“Registered representative” is a term that describes someone who is licensed to buy and sell securities for clients and is sponsored by a firm registered with the Financial Industry Regulatory Authority (FINRA). Registered representatives are more commonly referred to as stockbrokers. This article explains what a registered representative does and details the difference between an investment adviser representative and a registered representative. You'll also learn the steps you need to take to become a registered representative.
What a Registered Representative Does
Registered representatives represent clients in the trading of investment products such as stocks, bonds, and mutual funds. Many handle complicated trades or complex products that are outside the capabilities of online trading. Well-versed in the markets, they search for the best securities and prices possible so they can advise clients on what to buy and sell, as well as the best times to trade. In return, they receive either a flat fee or a percentage of the transaction value as a commission. Therefore, a registered representative is adept at sales and working with people.
Registered representatives must follow standards and rules set by FINRA and the SEC, as well as the suitability standard. The suitability standard requires that a registered representative recommend only the securities that meet client requirements and goals and complement their portfolios. However, if a registered representative finds an investment product that will make the client money, they can recommend a trade, even if it doesn’t meet the client’s financial goals or appetite for risk.
Registered Representative vs. Investment Adviser Representative
An investment adviser representative (IAR) is an individual who works for an investment advisory company or firm and provides investment-related advice for a fee. The advice IARs can provide is based on the licenses they hold. IARs are usually asset managers, investment counselors, investment managers, portfolio managers, and wealth managers. Many have Series 65 licenses.
By contrast, registered representatives work with broker-dealers or brokerage firms, buying and selling securities stocks, bonds, mutual funds and certain other investment products on behalf of customers or for their firm’s own accounts, or both. The securities licenses most commonly associated with registered representatives are Series 7 and Series 63.
How to Become a Registered Representative
Here are the steps tobecoming a registered representative:
- Sit for and pass the SIE exam. This exam, which tests security industry essential concepts, gets you started on the path to earning your Series 7 and Series 63 licenses.
- Secure employment with and sponsorship from a FINRA-licensed firm.
- Register and prepare for the Series 7 exam. Your sponsoring broker is required to file an application for you through FINRA’s CRD system. FINRA’s approval of that application opens a 120-day testing window. You should schedule your exam as far in advance as possible to ensure adequate preparation time and to get your desired date.
- Sit for and pass the Series 7 exam.
- Register for, prepare for, sit for, and pass the Series 63 exam.
After you complete these steps, you will be licensed and sponsored to buy and trade securities for individual clients, your firm, or both.
Thinking of Becoming a Registered Representative?
A career as a registered representative is hard work, but it is satisfying and rewarding. Sitting for the SIE exam is a great way to start, and SIE exam preparation packages can increase your chances of passing. Another option is to enroll in an SIE and Series 7 exam preparation bundle, which will ultimately save you money in the long run.
FAQs
“Registered representative” is a term that describes someone who is licensed to buy and sell securities for clients and is sponsored by a firm registered with the Financial Industry Regulatory Authority (FINRA). Registered representatives are more commonly referred to as stockbrokers.
What qualifies you as a registered representative? ›
A registered representative (RR) is a financial professional who is able to deal with client transactions in the securities markets. RRs must pass strict licensing requirements, including the Series 7 & 63 exams, and must follow rules set out by FINRA and the SEC.
Is a registered representative the same as a financial advisor? ›
If properly licensed, a financial advisor can be a registered representative, an investment advisor representative and even an insurance agent all at the same time.
What is the difference between a registered principal and a registered representative? ›
This includes registered principals, who are actively engaged in the management of a firm's investment banking or securities business, and registered representatives, who are involved in a firm's investment banking or securities business.
What's a registered person? ›
Registered Person, refers to a natural person whose Personal Data is being Processed.
Who is considered a representative? ›
What is a Representative? Also referred to as a congressman or congresswoman, each representative is elected to a two-year term serving the people of a specific congressional district. Among other duties, representatives introduce bills and resolutions, offer amendments and serve on committees.
What can a non-registered representative do? ›
Employees of securities firms that are not licensed may generally perform clerical roles, but cannot discuss the attributes, benefits, or risks of securities. Providing a client with an account form is included in the category of clerical duties, and therefore is okay for unregistered representatives.
Are registered representatives restricted persons? ›
Registered representatives are subject to limitations when borrowing from or lending to customers. Generally speaking, representatives are prohibited from engaging in loans of any form with most customers.
How many registered representatives are there? ›
Do registered representatives have a fiduciary duty? ›
FAIR, EQUITABLE AND ETHICAL PRINCIPLES [CCR § 260.238]* As a registered investment adviser, you and your investment adviser representatives are fiduciaries and have a duty to act in your client's best interest.
Registered investment advisors (RIAs) manage the assets of high-net-worth individuals and institutional investors. RIAs can create portfolios with individual stocks, bonds, and mutual funds; they may use a mix of funds and individual issues or only funds to streamline asset allocation and cut down on commission costs.
What is the difference between a registered rep and an RIA? ›
RIAs are considered to be acting in a fiduciary capacity, and so held to a higher standard of conduct than registered representatives. This fiduciary standard mandates that an RIA must always unconditionally put the client's best interests ahead of their own, regardless of all other circ*mstances.
What makes you a registered representative? ›
The term "registered representative" means an employee engaged in the solicitation or handling of accounts or orders for the purchase or sale of securities, or other similar instruments for the accounts of customers of his employer or in the solicitation or handling of business in connection with investment advisory or ...
How to become a registered rep? ›
How to Become a Registered Representative
- Step 1: Sit for and Pass the SIE Exam. ...
- Step 2: Secure Sponsorship with a Licensed Firm. ...
- Step 3: Choose an Exam that Fits What You Want to Do. ...
- Step 4: Register and Prepare for the Exam. ...
- Step 5: Sit for and Pass a Series-Specific Qualification Exam.
Candidates must pass the Securities Industry Essentials (SIE) exam and the Series 7 exam to obtain the General Securities Representative registration. For more information about the SIE and Series 7 exams, refer to FINRA Rule 1210 and FINRA Rule 1220(b)(2).
What does being a representative mean? ›
A representative is a person who has been chosen to act or make decisions on behalf of another person or a group of people.
How many registered representatives are there in the US? ›
Does the Series 7 make you a registered representative? ›
The Series 7 is generally preferred by banks and broker dealers for new recruits coming directly into the financial services industry. Those who get this license are officially listed as registered representatives by FINRA, but are more commonly referred to as stockbrokers.
