration can be reinstated (less than 4 years), but Series 7 top-off cannot (more than 2 years)
• 5 years – both the SIE and Series 7 top-off exams would be required

How does the SIE + new Series 7 Top-Off compare to the legacy Series 7?

The overall content covered over the two tests—the SIE and the new Series 7 top-off exam —is intended to be nearly identical to the legacy Series 7. FINRA did not change the actual topics or concepts on the exams but instead changed how the questions are delivered. The number of questions on the combined tests has been reduced to 200 (75 + 125) as opposed to the 250 on the legacy Series 7.

How does the SIE + new Series 6 Top-Off compare to the legacy Series 6?

The SIE and the new Series 6 Top-Off covers more content and requires candidates answer 25 more questions than on the legacy exam.  The new content requires a deeper understanding of the broader securities marketplace, including products beyond the investment companies (mutual funds) and variable contracts (annuities) that the rep is qualified to sell.

How does the SIE + new Series 79 Top-Off compare to the legacy Series 79?

The SIE and the new Series 79 Top-Off covers more content than the legacy Series 79 but will do so over fewer questions (150 rather than 175). The new content requires a deeper understanding of the broader securities marketplace and retail investing, such as securities products (including options and municipal bonds), customer accounts, order types, and retirement plans.

How long is the SIE valid for and does it have to be renewed?

The SIE is valid for four years. It needs to be renewed if four years have passed since you were last registered.

What is the wait time if I fail the SIE?

The wait time is 30 days after the first and second fail and six months (180 days) after a third failure. 

Is there a recommended order when taking the SIE and the top-off?

The SIE and the top-off exams are co-requisites, meaning either can be taken first. Candidates can take the top-off exams first (if associated) and then complete the SIE.  In fact, you can take the SIE and a top-off on the same day.

However, the SIE tests on fundamental industry knowledge that will be built upon when preparing for the top-off exam. For that reason, taking the SIE first is recommended.

Can I become a fully regulated representative without a FINRA sponsor?

No, full registration requires both the SIE plus a top-off. If you are not sponsored by a FINRA member firm, you can only take the SIE. But, having passed the SIE it may be easier to find a firm that will hire and sponsor you as a full registered rep.