Stockbrokers, who are more commonly referred to within the financial services industry as broker-dealer agents, work as securities sales representatives and make various investment vehicles available to retail investors.
Follow this step-by-step guide to become a stockbroker in South Dakota by securing sponsorship with a South-Dakota registered broker-dealer firm, passing the required exams and registering with the South Dakota Department of Labor and Regulation, Division of Securities.
Step 1. Get Your Education
- While the South Dakota Division of Securities does not require a college education for registration, most broker-dealer firms will require that candidates have a bachelor’s degree as a stipulation for being sponsored to take the securities exams.
Some of the degrees that would be most helpful to you in securing sponsorship include:
- BS-Business Administration- Finance
- BA-Consumer and Family Financial Services
- Business communications
- Business law
- Business ethics
- Quantitative applications in business
- Behavior of organizations, persons and groups
- Accounting, in particular courses in financial accounting and managerial accounting
Step 2: Take the Required Exams
- You must be sponsored by a broker-dealer registered in South Dakota before you are allowed to take the required securities exams. (If you were registered as a representative prior to January 1, 1989, you are exempt from taking the securities exams assuming your registration has never lapsed.) To become sponsored, begin by looking for open broker-dealer agent positions. Consider all options available to you, including small independent local and regional firms.
- Your FINRA (Financial Industry Regulatory Authority)-member sponsor will help you fill out Form U-4, Uniform Application for Securities Registration or Transfer. For applicants associated with FINRA-member firms, this is both the exam application and the application for licensure through the South Dakota Department of Labor and Regulation, Division of Securities.
You will also be required to provide a copy of your fingerprints, which are used to process your federal FBI background check. If your broker-dealer cannot assist you with fingerprinting, you can be fingerprinted for a small fee at a local police station or sheriff’s office.
The compliance department of your sponsoring broker-dealer will help you complete the form and submit it along with the additional supplemental materials through the Central Registration Depository (CRD). All required fees will be debited from your sponsor’s CRD account:
- $85 fee that FINRA charges to process your registration
- $30.25 to process your fingerprint card and background check
- Fees for all the exams you’re applying for
- South Dakota Securities Division registration fee of $125
You may become sponsored in South Dakota through a non-FINRA member firm, although this is rare, as most firms have joined FINRA. To do so, submit Form U-10 Uniform Examination Request for non-FINRA Members to apply for the exams through the CRD. Upon passing the exams, send Form U-4, proof of passing the Series 63 or 66, and the registration fee, directly to the South Dakota Department of Labor and Regulation, Division of Securities at 700 Governors Drive, Pierre, SD 57501-3101
- Your firm will be notified when your application is approved, allowing you to schedule the Series 7, General Securities Representative Examination, or another general securities exam as determined by your sponsor.
Once you pass a general securities exam, you can register for either the Series 63 or the Series 66 exam (which both cover state securities laws). The most common of the exams is the Series 63, Uniform Securities Agent State Law Examination, but the Series 66, Uniform Combined State Law Examination is also accepted, so speak to your firm about which they prefer.
You have 120 days after the approval of your application to schedule the securities exams. Find the South Dakota test location that is the most convenient and schedule the exams online with that specific location.
- Prepare for your exams by studying and taking practice tests beforehand. Your firm should be able to provide resources to help you get ready. Arrive an hour early and be sure to have your ID.
- Your exam score will appear on the monitor immediately after the test is done. Once you have passed all required exams, you will be licensed as a broker-dealer agent in South Dakota.
Step 3: Get Your On-The-Job Training
Your broker-dealer firm will likely require that you participate in on-the-job training in order for you to learn the firm’s investment philosophy and to refine your sales skills, knowledge of suitability standards and investment strategies.
Your training will help prepare you to properly align clients with suitable financial vehicles, including:
- Options on stocks
- Variable contracts
- Mutual funds
- Corporate, municipal and treasury bonds
- Corporate equity and debt securities
- Government securities
- Open-end and closed-end investment company shares
- 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
Your South Dakota securities licenses will be renewed automatically each year, assuming you haven’t submitted a formal withdrawal. South Dakota’s $125 renewal fee will be automatically distributed to the South Dakota Division of Securities through the Web-CRD (Central Registration Depository) prior to December 31st.
Continuing Education Requirements
In order for you to stay current on industry trends, you are required to complete the Securities Industry Continuing Education Program, which is comprised of two distinct elements:
- The Regulatory Element
The first Regulatory Element training session must be completed within 120 days of your second annual registration renewal. Your broker-dealer will keep you updated as to when subsequent Regulatory Element training is due, which comes about every three years after the first one is completed.
As a broker-dealer agent who holds the Series 7 license, you will complete the S101 General Program. The S101 is made up of these four modules:
- Communicating with the Public
- Client/Product Suitability
- New and Secondary Offering & Corporate Finance
- Handling Customer Accounts/Trade and Settlement Practices
- The Firm Element
Your broker-dealer will implement in-house Firm Element continuing education based on requirements set by FINRA and the topics it deems appropriate. You are required to complete Firm Element training each year. The Firm Element generally addresses the following topics:
- Regulatory requirements related to products, services, and strategies
- Investment features and associated risk factors
- Sales practices and suitability standards
Updating your Form U-4
You must inform your broker-dealer’s compliance department of any changes that occur affecting your Form U-4 registration. Your firm will update your registration information and submit it through the CRD. Life events that would require registration updates include:
- Address updates
- Changes to name or marital status
- Pending or completed disciplinary actions
- Customer complaints
- Civil judgments against you
- Financial judgments against you
- Criminal disclosures
The public can access your securities registration by visiting FINRA’s BrokerCheck, so it wise to review it periodically to ensure it reflects accurate information.