What are the Differences Between CFA® Charter and FINRA Series 7?

If you consider a career in finance and investments, you will likely hear about the CFA charter and FINRA series 7 license. However, if you do not know which certification to pursue, this article explores the difference between the CFA charter and FINRA series 7 license to help you make the best choice.

What is the CFA Charter?

The CFA (Chartered Financial Analyst) charter is an internationally recognized professional accreditation by the CFA Institute. The CFA program curriculum is ideal for individuals in the investment and finance industry.

Specifically, the CFA program curriculum covers a wide range of topics in finance such as financial
analysis, bonds and stocks, portfolio management, derivatives, and ethics. As a result,
professionals recognize the course as the gold standard for all financial analysts.

What is the FINRA Series 7

The FINRA Series 7 license, offered by the Financial Industry Regulatory Authority, which
regulates member investment companies and stock exchange markets, is also referred to as the General Securities Registered Representative license.

Acquisition of the Series 7 license allows you to undertake trading in exchange markets such as selling municipal and corporate bonds and stocks, valuable annuities, mutual funds, mortgage obligations with collateral, and direct participation programs, among others.

Is it Possible to Hold Both Certifications?

If you are wondering if you can earn both certifications, the answer is, yes, you can. Researchers in brokerage and trading firms who already have a CFA charter can earn their Series 7 license. On the other hand, if you hold a Series 7 license and get a position in investment as an advisor or you register an investment firm, you will benefit from becoming a CFA charter holder.

What are the Series 7 License and CFA Charter Requirements?

The following are the requirements for becoming a CFA charter holder:

  • You should hold a bachelor’s degree or an equivalent or be in the final year of your undergraduate studies. You are also eligible to register for the CFA program if you have at least 4,000 hours of relevant work experience or 4,000 hours of the combined university and professional experience.
  • Sit for and pass all three levels of the CFA exams.
  • You should agree to abide by the CFA Institute Code of ethics and become a member of the institute by paying the fee ($275).
  • You should provide proof of 4,000 hours of full-time work experience in a position involving decision-making on investments or a product that contributes to the decision-making process. The work experience can be from before or after you did the CFA exam.

Although there are no pre-requisite work or degree requirements to qualify for the Series 7 license, most candidates are in college or have a college degree with a major in finance. To earn the license, you should;

  • Sit for and pass the SIE (Securities Index Essentials) exam.
  • You should also secure sponsorship and work for four months in a firm that is a registered member of FINRA. At the end of the four months, the firm should register you for the exam by sending a special application (Form U4)
  • Take and pass the FINRA Series 7 exam after registration.

What are the Exam Topics, Format, and Pass Rates of CFA Program and FINRA Series 7 Exams?

The CFA program curriculum has three levels. Due to the postponed 2020 examinations, there will be more testing windows in 2021. Starting in 2022, the CFA Institute will offer Level I four times and Levels II and III twice a year.

Level I and II CFA exam format is multiple choice, while level III has multiple choice and written or constructed response portions. The CFA Institute provided the pass rates for 2019 sitting as;

• Level I – 41% June sitting and 42 % December sitting
• Level II – 44%
• Level III – 56%

The core topics you should master and learn the skills to apply include:

• Derivatives
• Equity investments
• Alternative investments
• Ethics
• Economics
• Quantitative methods
• Corporate finance
• Fixed income
• Portfolio management.

Similarly, beginning 2021, the Series 7 exam will be computer-based and administered by Prometric. However, unlike CFA exams, Series 7 exams are available throughout the year. In addition, FINRA opens a 120-day exam window after submission of the Form U4 application by your sponsor. Consequently, you can sit for your exam on any day it is offered within this period.

The Series 7 exam topics are;

• Taxation
• Packaged securities
• Investment risk
• Retirement plans
• Equity and debt instruments
• Interactions with clients
• Options

The pass rate for FINRA Series 7 exam in March 2019 was 71%, which is significantly higher than that of CFA.

What are the Similarities and Differences Between the CFA Charter and Series 7 license?

The most common similarity between CFA charter and Series 7 license is that both require candidates to pass a series of exams. While the CFA program has three levels, you should pass the SIE exam before qualifying for the Series 7 exam.

On the other hand, earning CFA charter requires knowledge and expertise in financial analysis; you can compare a Series 7 license to one required to sell real estate and insurance. The second difference is that the CFA charter is not a requirement for one to work as a financial analyst. However, you need a Series 7 license to qualify as a stockbroker.

Additionally, both curricula are intense. We recommend that you dedicate at least 300 hours of study for each CFA program level. If you are studying for a Series 7 license, you should put in a minimum of 80 to 100 hours if you have an education background in finance or 150 hours if you do not.

In summary, the choice between which accreditation to choose depends on the career you choose. For example, you require the Series 7 license to work as a stockbroker. On the other hand, a CFA charter is beneficial if you want to pursue a career in financial management, such as a risk manager, financial analyst, or portfolio manager.

If you want to start your journey to attain a CFA charter, contact AnalystPrep.com and enroll in our study packages. You will access a vast library of study materials to help you prepare for your CFA exams. In addition, our online study notes and video lessons will help you assimilate the most complex concepts.

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