CFA vs. Series 7: What’s the Difference?

CFA vs. Collection 7: An Overview

The Chartered Monetary Analyst (CFA) designation is an expert credential supplied by CFA Institute. It’s a globally acknowledged and revered credential held by over 167,000 professionals throughout 165 international locations, and it’s considered the gold customary for the funding business.

Collection 7 colloquially refers back to the license that permits the holder to promote all sorts of securities besides commodities and futures. Administered by FINRA, the Collection 7 examination—also referred to as the Common Securities Consultant Qualification Examination (GS)—primarily assesses the competency of an entry-level registered consultant to carry out their job as a Common Securities Consultant, or a stockbroker in frequent parlance. In an effort to get hold of the Common Securities Consultant registration, candidates should cross the Securities Trade Necessities (SIE) examination and the Collection 7 examination.

Evaluating the CFA Program with the Collection 7 is an apples-to-oranges comparability. The CFA Program is a rigorous, three-level superior program, whereas the Collection 7 exams are meant for entry-level registered representatives. Thus, it could usually take way more time to check for the three examination ranges of the CFA Program—a median of 300+ hours is really useful for every examination degree—than it could for the Collection 7. The CFA exams are additionally notoriously troublesome to cross; the common cross charge of all three CFA ranges from 1963 to 2021 is 45%. FINRA doesn’t publish cross charges for the Collection 7 exams, however anecdotal proof means that it’s round 65% to 70%, considerably larger than the CFA cross charges however definitely a difficult examination to cross for an unprepared candidate.

Whereas CFA and Collection 7 credentials could take you down totally different profession paths within the monetary business, many monetary business professionals possess each. Collection 7 holders are licensed to promote most securities of their capability as monetary advisors and brokers. However very often, being concerned within the monetary business sparks an curiosity for extra in-depth studying in areas similar to funding evaluation and portfolio administration, in addition to the need to garner a profession benefit via a complicated credential just like the CFA. Observe that the CFA shouldn’t be mandated by any regulatory company for a monetary business place. The CFA is primarily a certification, similar to a grasp’s diploma, that will increase the credibility of funding professionals and in addition improves profession development prospects.

CFA Constitution

The CFA Institute points the CFA constitution to individuals who can cross its rigorous necessities. Folks generally evaluate the CFA examine program to acquiring a grasp’s of enterprise administration (MBA) besides that it’s way more specialised within the space of investments.

To enroll within the CFA Program and register for the Stage I examination, candidates should have a world journey passport and meet one of many following entrance necessities—have a bachelor’s diploma or be a final-year scholar, or have a mixture of 4,000 hours of labor expertise and/or at the very least three sequential years of upper schooling.

To acquire a CFA, a person should meet all the necessities set forth by the CFA Institute, together with:

• Cross all three ranges of the CFA exams.
• Obtain certified work expertise—at the very least 4,000 hours of expertise, accomplished in a minimal of 36 months.
• Submit two to 3 skilled references.
• Apply to grow to be a daily member of the CFA Institute, which requires an affiliation with a neighborhood chapter.

A breakdown of the CFA program curriculum will be discovered on the CFA Institute web site.

CFA holders really feel that this system’s most difficult side is fulfilling the academic requirement. Candidates should cross three exams of progressive problem. In response to the CFA Institute, on common, a typical candidate takes 4 to 5 years to cross all three exams. Profitable candidates report spending about 300 hours finding out for every degree, starting from 303 hours for the CFA Stage I examination to 328 hours for the CFA Stage II examination and 344 for the CFA Stage III examination. Most individuals would discover it troublesome to make that sort of time dedication.

And regardless of the period of time spent finding out, there isn’t a assure of success. Cross charges fell to report lows for all three ranges of the CFA exams in 2021, as the worldwide pandemic affected candidates’ examination preparation efforts as a consequence of cancellations and deferrals.

All CFA exams at the moment are administered via computer-based testing, versus the in-person testing at examination facilities that was the norm earlier. Stage 1 exams are held 4 occasions per yr, whereas Stage II and Stage III exams are held twice per yr.

