STUDY FOR THE SECURITIES INDUSTRY ESSENTIALS EXAM (SIE) EXAM

The Securities Industry Essentials (SIE) Exam is a necessary first step if you plan to sit for many securities exams, including the Series 6 and Series 7 exams. If you do intend to sit for the SIE Exam, make sure that you know about self-regulatory organizations (SRO's), what they are, who they are, and what their purpose is. FINRA publishes a Content Outline for the SIE Exam, and Section 1.1.2 specifically talks about Self-Regulatory Organizations(SRO's), indicating that you should expect to see questions about SRO's on your exam. Bob Eder discusses SRO's in his Study for the Securities Industry Essentials (SIE) Exam. Here is a sample of Bob Eder's treatment: Self-Regulatory Organizations                                                      ...

Several weeks ago, Bob Eder's blog discussed RILAS or Registered Index Linked Annuities. In this blog Bob discusses the major penalties and charges that can reduce a client's return. These penalties include, but are not limited to, surrender charges; interim value adjustments and mid-term investment withdrawals; and tax penalties. This information is based on a publication of the SEC's Office of the Investor Advocate entitled "Report on Activities Fiscal Year 2023." A "RILA" has both insurance components and investment components. An investor puts money into a RILA, generally with a minimum requirement of $10,000 to $20,000.  After making this initial investment, the RILA purchaser then decides how much premium to put into investment options. These investments are relatively short-term, generally not exceeding six years.  This short-term character of RILA investments means that the investment options generally will not exceed the life of the RILA contrac...

FINRA's Content Outline for the Securities Industry Essentials (SIE) Exam lists Annuities under Section 2.1.4, meaning that the SIE Exam covers these packaged product investments and asks questions about them. A few days ago, on the SEC website, I saw that the SEC is paying close attention to the complex structure and details of a particular type of annuity, named Registered Index-Linked Annuity (RILA), in its   SEC OIAD Report on Activities—Fiscal Year 2023 . Here is just one paragraph from this SEC publication in regard to RILA's. I intend to present more segments in future blogs from this SEC Report on RILA's. " REGISTERED INDEX-LINKED ANNUITIES (RILAs)  "What Are RILA's and How Do They Work?  "RILA's are tax-deferred retirement savings vehicles that advertise potentially reduced market risk relative to investing directly in financial markets. Like many other retirement savings vehicles, money is first added to the overall vehicle and then the inve...

One thing about the Securities Industry Essentials (SIE) exam, it asks questions about debt securities, specifically about Treasury bills, notes and bonds. Some SIE candidates study only stocks, but that overlooks the importance of becoming familiar with bonds on the SIE exam. How do I know this about the SIE Exam? I know this from FINRA's Content Outline for the SIE Exam. Section 2.1.2 indicates that test candidates should know how debt securities operate, and in particular, a candidate must be able to explain credit spreads and compare characteristics of short-term bonds and long-term bonds. Bob Eder in his Study for the Securities Industry Essentials (SIE) Exam presents a full treatment of Treasury securities including coverage of credit spreads. Here is a sample of Bob Eder's treatment: Bond Credit Spreads                                                  ...

If you plan on sitting for the Securities Industry Essentials (SIE) Exam, be prepared for test questions that ask about the various Share Classes for Mutual Funds. FINRA publishes a Content Outline for the SIE Exam, and it specifically lists knowledge of Share Classes in Section 2.1.4. Bob Eder in his Study for the Securities Industry Essentials (SIE) Exam discusses Share Classes of Mutual Funds in detail. Here is an example of Bob Eder's treatment: "Class B                                                                                           ...

If you plan on sitting for the SIE Exam, make sure that you thoroughly understand the differences between the various interest rates, such as discount rate, prime rate, and federal funds rate. FINRA publishes a Content Outline for the SIE Exam, and in Section 1.3.1, FINRA lists the various interests as being important for the test. Bob Eder in his Study for the Securities Industry Essentials (SIE) Exam discusses interest rates in some detail. Here is an example of Bob Eder's treatment—note how Bob Eder links major paragraphs to FINRA's Content Outline: Fed Funds Rate                                                                        ...

FINRA makes available a Content Outline for the Securities Industry Essentials (SIE) Exam for those planning to sit for the exam. This Content Outline describes the subject matter of the SIE Exam. The SIE Content Outline includes Section 3.2.4 which covers Books and Records Regulations, and it encompasses the use of social media to communicate with clients, digital messaging, and internet communications. From time to time, the SEC issues press releases about penalties and charges brought against broker/dealers and advisers. Here is a recent one that imposes penalties on 10 firms for inadequate Record-Keeping of electronic communications, called "Off-Channel Communications." We include the SEC Release here because it demonstrates that a broker or adviser must treat the rules as having real life consequences, potentially bringing serious penalties and large fines for non-observance. Students who plan on sitting for the SIE Exam should pay careful attention to the SEC Release as...