Recently, the SEC has made changes to the qualifications required to obtain accredited investor status that now allows more investors to participate in this exclusive investing category. Not only can potential investors qualify under the financial criteria – income or net worth – they can also qualify through professional criteria, including as a knowledgeable employee or by possessing a professional designation, such as the passing of a Series 82, 65, or 7 exams. Having passed one of these exams and meeting any other associated criteria, you can qualify as a Series 82, Series 65, or Series 7 accredited investor.
Series 82, 65, and 7 Licenses
In order to qualify as an accredited investor through one of these licenses, you must pass the required exam associated with obtaining the license and hold them in good standing. These licenses are:
- Series 82 – Private Securities Offerings Representative
- Series 65 – Licensed Investment Advisor Representative
- Series 7 – General Securities Representative
Possessing these certifications allows you to qualify to operate as an accredited investor and also access other benefits. For instance, having a Series 65 license allows you to legally operate as a financial professional who provides investment advice and analysis.
The Financial Industry Regulatory Authority (FINRA) administers these licenses. Other than the Series 65 license, the Series 7 and 82 licenses require a certain level of education or sponsorship to qualify. Candidates for the Series 65 license, however, only need to obtain a basic understanding of economics along with studying diligently and taking and passing the exam.
Series 82 Exam
Passing this exam allows the financial professional who represents a sponsor organization to conduct transactions of private securities for clients. The exam consists of 100 multiple-choice questions taken over a period of 2-1/2 hours. A passing score is 70% or better.
Series 7 Exam
Passing the Series 7 exam allows you to trade a variety of securities, such as municipal securities, options, mutual funds, stocks, and variable contracts. This license is required for entry-level stockbrokers in order to perform trades. In some states, registered representatives may also be required to pass the Series 63 exam (Uniform Securities Agent State Law Exam). If score a 72% on this 3 hr. 45-minute, 125-question exam, you will have passed and may be referred to as a Series 7 accredited investor.
Series 65 Exam
Passing the Series 65 exam allows you to function as an investment advisor. As an investment advisor, you can serve clients on issues such as retirement laws, management strategies, planning, and regulations. No sponsor is required to take the exam. And a 72% score on the 130-question, three-hour exam is enough to pass. Some states may require you to follow certain requirements based on how you use the license.
Compared to the Series 82 which requires employment with a securities firm belonging to the FINRA and the Series 7 which requires sponsorship from a FINRA member, the Series 65 is great for the average investor, having no such requirements.
The opportunity to become an accredited investor is not restricted to only those with sufficient net worth or yearly income. As you can see, it extends to those with professional credentials in the form of various licenses, one of which – Series 65 – is readily attainable by the average investor.
