Question Regarding Series 6, 63, 7 and 66. New Agent Plz Haalp

[insurance_Tycoon]

Ok so i just got my life/health license. I want to get my securities now. I was wondering which one i should get. I got offered to be sponsored for the 6 and 63 but i am 21 years old and i know you cant deal with stocks or bonds or anything like that without the series 7. I am still very new to the whole industry. Should i try to find someone to sponsor my series 7 and 66 rather than the 6 and 63 or just roll with the 6 and 63 for now and go back and get the 7 and 66 later on. Being that I am very young i think that the younger generation is a lot more interested in stocks and bonds. Anything that involves making money faster at a greater risk.

 

[DHK]

My impressions are that the younger generation is seeing how the crash of 2008 has affected their parents and grandparent's retirement, so they would want to conserve whatever they have.

As far as licensing... if you can be sponsored for the 7/66, that would be the best way to go, IMO.

However, it may not be up to you. I wouldn't worry about it. Even if you're sponsored for only the 6/63 at first. Add the series 65 later. After you've done some production, add the Series 7.

Just get started and get going.

 

[LGilmore]

A series 7 sounds great till you end up in court. Then your a ss will be handed to you. If you get a chance, look over a securities E&O policy.

I decided to park my 6 almost two years ago because the BD I was with wanted everybody to pay for 7 E&O coverage, which is expensive and provides really, no coverage at all. It wasn't cost/risk effective to continue on with it.

What's honestly nice about a 6 is the legal limitations it places on a RR. You simply can't do the things that get most 7's into trouble with because you aren't allowed to by law. You simply can't get into the trouble you can with a 7. And understand you don't have to commit illegal acts to get your a ss sued and lose.

Discretionary control is one of those things that would put you in court and could cause you to lose millions of dollars if you can't show reasonable cause for a transaction. Reasonable clause does not include sales contests, stocks the house is long on or generating account activity. When the court looks at your transactions, they aren't looking with a friendly eye.

That said, good luck, I am sure you'll do what you want anyway, but I tossed this out there as something to think about.

 

[pcbinsurance]

21 yrs of age and already an "Insurance Tycoon".....pretty impressive stuff!!!

Good luck and I wholeheartedly agree with what LGilmore is telling you.

 

[DHK]

Facilitating trades is not necessarily the same thing as soliciting trades.

If someone wants to buy 100 shares of APPL stock, you can facilitate that trade with a Series 7. But that's an unsolicited trade. An solicited trade means that you recommended it, and the client signed off on it.

Many firms - especially insurance b/d - won't allow you to do any solicitation of individual securities. That's a limitation placed by the firm, not by your licensing.

The discretionary trading stuff is going to be with high-end clients with larger accounts with a brokerage firm that will let you do it, after you have proven (via an internal firm examination, or obtaining the CFA designation) that you can. I know people who have done that. You won't be doing anything like that for a long time, if ever.

The closest you may have is to gather assets for a 3rd party asset manager, and you collect a fee for managing the relationship with the client. You won't deal directly with the underlying assets. Just the manager and risk classification. This is the Series 65 asset management stuff.

 

[LGilmore]

"The discretionary trading stuff is going to be with high-end clients with larger accounts "

You know, I just didn't see that in practice in the field, unless you're thinking more than 100k is high end?

I know what you're saying and I understand, but in actual practice in the field that isn't the case. Hence the ever increasing E&O costs and shrinking coverage. You're perfectly stating how it should be. In practice? well

 

[Norwayguy]

"The discretionary trading stuff is going to be with high-end clients with larger accounts "

You know, I just didn't see that in practice in the field, unless you're thinking more than 100k is high end?

I know what you're saying and I understand, but in actual practice in the field that isn't the case. Hence the ever increasing E&O costs and shrinking coverage. You're perfectly stating how it should be. In practice? well

I can definatly say amen on the E&O I noticed every year the premium went up deductible remained the same at 5k but my entire B/D coverage limit decreased from 100 million to 30 million I could see how one really bad branch could wipe out coverage for the entire B/D and leave me hanging. So much happier without the FINRA harness.

 

[insurance_Tycoon]

I can definatly say amen on the E&O I noticed every year the premium went up deductible remained the same at 5k but my entire B/D coverage limit decreased from 100 million to 30 million I could see how one really bad branch could wipe out coverage for the entire B/D and leave me hanging. So much happier without the FINRA harness.

Sounds like there's fees involved in having a series 7/66? Is there like certain fees I would have to pay

 

[LGilmore]

"Sounds like there's fees involved in having a series 7/66? Is there like certain fees I would have to pay "

Yup. there's additional costs and ongoing testing and compliance costs. You will have to figure out if the cost of doing a type of business is worth the income it produces.

AND you also have to figure out if the requirements of doing a certain type of business are worth it to you personally.

With a securities license ALL correspondence between you and a client must be cleared first by a compliance officer. All advertising, community activity and many other things must be cleared in advance by a compliance officer.

One of my last straws with this licensing was the demand by my BD that I turn over health related emails from clients for the compliance officer's review. I refused. This set off several days of back and forth about coming "into compliance" with the BD.

I asked them where they fit into the HIPAA equation with clients? I understand a relationship between myself, my client and the health insurance company as they are involved with the client's healthcare... I didn't understand where the BD, whom didn't sell the insurance plan, fit into the situation where they could demand those confidential emails from clients.

That said, this may be a tough place to find cheer leading for securities licensing. Most of us have gone through one sort of BS or another in dealing with our current or former BDs. You just have to decide if it is worth your time to deal with. While the idea of doing everything for a client is something we all like in concept, the reality of dealing with the crap from outsiders that comes with it can taint the experience.

 

[DHK]

Sounds like there's fees involved in having a series 7/66? Is there like certain fees I would have to pay

Commit this to memory: "There Ain't No Such Thing As A Free Lunch."

One of my firms paid for all my E&O, CE and everything... but I got a reduced compensation plan (compared to an insurance B/D).

It may be similar with the wirehouses (Merrill Lynch, Morgan Stanley, Wells Fargo Advisors, or UBS).

Edward Jones has a pretty low grid AND you still pay for a lot of your own expenses.

Waddell & Reed has a pretty good package (tech & E&O), but you're still paying about $200/month for it out of your own pocket.

There are fees for your initial licensing, fingerprinting, study materials, registration... most of this you pay for. It may be reimbursed to you later, but every firm is different.

The only way for you to know... is to ask. You should ask what expenses you are responsible for, including office, phone, copier, etc. It sucks that you have to ask, but you need to.