How to Pass the NASAA Series 66 Exam

What can you do with a Series 66 license? What does the exam cover and how should you prepare for it? Keep reading for answers to your Series 66 questions. Continue reading

What does the Series 66 exam allow me to do?

The Series 66, also known as the Uniform Combined State Law Exam, is created by the North American Securities Administrators Association (NASAA), which represents state securities regulators in the United States, Canada, and Mexico. Passing the Series 66 exam is like passing both the Series 63 (Uniform Securities Agent State Law Examination) and the Series 65 (Uniform Investment Adviser Law Examination). However, to register as an investment adviser representative with the Series 66, you must also pass the FINRA Series 7 General Securities Representative exam. In conjunction with the Series 7 license, the Series 66 license qualifies you as both an investment advisor representative and a securities agent.

As an investment adviser representative, an individual can perform the following tasks:  

    • Make recommendations and render general advice regarding securities
    • Manage accounts or portfolios of clients
    • Solicit, offer, or negotiate for the sale of investment advisory services
    • Supervise employees who perform any of the above tasks.

Note that the Series 7 exam is a co-requisite to the Series 66, so you can take the exams in either order. However, Solomon recommends passing the Series 7 before the Series 66 since much of the information tested on the Series 7 is likely to appear on the Series 66 exam.

About the Exam

The Series 66 exam consists of 100 scored and 10 unscored multiple-choice questions covering the four sections of the NASAA Series 66 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. The NASAA updates its exam questions regularly to reflect the most current rules and regulations.

About the Series 66 exam

Note: Scores are rounded down to the next lowest whole number (e.g. 72.9% would be a final score of 72% – not a passing score for the Series 66 exam).

Topics Covered on the Exam

The NASAA divides the Series 66 exam into four sections:

Topics on the Series 66 exam

The Series 66 exam covers many topics including the following:

    • Business Cycles and Economic Factors
    • Fundamental Analysis
    • Types of Risk
    • Equity and Debt Securities
    • Investment Companies
    • Discounted Cash Flow
    • Derivatives
    • Alternatives and Insurance Products
    • Clients and Client Profiles
    • Capital Market Theory, Portfolio Management, and Taxation
    • Taxation of Debt and Equity Securities
    • Retirement Plans, ERISA, Special Accounts
    • Trading and Performance Measures
    • Regulations of Securities Professionals
    • Regulations of Securities and Issuers
    • Remedies and Administrative Provisions
    • Recordkeeping Requirements
    • Net Worth/Net Capital Requirements
    • Business Practices for IAs and IARs
    • Performance-based fees
    • Wrap fees
    • Custody
    • Communication with Clients and Prospects
    • Compensation and Client Funds
    • Conflicts of Interest

Question Types on the Exam

The Series 66 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 is not a current asset?

    1. Inventory
    2. Accounts receivable
    3. Cash
    4. Trademarks
Incomplete Sentence Format:

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

Callable preferred stock is more likely to be called when:

    1. Interest rates go up.
    2. Interest rates go down.
    3. The price of the common stock rises.
    4. The price of the common stock falls.
“EXCEPT” Format:

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

An investor calculating the investing merits of a payment or payments not yet received might potentially use all of the following except:

    1. Present value
    2. Net present value
    3. Future value
    4. Internal rate of return
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.

Pick two statements that best represent time-weighted and dollar-weighted returns:

    1. Conceptually, the time-weighted return is the compounded growth rate of the initial investment over a given period of time, and is calculated using the geometric mean rather than the arithmetic mean.
    2. Conceptually, the dollar-weighted return is the compounded growth rate of the initial investment over a given period of time and is calculated using the geometric mean rather than the arithmetic mean.
    3. Conceptually, a time-weighted return is the internal rate of return on an investment.
    4. Conceptually, a dollar-weighted return is the internal rate of return on an investment.
    1. I and III
    2. I and IV
    3. II and III
    4. II 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.

Rank the following categories of mutual funds in order of volatility, from highest to lowest.

    1. Growth and income
    2. Balanced
    3. Growth
    4. Equity income
    1. I, III, II, IV
    2. III, II, I, IV
    3. III, I, II, IV
    4. III, I, IV, II

Answers: D, B, C, B, D

For an even better idea of the possible question types you might encounter on the Series 66 exam, try Solomon Exam Prep’s free Series 66 Sample Quiz.

How to Study for the Series 66 Exam

Follow Solomon Exam Prep’s proven study system:
    • Read and understand. Read the Solomon Study Guide, carefully. The Series 66 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 Series 66 Audiobook, which is a word-for-word reading of the 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 Series 66 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 Solomon Pass Probability™ score to at least an 80%; when you reach that point, you are probably ready to sit for the Series 66 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 66 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 previous blog 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 66: exercise, eat well, and avoid activities that will hurt your ability to get a good night’s sleep.

