New State Adviser Exams Coming

The North American Securities Administrators Association (NASAA) is revising the Series 65 exam and coming out with a new Series 66 test. The exams are scheduled to be rolled out in July and will include material to gauge investment adviser competency.Investment adviser representatives will take the new Series 65 exam. "It will test entry-level investment adviser subject matter in addition to the

The North American Securities Administrators Association (NASAA) is revising the Series 65 exam and coming out with a new Series 66 test. The exams are scheduled to be rolled out in July and will include material to gauge investment adviser competency.

Investment adviser representatives will take the new Series 65 exam. "It will test entry-level investment adviser subject matter in addition to the basic precepts of state and federal law and ethics," says Richard Cortese, vice chairman of the NASAA Investment Adviser Competency Committee and securities administrator for the state of Vermont.

Brokers with a Series 7 license will take the new Series 66 exam. In addition to covering legal and ethics topics, the exam will include investment adviser topics that are not redundant with the Series 7 material, Cortese says.

Reps who currently hold investment adviser licenses likely will be grandfathered and not required to take the new tests, according to Donald Reis, chairman of the NASAA Investment Adviser Competency Committee and Nevada securities commissioner.

The exams are being developed by the Chauncey Group, an outside consulting group hired by the NASAA. In addition to conducting a two-day meeting with investment advisers to analyze their jobs, the consultant also surveyed 4,000 advisers, Reis says.

The Investment Company Institute (ICI) was initially opposed to the NASAA's development of a competency exam for advisers. The organization had doubts about a "one-size-fits-all examination." But Reis says that in his last conversation with ICI officials, "they seemed sort of satisfied with the Series 7 carve out"--the separate exam for Series 7 reps.

Another group that opposed the plan early on was the Securities Industry Association. "They said anybody with a Series 7 shouldn't have to take any other exam to test competency," Reis says. But once the NASAA committee presented the idea of having two different versions of the new exam, things quieted down, Reis says.

The NASAA will propose the new exams to the states for adoption. "I'm very optimistic they'll adopt it rapidly," Reis says. He adds: "I've been working on this since summer of '96. I'm ready to give birth on this project. It's a longer gestation period than an elephant."

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