How to Pass the Securities Industry Essentials (SIE) Exam

Career changers, undergraduates hoping to work in the securities industry, and anyone looking to land a job in financial services are taking advantage of a new career launching pad, the SIE (Securities Industry Essentials) Exam.

“It’s been exciting to watch the SIE Exam offer a new entry point to the securities industry,” says Liza Streiff, CEO of Knopman Marks. “It’s opening doors to so many people who thought a career in this industry was out of reach.”

FINRA (the Financial Industry Regulatory Authority) created the SIE in 2018 to make it easier for more people to enter the industry. The SIE Exam is is now a mandatory first step to all securities licensing.

What Is the SIE?

The SIE Exam tests candidates on basic securities industry knowledge and general concepts. Questions cover specific rules, regulations, and securities laws, as well as broad characteristics and features of securities products (such as stocks, bonds, and mutual funds) and investment objectives (such growth, income, and preservation of capital). The questions on the real exam will vary in both length and difficulty.

Returning to the book or video lectures when reviewing questions is key to developing the depth and breadth of knowledge necessary to pass the exam. With this strategy, you will see most topics at least twice. Just doing questions and reading the rationales is not enough.

In general, the harder and more detailed questions on the SIE relate to securities rules and regulations. This is because the SIE is FINRA’s main examination covering this content. By contrast, questions on investments objectives and securities products are often more definitional and straight-forward as candidates will face more challenging questions on these topics when taking their top-off exams. Of course, this is generalized advice, you may get tough questions on any topic on any FINRA exam!

How to Start Studying

What Is the Pass Rate for the SIE?

The passing score for the SIE exam is 70%, but will be adjusted to equalize the specific mix of questions each candidate faces. This way everyone tests on a level playing field.

The average rate at which candidates pass the SIE on their first try is 74%. For candidates trained by Knopman Marks, the number is more than 20 points higher. Knopman Marks’ SIE students had an average pass rate of 97.5% on their first attempt, for the 15-month period ending December 2019, which is 23 percentage points above the national average.

“Our SIE Exam pass rates this first year are the highest in the industry,” said Brian Marks, President of Knopman Marks. “They’re a powerful endorsement of our approach.”

Learn more about our pass rates in the SIE’s first year here. If you have taken the SIE but did not pass on your first try, follow our steps to make sure you pass the SIE exam on your next try.

Download Your Free SIE Practice Question Set

How Hard is the SIE Exam?

FINRA has made it clear that the SIE is not an “easy” test.

The content on the exam will be tested using easy, medium, and hard questions, and because many of the topics on the SIE (such as securities law, SEC regulation, and FINRA rules) are only tested on this exam, candidates will be expected to master these in ways that are similar to the current full Series exams. The difficulty of the SIE is similar to that of the older Series 7 exam with the caveat that it may feel easier because there is less content to master.

In areas that remain tested on both the SIE and a top-off, the more basic and straightforward aspects will be on the SIE with the more complex and nuanced topics presented on the top-off.

Exam Specifications

• Exam length: 1 hour 45 minutes
• Number of questions: 75 + 10 ungraded (85 total)
• Passing score: 70%

SIE Exam Topic Breakdown

Section	Description	Percentage of Exam	Number of Questions	Textbook Chapters
1	Knowledge of Capital Markets	16%	12	8-10
2	Understanding Products and Their Risks	44%	33	1-7
3	Understanding Trading, Customer Accounts, and Prohibited Activities	31%	23	8, 11, 12
4	Overview of the Regulatory Framework	9%	7	13-14
	Total	100%	75

Recommended Study Time & Practice Exams

• 40–60 hours
• Questions to complete: 1,000 (approx.)
  • 1 assessment exam (50 Qs)
  • 10 online practice exams (850 Qs)
  • 2 diagnostic exams (85 Qs)
  • 1 benchmark exam (85 Qs)

Step-by-Step Guidance on How to Prepare

1. Complete the assessment exam (50 Qs).
2. Read the book and Class Supplements (e.g. Class Summary).
   • Do not take notes. Read to gain exposure and familiarity with the content.
   • Pay special attention to Knopman Notes.

1. Attend a live class or watch the online video lectures taking notes on the slide printouts (downloadable in the Knopman Marks training center).
   • If you attend a live class, watch the additional recorded lectures in the training center.
     1. Advanced content—Deeper guidance, insight, and information
     2. Q&A review—Instructor-led practice Q&A.
        Watch all Q&A review videos.
2. Complete 10 online practice exams.
   • After selecting your exam topics, check “Questions I have not seen before” under “Select Question Pool” – this way each question is new.
   • Check “Show correct answer & explanation after each question” under “Exam Display Options” and review answer explanations immediately after answering the question. This improves comprehension and retention.
   • Return to the textbook, video lectures, class notes, and supplements to enhance and deepen your knowledge in difficult areas.
   • For EVERY question you miss or are unsure of, return to the book and review the section referenced in the explanation.

Final Prep (1 week before exam)

Continue to review your notes, study supplements, video lectures, and textbook. Complete additional practice exams in weak areas.

1. Complete the first diagnostic exam (85 Qs) 8–10 days prior to your real test (target 75%).
2. Complete the second diagnostic exam (85 Qs) 4–5 days prior to your real test (target 75%).
3. Complete the benchmark exam (85 Qs) 2–3 days prior to your real test (target 80%).

As a new exam, the SIE will change and evolve more frequently than older exams, therefore our resources and supplements section will be frequently updated.

CONTACT US to learn about the next free SIE Exam review session that will provide expert coaching from Knopman Marks faculty.

Good luck on your exam!

Update November 24, 2020: This post has been updated to reflect industry average pass rates for the SIE in its first year. Learn more here.