Stockbrokers who will be working with clients within the state of Colorado are licensed by the Colorado Department of Regulatory Agencies Division of Securities.
Stockbrokers are more commonly referred to as registered representatives, as they function as sales representatives for the broker-dealer firms they work for. The following steps detail the process for becoming a stockbroker in Colorado through both Financial Industry Regulatory Authority (FINRA) and Non-FINRA member broker-dealer firms.
Step 1. Get Your Education
Almost all stockbrokers have a degree. Even though there are no formal education requirements, many large firms will only hire applicants who hold a four-year degree. Professional designations, the result of personal ongoing education efforts, will usually require a bachelor’s degree as well.
Degrees commonly held by Investment Adviser Representatives:
- BA-Consumer and Family Financial Services
- BS-Business/Finance
- BS-Finance
- BA-Finance
- BS in Business Administration- Finance
While getting your degree, be sure to register for the right courses. Your education should get you ready to understand how the markets and investing work. Courses that would help include:
- Business law
- Behavior of organizations, persons and groups
- Business ethics
- Business communications
- Economics
- Finance
- Marketing
- Statistics
- Quantitative applications in business
- Accounting, in particular courses in financial accounting and managerial accounting
- Taxation
Step 2: Take the Required Exams
- You will need a broker-dealer registered in Colorado to sponsor you in order to take the required exam(s) and become licensed as a registered representative in Colorado. To find a sponsor, you can apply for an open registered representative position, or contact the firm you’d like to work with.
- Complete the test application form. This will be a Form U-4, Uniform Application for Securities Registration or Transfer, which your sponsoring firm will help you complete. The completed form will need to be filed by your sponsoring firm with FINRA through the Central Registration Depository (CRD).
- The application consists of a detailed questionnaire detailing your education, work experience, and any criminal history
- A registration fee of $85 will be payable to FINRA
- Test fees of $245 for the Series 7 and $147 for the Series 63 (explained below) will be additional
- Fingerprints are also required and can be obtained for a nominal fee at a local police station or sheriff’s office. FINRA charges $30.25 to process the fingerprint card.
- These fees will be paid electronically by your sponsoring broker when they file the U-4
- The initial registration fee in Colorado is $24, which will be paid by your sponsoring broker-dealer and made payable to the Colorado State Treasurer, and sent to:
Colorado Division of Securities
1560 Broadway, Suite 900
Denver, CO 80202
- You become registered to take the Series 7, General Securities Representative Examination when your sponsoring firm has filed and received approval on the Form U-4 through the CRD. The series 7 exam covers securities laws, rules and regulations, ethics, and knowledge on specific investment products.
- Although the Series 63 exam is not required when working with clients in Colorado, if you work for a broker-dealer firm that is registered in a state that requires the exam, the firm will see to it you are registered to take the Series 63, Uniform Securities Agent State Law Examination. This exam covers State securities regulations as described in the Uniform Securities Act.
- Schedule the exam(s) within 120 days of registration. Go to the FINRA website to schedule the examinations at one of the testing sites near you.
- Arrive at least an hour before the scheduled exam time at your chosen testing center on examination day.
- You will receive your test scores immediately upon completion of the exam. You are licensed as a registered representative in Colorado after achieving passing scores on the Series 7 exam.
Step 3: Get Your On-The-Job Training
After passing the exams, the broker-dealer firm through which you are employed will continue to provide on-the-job sales and product knowledge training.
Sales training will consist of how to legally solicit clients and help them buy and sell a variety of investments products, including:
- Stocks
- Corporate, municipal and treasury bonds
- Variable contracts
- Government securities
- Open-end and closed-end investment company shares
- Corporate equity and debt securities
- Mutual funds
- Options on stocks
- Direct participation programs like non-publicly traded real estate investment trusts or oil and gas leases
Step 4: Ongoing Requirements for License Renewal and Continuing Education
- Annual License Renewal and Fees
Annual license renewals are done through the Web-CRD (Central Registration Depository). In Colorado, stockbrokers have their licenses automatically renewed on the anniversary date of their initial registration. The renewal fee in Colorado is $24 and must be submitted as a check made payable to the Colorado State Treasurer, and sent to:Colorado Division of Securities
1560 Broadway, Suite 900
Denver, CO 80202 - Continuing Education Requirements
- Annual License Renewal and Fees
As part of the Securities Industry Continuing Education Program, registered representatives are required to fulfill continuing education requirements, which are broken into two elemental categories:
- The Regulatory Element
This involves periodic training on material specific to regulatory compliance and ethical sales practices. One regulatory Element training program must be completed at the beginning of your third year in practice within 120 days of your annual registration and then every three years throughout your career. Your firm’s compliance department will keep you abreast of when and how to take part in this ongoing continuing education.The Regulatory Element training program that applies to Series 7 licensed registered representatives is known as the S101 General Program. The S101 consists of four modules:
- Communicating with the Public
- Client/Product Suitability
- Handling Customer Accounts/Trade and Settlement Practices
- New and Secondary Offering & Corporate Finance
- The Firm Element
This involves product related training based on the needs of the firm. As a registered representative you will participate in Firm Element training every year. The Firm Element involves training in specific areas and related to specific products as determined by the firm based on their internal evaluation. This most often consists of training related to:
- Investment features and associated risk factors
- Sales practices and suitability standards
- Regulatory requirements related to products, services, and strategies
- Updating your Form U-4
As a registered representative you are responsible for informing your supervisor promptly of the need to update your Form U-4. This includes:- Address updates
- Criminal disclosure
- Financial judgments against you
- Civil judgments against you
- Pending or completed disciplinary actions
- Customer complaints
Clients will be able to review details on your education and credentials, as well as any disciplinary action taken against you, through FINRA’s BrokerCheck.