You can pass the NASAA Series 66 Exam! It just takes focus and determination. Solomon Exam Prep is here to support you on your path to becoming a registered securities agent and investment advisor representative.

To explore all Solomon Exam Prep’s Series 66 study materials, including product samples, visit the Solomon website here.

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New Series 66 Video Lecture – Now Available!

Solomon Exam Prep is pleased to announce the release of a new Series 66 Video Lecture. Updated for 2016, this 9.5 hour video lecture offers a complete overview of the NASAA Uniform Combined State Law Examination. Continue reading

Series 66 Video Lecture

Solomon Exam Prep is pleased to announce the release of a new Series 66 Video Lecture.  Updated for 2016, this 9.5 hour video lecture offers a complete overview of the NASAA Uniform Combined State Law Examination.

Jeremy Solomon breaks down each section of the exam into different topic areas so students can focus on individual topics or watch from beginning to end.

Topics covered include economics and business information, investment vehicle characteristics, client investment recommendations and strategies, state and federal securities acts and related rules and regulations, and ethical practices and fiduciary obligations.

Students get the added benefit of being able to download the slides from the Video Lecture to study at their leisure.

The Solomon Series 66 Video Lecture can be purchased alone, or as part of our recommended Total Study Package. Order online or give us a call at 503-601-0212!

Series 66, 2nd Edition, Now Available

Solomon Exam Prep constantly strives to produce the most up-to-date materials in order to give our students the best chance of passing their exam on the first try. Thus, we are proud to announce a new 2nd edition of our Solomon Exam Prep Guide to the Series 66 Uniform Combined State Law Examination. Continue reading

Series 66 2nd EditionSolomon Exam Prep constantly strives to produce the most up-to-date materials in order to give our students the best chance of passing their exam on the first try. Thus, we are proud to announce a new 2nd edition of our Solomon Exam Prep Guide to the Series 66 Uniform Combined State Law Examination. The second edition of the Solomon Series 66 Exam Study Guide includes more examples, visuals and practice questions, as well as additional information on the following topics:

  • Time value of money
  • Discounted cash flow method
  • Business structures
  • Trust and estate accounts, including the taxation of trust and estate accounts
  • Financial goals and strategies
  • Modern portfolio theory
  • Capital asset pricing model, including discussions of alpha and beta
  • Efficient market hypothesis
  • Options strategies
  • Fiduciary responsibilities
  • Investment policy statements
  • Suitability
  • Compensation, including comparisons of investment advisers and broker-dealers
  • Prudent investor standards

According to Solomon Exam Prep President Jeremy Solomon, “The NASAA Series 66 Uniform Combined State Law Examination is one of the most challenging securities licensing exams. After passing the Series 7, people underestimate the Series 66 exam and may not be successful on their first try. With this new edition we have greatly expanded our text and hope to convey the importance of the material the Series 66 covers.”

Regulators have set the bar high for this exam for a simple reason: the Series 66 exam, in conjunction with the Series 7 exam, qualifies you to be a securities agent and an investment adviser representative, so you must know what you’re talking about when giving investment advice or effecting securities transactions. This means that you need to know a lot of information, including the three types of securities registration, the nine types of investment risk, the difference between the strong, semi-strong, and weak forms of the EMH; when a securities professional is permitted to sell non-exempt unregistered securities (never); who may issue a stop order to deny, revoke, or suspend; when rescission is allowed and by whom; what contumacy is and how to avoid it; what prudent investor, suitability, and fiduciary mean—and more!

The comprehensive Solomon Exam Prep Guide to the Series 66 Exam works in three mutually reinforcing ways: it focuses on the most important aspects of the exam, provides you with plenty of practice questions, and continually reminds you why you have to take the test in the ­first place: to protect investors.

With practice questions at the end of each chapter, as well as a helpful glossary, the Solomon Exam Prep Guide will give you the knowledge to tackle the NASAA Series 66 Uniform Combined State Law Examination with confidence!

Solomon Exam Prep has helped thousands of financial professionals pass their FINRA, NASAA, and MSRB securities regulatory exams including the Series 6, 7, 24, 26, 27, 28, 51, 52, 53, 55, 62, 63, 65, 66, 79, 82, and 99. The Solomon Exam Prep training system includes print and digital Exam Study Guides, Online Exam Simulators, Audiobooks, and Video Lectures to address the learning needs of all kinds of test-takers.

Solomon Exam Prep is led by founders Jeremy and Karen Solomon, both of whom maintain a lifelong commitment to advancing learning and education.  Solomon Exam Prep draws from a pool of seasoned educators, practitioners and communicators who are experienced in both investment education and the process of adult learning.