Series 26

What Is the Series 26?

The Series 26 is an examination administered by the Financial Industry Regulatory Authority (FINRA). Although it is often simply referred to as the Series 26 exam, its full name is the Investment Company and Variable Contracts Products Principal Eam.

As its full name suggests, passing the Series 26 exam entitles candidates to register as a limited principle responsible for supervising personnel who sell redeemable securities, such as mutual funds, variable insurance contracts, and other financial products as outlined in the Investment Company Act of 1940.

How the Series 26 Works

The purpose of the Series 26 exam is to safeguard the investing public by ensuring that new professionals overseeing the sale of redeemable securities are equipped with at least a minimal level of knowledge and competence. In that sense, it is similar to the exams administered by the CFA Institute for candidates in its Chartered Financial Analyst (CFA) program.

To ensure that these standards are maintained, candidates for the Series 26 exam must first be sponsored by a FINRA member firm and must have already passed either the Investment Company and Variable Contracts Products Representative exam (known as the “Series 6”), or the General Securities Representative exam (known as the “Series 7”). In addition, candidates must also have passed the Securities Industry Essentials exam (SIE).

The Series 26 exam consists of 110 questions. Candidates are given 2 hours and 45 minutes to write the exam, which is completed electronically. To pass, candidates must answer at least 70% of the questions correctly. Since there is no penalty for guessing, candidates should ensure they attempt all questions on the test.

Real World Example of the Series 26

The Series 26 covers a deliberately wide range of subject matter, although the order of the questions are arranged to cover three major topic areas. The first section relates to the management and record-keeping responsibilities of professionals who oversee financial sales teams, while also testing candidates’ general knowledge about the securities industry as a whole.

In the second and third sections, candidates are tested on their ability to navigate the compliance responsibilities of managers in the industry, such as the required processes for correctly handling customers’ accounts, and the various disclosures required when marketing securities to the public. More broadly, this section includes questions about the ethical standards required of professionals in the field, such as how to navigate conflicts of interest and how to disclose potential violations of securities laws and regulations.