State Regulators Revise Exam for Investment Advisors

An organization of state securities regulators revamped the exam states give registered investment advisors, adding more questions on economics, investment vehicles and investing strategies, regulators said Monday.

The 130-question revised Series 65 “competency exam” replaces a shorter test that focused on ethics and securities laws. The North American Securities Administrators Assn., which revised the test, wants its members to begin using the test by Jan. 1.

State regulators said they revised the exam, to be administered by the regulatory unit of the National Assn. of Securities Dealers, to head off problems with advisors as more people invest in securities and turn to professionals for help.

“With more Americans relying on investment advisors we need to make very sure they have the basic knowledge to offer advice,” said Donald Reis, Nevada’s assistant secretary of state and chairman of the committee that developed the exam. “We test barbers, beauticians and stockbrokers before they get licensed; investment advisors should be no different.”

Each state can decide on its own whether to require the revised Series 65 exam.

The Investment Counsel Assn. of America, which represents large investment advisors, said it supports the new examinations as long as states implement them uniformly and allow people with appropriate designations and experience to avoid taking the exam.

NASAA said that in states where individuals are required to be licensed as stockbrokers and investment advisors, they will take a revised Series 66. That 100-question test will cover investment analysis, recommendations and strategies, ethics and legal guidance. The Series 66 combines the current Series 63 state licensing exam and the new test, it said.