How to Pass the NASAA Series 65 Exam

What is the Series 65 exam and how should you prepare for it? Read Solomon Exam Prep’s guide to the NASAA Series 65 exam. Continue reading

What does the NASAA Series 65 allow me to do?

The Series 65, also known as the Uniform Investment Adviser Law Examination, qualifies individuals to give investment advice for a fee. Investment adviser representatives (IARs) use their knowledge to give financial advice and help clients build investment portfolios. IARs might provide general investment advice or recommend a client to invest in a specific security. IARs can also manage client accounts and supervise other IARs.

The organization that creates the test—the North American Securities Administrators Association, or NASAA—works to protect investors in every state, territory, the District of Columbia, Canada, and Mexico. Requiring investment adviser representative candidates to pass the Series 65 is a key tool in the NASAA’s investor protection arsenal. Regulators want to make sure people who are giving investment advice in their state or jurisdiction are competent and will behave legally and ethically.

About the Exam

The Series 65 exam consists of 130 scored and 10 unscored multiple-choice questions covering the four sections of the NASAA Series 65 exam outline. The 10 additional unscored questions are ones that the exam committee is trying out. These are unidentified and are distributed randomly throughout the exam. NASAA updates its exam questions regularly to reflect the most current rules and regulations.

Note: Scores are rounded down to the lowest whole number (e.g. 71.9% would be a final score of 71%–not a passing score for the Series 65 exam).

Topics Covered on the Exam

The NASAA divides the Series 65 exam into four sections:

The Series 65 exam covers many topics including the following:

    • Economics
    • Financial reporting
    • Quantitative methods
    • Risks
    • Cash investments
    • Fixed income
    • Equities
    • Pooled investments, such as mutual funds, ETFs, and REITs
    • Derivatives
    • Alternatives
    • Annuities and other insurance-based investments
    • Client types
    • Client profiles
    • Capital market theory
    • Portfolio management
    • Taxes
    • Retirement plans
    • ERISA
    • Special accounts, such as college savings plans
    • Trading securities
    • Performance measures
    • State and federal securities acts and regulations
    • Ethical practices and fiduciary obligations

Question Types on the Series 65

The Series 65 exam consists of multiple-choice questions, each with four options. You will see these question structures:

Closed Stem Format:

This item type asks a question and gives four possible answers from which to choose.

Which of the following actions might the Federal Reserve take if it wishes to stimulate the economy?

    1. Buy Treasuries
    2. Raise the discount rate
    3. Raise the bank reserve requirements
    4. Raise the margin requirements
Incomplete Sentence Format:

This kind of question has an incomplete sentence followed by four options that present possible conclusions.

A recession is a protracted period of decline in the national economy, typically defined as:

    1. More than two quarters of decreasing GDP
    2. More than two quarters of decline in the housing market
    3. More than two quarters of shrinking M1
    4. More than two quarters of a falling PPI
“EXCEPT” Format:

This type requires you to recognize the one choice that is an exception among the four answer choices presented.

All of the following are tools that the Federal Reserve uses to implement monetary policy except:

    1. Open market operations
    2. Discount window lending
    3. Altering bank reserve requirements
    4. Altering the value of the dollar
Fill-in-the-Blank Format:

This question type has a missing word or phrase, which you must select from the four options provided.

A situation in which short-term securities pay higher yields than long-term securities is considered a(n) _____ yield curve.

    1. Normal
    2. Inverted
    3. Flat
    4. Barbell
Complex Multiple-Choice (“Roman Numeral”) Format:

For this question type, you see a question followed by two or more statements identified by Roman numerals. The four answer choices represent combinations of these statements. You must select the combination that best answers the question.

A stronger dollar benefits which group?

    1. U.S. exporters
    2. U.S. importers
    3. U.S. investors who want to invest in foreign assets
    4. Overseas investors who want to invest in U.S. assets
    1. I and II
    2. II and III
    3. III and IV
    4. I and IV

This format is also used in items that ask you to rank or order a set of items from highest to lowest (or vice versa), or to place a series of events in the proper sequence.

Order the following from lowest to highest:

    1. Broker call rate
    2. Federal funds rate
    3. Prime rate
    4. Discount rate
    1. I, IV, III, I
    2. III, II, I, IV
    3. IV, III, I, II
    4. II, IV, I, III

How to Study for the Series 65

Follow Solomon Exam Prep’s proven study system:
    • Read and understand. It’s simple: read the Solomon Study Guide, carefully. The Series 65 is a knowledge test, not an IQ test. Many students read the Study Guide two or three times before taking the exam. To increase your ability to focus while reading, or as an alternative to reading, listen to the Solomon Audiobook, which is a word-for-word reading of the Solomon Study Guide.
    • Answer practice questions in the Solomon Exam Simulator. When you’re done with a chapter in the Study Guide, take 4 – 6 chapter quizzes in the Solomon Online Exam Simulator. Use these quizzes to give yourself practice and to find out what you need to study more. Make sure you read and understand the question rationales. When you’re finished reading the entire Study Guide, review your handwritten notes once more. Then, and only then, start taking full practice exams in the Exam Simulator. Aim to pass at least six full practice exams and try to get your average score to at least an 80; when you reach that point, you are probably ready to sit for the Series 65 exam.
Use these effective study strategies:
    • Take handwritten notes. As you read the Study Guide, take handwritten notes and review your notes every day for 10 to 15 minutes. Studies show that the act of taking handwritten notes in your own words and then reviewing them strengthens learning and memory.
    • Make flashcards. Making your own flashcards is another powerful and proven method to reinforce memory and strengthen learning. Solomon also offers digital flashcards for the Series 65 exam.
    • Research. Research anything you do not understand. Curiosity = learning. Students who take responsibility for their own learning by researching anything they do not understand get a deeper understanding of the subject matter and are much more likely to pass.
    • Become the teacher. Studies show that explaining what you are learning greatly increases your understanding of the material. Ask someone in your life to listen and ask questions. If you don’t have anyone, explain it to yourself. Studies show that helps almost as much as explaining to an actual person (see Solomon’s recent post to learn more about this strategy!).
Take advantage of Solomon’s supplemental tools and resources:
    • Use all the resources. The Resources folder in your Solomon student account has helpful information, including a detailed study schedule that you can print out – or use the online study schedule and check off tasks as you complete them.
    • Watch the Video Lecture. This provides a helpful review of the key concepts in each chapter after reading the Solomon Study Guide. Take notes to help yourself stay focused.
  • Good practices while studying:
    • Take regular breaks. Studies show that if you are studying for an exam, taking regular walks in a park or natural setting significantly improves scores. Walks in urban areas or among people did not improve test scores.
    • Get enough sleep during the period when you are studying. Sleep consolidates learning into memory, studies show. Be good to yourself while you are studying for the Series 65: exercise, eat well, and avoid activities that will hurt your ability to get a good night’s sleep.

You can pass the NASAA Series 65! It just takes work and determination. Solomon Exam Prep is here to support you on your journey to becoming a registered Investment Adviser Representative.

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