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Preparing the next generation of securities industry professionals

Changes to financial services exams are coming in 2018

6 min read




Doug Vincens

In 2015, the Financial Industry Regulatory Authority communicated plans to restructure the representative-level qualification examination program, which would include a new general knowledge exam available to anyone interested in a career in the securities industry.  This October, FINRA announced that this general knowledge exam, known as the Securities Industry Essentials (SIE) exam, along with new specialized knowledge exams (called top-offs) will take effect on October 1, 2018.

In this post, we talk with Doug Vincens, vice president of financial services and product director for securities at Kaplan, about the new regulations and how they’ll be implemented.


Why is FINRA making these changes to the exam?

Essentially, FINRA’s intentions are twofold: 1) Reducing redundant testing of general knowledge when taking multiple exams by moving common content to the SIE exam; and 2) Making it easier for candidates to start or return to careers in the securities industry by allowing them to sit for the SIE exam without association with a firm.  

It is important to note that FINRA recently released statistics that show a decline in the number of registered representatives over the last 15 years. Compounding that lack of growth is the expectation that one-third of financial advisors, many of whom are employed by securities firms, plan to retire within the next decade, based on an often-cited 2014 study by Cerulli Associates. So FINRA’s introduction of the SIE is quite timely.


What are the benefits of the changes for companies and individuals?

The potential benefits of FINRA’s exam restructuring are many, particularly for firms looking to be more efficient in their recruiting and onboarding processes. Firms will now have options when onboarding new reps, including making the SIE a condition of employment, having new hires pass the SIE prior to taking a specialized knowledge exam or asking new hires to take both exams together.

By creating pipelines of candidates that have demonstrated mastery of fundamental securities-related knowledge, firms are able to reduce costs associated with recruiting and licensing, and most importantly, mitigate the drain on productivity when bringing on new hires. Those who pass the SIE can show basic knowledge of products, risks, the structure and function of the securities industry and its regulatory agencies, and knowledge of regulated and prohibited practices.

Speaking of candidate pipelines, FINRA expects to initially promote the SIE to college students since a majority of annual test-takers come from 300 or so universities with business schools or finance departments. Firms that currently have or plan to develop relationships with local universities will have an advantage in leveraging the benefits of this new exam.

Additionally, many of the firms Kaplan partners with on corporate training programs have expressed an interest in utilizing 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.  

Finally, individuals who are able to add the SIE to their resume and more importantly demonstrate general industry knowledge will stand out to potential employers during job interviews and within post-hire training programs.


What are the risks for changing the exam structure?

Many firms are concerned that individuals who have passed the SIE 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 will 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 looking to hire individuals without the SIE credential, the total FINRA exam registration fees will likely be higher, increasing recruiting costs. FINRA expects to file their new exam fee schedule during the first quarter of 2018.


How will this reshape certifications in the industry, particularly for hiring managers and those in human resources?

I would not consider the SIE as part of any broad industry transformation, rather it is simply FINRA’s response to the needs of its membership by enabling better access to more qualified candidates.

It is also worth noting that the current regulatory environment and expected disruption of fintech will continue to drive demand for professional training, licensure and exam preparation.  

Specific to SIE, the more technical knowledge candidates are able to acquire before joining a firm, the more these companies can focus their training investments to address skills gaps by targeting specific role-based competencies.  For example, robo-advisors and other emerging technologies such as artificial intelligence and robot process automation will have a significant impact on the roles of financial services professionals, requiring additional communication and other interpersonal skills.  This is central to adopting an organizational culture of lifelong learning.


What types of resources are available for those looking to take the new exam?

As we head into 2018, a number of training providers are expected to offer exam preparation courses and programs designed to assist students with passing the new SIE and top-off exams.  

Kaplan, recognized as the pioneer of exam prep and leader in securities licensing for over 47 years, currently offers classroom, online and blended exam prep programs to more than 90,000 successful candidates annually. These same proven approaches will be used to implement SIE-related programs within more than 1,500 universities, many of which Kaplan is currently partnering with to offer CFP® and CFA®-based curricula, and more than 1,000 corporate relationships.  Our integrated strategy is to connect these universities with potential employers to provide sources of highly qualified candidates, while preparing individuals to pass the SIE and top-off exams and supporting their future careers in the securities industry with ongoing education and training.  


Download your free guide to the new SIE exam for more information here.


Doug Vincens is the vice president of financial services and product director for securities, where he leads teams responsible for ensuring Kaplan’s study solutions enable students to achieve successful learning outcomes. 

He has been with Kaplan for more than 13 years, most notably as vice president of business systems and education technology, where he directed a professional services organization, managed the delivery of several customer-facing education technology initiatives and acted as the key liaison between the business and technology groups. Before that, he worked at Vertafore as a senior product manager designing regulatory compliance technology solutions for the financial services industry.