The CFA constitution is taken into account to be one of the specialised funding evaluation certifications within the monetary business. A CFA can considerably assist a person’s profession development, primarily within the areas of:

• Funding administration
• Portfolio evaluation
• Purchase-side buying and selling
• Promote-side analysis evaluation
• Funding banking
• Academia
• Economics
• Monetary advising

In response to CFA Institute, the highest 5 roles for CFA charterholders globally are:

• Portfolio Supervisor
• Analysis Analyst
• Chief Stage Government
• Marketing consultant
• Danger Supervisor

Collection 7

The first distinction between the Collection 7 and the CFA is that one is a license whereas the opposite is a certification. A Collection 7 license is important for people whose job entails the solicitation, buy, or sale of securities—together with shares, bonds, mutual funds, exchange-traded funds, choices, direct participation applications, and variable contracts. As of October 2018, passing the Collection 7 examination shouldn’t be the one requirement for brand new FINRA licensees. New licensing candidates should additionally cross the Securities Trade Necessities (SIE) examination.

The SIE is a 75-question, a number of alternative examination. Candidates have one hour and 45 minutes to take the check. A passing rating of 70 is required. The SIE examination was designed by FINRA to make sure that FINRA licensees exhibit an intensive understanding of fundamental securities business information.

The Collection 7 examination is managed by FINRA. It has 125 questions overlaying 4 important job capabilities of a Collection 7 licensed consultant. The check should be accomplished in 225 minutes.

The next are the 4 important job capabilities:

• Operate 1: Seeks enterprise for the broker-dealer via prospects and potential prospects.
• Operate 2: Opens accounts after acquiring and evaluating prospects’ monetary profile and funding targets.
• Operate 3: Gives prospects with details about investments, makes appropriate suggestions, transfers belongings, and maintains acceptable data.
• Operate 4: Obtains and verifies prospects’ buy and gross sales directions and agreements; processes, completes, and confirms transactions.

Most Collection 7 examination preparation programs recommend 80 to 100 hours of examine time, together with dwell apply exams and at the very least 1,000 apply questions. In contrast to the CFA exams, which cowl case research, monetary and funding theories, and quantitative math, the Collection 7 examination entails memorizing SEC laws and a few fundamental math. A 72% rating is important to cross the examination.

To totally get hold of the Collection 7 license, candidates should:

• Be related to and sponsored by a FINRA member agency or different relevant self-regulatory group (SRO) member agency
• Register with FINRA
• Cross the SIE Examination
• Adjust to eligibility beneath FINRA Rule 1220(b)(2)

Key Variations

The Collection 7 license and CFA certification are usually acquired for various careers throughout the monetary business, though many monetary business professionals possess each. Collection 7 licensed representatives are likely to work in monetary market gross sales, typically as a stockbroker or monetary advisor. Remember that a Collection 7 is required to solicit, buy, and promote shares, bonds, mutual funds, choices, direct participation applications, and variable contracts in any monetary place. The Collection 7 license can expire if a consultant shouldn’t be employed with a FINRA-registered group for 2 years.

Though some Collection 7 licensed funding advisors additionally maintain a CFA constitution, most careers requiring a CFA do not require a Collection 7 license. In contrast to the Collection 7, the CFA certification doesn’t expire. As such, it’s a certification that can be utilized in advertising your private expertise all through your profession. With the CFA constitution and membership with the CFA Institute, charterholders have the chance to additional their schooling yearly via persevering with schooling programs. Basically, the CFA generally is a good pathway to a higher-paying job with larger latitude for accountability and administration authority.

When it comes to curriculum and problem, there’s a huge distinction between the Collection 7 and the CFA. The Collection 7 license covers fundamental securities market terminology, merchandise, and job capabilities via each the SIE examination and the Collection 7 examination. The CFA curriculum is way more quantitative and theoretical, overlaying the areas of quantitative evaluation, securities valuation, economics, monetary reporting, accounting, ethics, and extra.

The Backside Line

Collection 7 refers back to the license that permits the holder to promote all sorts of securities besides commodities and futures. In the meantime, the CFA is primarily a certification, similar to a grasp’s diploma, that will increase the credibility of funding professionals and improves profession development prospects. The Collection 7 license covers fundamental securities market terminology, merchandise, and job capabilities, whereas the CFA curriculum is way more quantitative and theoretical.