Securities Industry Essentials (SIE) Exam Frequently Asked Questions for Businesses

The introduction of FINRA’s new Securities Industry Essentials (SIE) in October 2018 has dramatically changed the securities licensing process. We’ve assembled and answered this list of the most common questions we’ve been fielding from partner firms in recent months.

How does the SIE exam impact our firm’s recruitment efforts?

There are many potential benefits of FINRA restructuring the securities exams, particularly for firms who want to be more efficient in their recruiting and onboarding processes. Your firm now has options when onboarding new reps, including making the SIE exam a condition of employment, having new hires pass the SIE exam prior to taking a specialized knowledge exam, or asking new hires to take both exams together.

How does the SIE exam affect our onboarding process?

Candidates now have to pass multiple exams before registering with FINRA, which may extend the onboarding process to account for exam scheduling, testing, and waiting periods for retakes.

How are our current license holders impacted by the introduction of the SIE exam?

Based on FINRA Regulatory Notice 17-30, the following individuals are considered to have passed the SIE exam:

• Individuals who registered as representatives before October 1, 2018, and who continue to maintain those registrations on or after October 1, 2018.
• Individuals whose registration as a representative was terminated between October 1, 2014 and September 30, 2018, provided they re-register as a representative within four years from the date of their last registration

All other individuals seeking representative-level registration must pass the SIE exam, unless they obtain a waiver.

How can our firm strategically use this change to our advantage?

Thinking strategically, the SIE exam allows firms to create pipelines of qualified candidates, reduce onboarding and recruiting costs, increase speed to production, and build more agile and effective workforces.

Can our firm partner with an education provider to provide SIE exam prep?

Yes. A number of training providers offer exam preparation courses and programs designed to assist students with passing the new SIE exam and top-off exams. Kaplan currently offers classroom, online, and blended exam prep programs to more than 90,000 successful candidates annually. These same proven approaches are being used to implement SIE-related programs within more than 1,500 universities, many of which Kaplan is currently partnering with to offer CFP® certification education and CFA®-based curricula, as well as more than 1,000 corporate partners. Our integrated strategy is to connect these universities with potential employers to provide sources of highly qualified candidates, while also preparing individuals to pass the SIE and top-off exams and supporting their future careers in the securities industry.

Can I use a candidate’s passing of the SIE exam as a reliable predictor of how they will perform on their FINRA series exams?

While candidates passing of the SIE exam can prove mastery of basic industry knowledge and demonstrate proficiency in handling a high-stakes exam experience, it is too early to determine any correlation on how they will perform on their respective top-off exams.

How should we adapt our internal training program and process to accommodate the SIE exam?

You have different options for onboarding new hires:

●     Hire applicants who have already successfully passed the SIE exam.

●     Onboard individuals and require them to take the SIE exam prior to top-off exam.

●     Request new hires to take both the SIE and top-off exams together.

Additionally, many of the firms Kaplan partners with on corporate training programs have expressed an interest in using the SIE exam for their non-registered administrative employees. Having a better understanding of the industry helps create more agile and effective workforces, which is key to growth and competitive positioning.

What are the benefits of the changes for companies?

By creating pipelines of candidates who have demonstrated mastery of fundamental securities-related knowledge, firms are able to reduce costs associated with recruiting and licensing. Most importantly, firms can mitigate the drain on productivity when bringing on new hires. Firms that currently have, or plan to develop, relationships with local universities have an advantage in leveraging the benefits of this new exam. As noted previously, many of the firms we have talked to are interested in having their administrative staff prepare and sit for the SIE exam as well.

What are the challenges caused by the introduction of the SIE exam?

Many firms are concerned that individuals who have passed the SIE exam will misrepresent their qualifications with investors. In response, FINRA plans to implement SIE Rules of Conduct that require individuals to attest that they are not qualified to conduct securities business with the public until they meet the additional requirements of being associated with a firm and passing a specialized knowledge exam.

Additionally, candidates now have to pass multiple exams before registering with FINRA, which may extend the onboarding process to account for exam scheduling, testing, and waiting periods for retakes.

Finally, for those firms who want to hire individuals without the SIE credential, the total exam fees will likely stay the same. For example, the exam fee for the current Series 7 exam is $305.  The SIE exam fee is $60, and the exam fee for the new Series 7 top-off exam will be the balance ($245) of the current fee.

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We hope this article has helped clear up confusion and answer any questions you have about the SIE Exam, and how it affects your firm.  If you're looking for more information, you can access our SIE Information Center. We've also created FAQs for candidates and universities to answer SIE-specific questions.