The Four Sections at a Glance
| Section | Weight | ~Questions | Study Priority |
|---|---|---|---|
| I. Economic Factors & Business Info | 8% | 8 | Low (score padding) |
| II. Investment Vehicle Characteristics | 17% | 17 | Medium |
| III. Client Recommendations & Strategies | 30% | 30 | High |
| IV. Laws, Regulations & Guidelines | 45% | 45 | Critical — start here |
Section I: Economic Factors & Business Information (8%)
Time Value of Money: PV, FV, NPV, IRR, Rule of 72. Tests investment evaluation, not just formula plugging.
Statistics: Mean, standard deviation, alpha, beta, Sharpe vs. Treynor ratios, R-squared, correlation. Know when to use which.
Financial Ratios: Current ratio, quick ratio, debt-to-equity. 1–2 questions. Know the formulas.
Valuation: P/E, P/B, growth vs. value, fundamental vs. technical analysis.
Section II: Investment Vehicle Characteristics (17%)
Cash: T-bills, commercial paper (270-day rule), CDs, money market funds vs. accounts.
Fixed Income: Duration, yield hierarchy, credit risk, reinvestment risk. Scenario-based: "this bond trades at 105 — rank the yields."
Equity: Common vs. preferred, ADRs, restricted stock, Rule 144, ISOs vs. NQSOs (AMT trigger).
Pooled Investments: Open-end vs. closed-end, ETFs, UITs, REITs, hedge funds. Breakpoint sales, 12b-1 fees, buying a dividend.
Options & Futures: Lighter than Series 7. Protective puts, covered calls, rights vs. obligations.
Alternatives & Insurance: Leveraged/inverse ETFs (daily decay), ETNs (credit risk), variable vs. fixed annuities, variable life insurance.
Other Assets: Howey Test for digital assets (2023 update). 1–2 questions.
Section III: Client Recommendations & Strategies (30%)
Clients & Profiling: Entity types, trust comparison, behavioral biases (loss aversion, anchoring, overconfidence, herd, recency). Expanded in 2023.
Capital Market Theory: CAPM, MPT, EMH (weak/semi-strong/strong), Security Market Line, alpha.
Portfolio Management: Strategic vs. tactical allocation, sector rotation, dollar-cost averaging, rebalancing.
Tax: Cost basis (gifted: carryover vs. FMV vs. no-man’s land; inherited: stepped-up), wash sale rule, asset location. The exam loves cost basis questions.
Retirement: Traditional vs. Roth IRA, 401(k), 403(b), 457(b) (no early penalty), SEP, SIMPLE, SECURE Act 2.0.
ERISA: Four fiduciary duties, prudent expert standard, 404(c) safe harbor, QDIAs.
Special Accounts: 529, Coverdell ($2K, age 30), UTMA/UGMA (kiddie tax), HSAs.
Estate Planning: JTWROS vs. TIC, TOD/POD, per stirpes, trusts, gift/estate unified credit, portability.
Trading & Performance: Order types, margin, PFOF, time-weighted vs. dollar-weighted returns, benchmarks.
Section IV: Laws, Regulations & Guidelines (45%)
IA Regulation: ABC test, exclusions (BLADE: Banks, Lawyers, Accountants, Dealers (when solely incidental), Engineers/publishers), $100M/$110M thresholds, Form ADV parts, brochure delivery.
IAR Regulation: State registration, 12-hour CE, EVEP (5-year), exam waiver designations.
BD & Agent Regulation: Definitions, exclusions, dual registration, Form U4/U5.
Securities & Issuers: Three registration methods (coordination, qualification, filing). Exempt securities vs. exempt transactions. Antifraud golden rule: applies to ALL, always.
Remedies: Administrator CAN (deny, suspend, revoke, subpoena, cease and desist). CANNOT (arrest, imprison, issue injunctions). Statutes of limitations. Rescission.
Communications: Marketing Rule (testimonials with disclosures, 1/5/10-year performance), advisory contract requirements, no assignment without consent.
Ethics & Fiduciary: Fiduciary (ongoing) vs. Reg BI (at recommendation). Custody, soft dollars (28(e)), pay-to-play (206(4)-5), insider trading, discretion vs. custody, performance-based fees (qualified clients only).
Study Strategy
Weeks 1–2: Section IV (45%). Week 3–4: Section III (30%). Week 5: Sections I & II (25%). Week 6: Practice exams — 3–4 full-length timed. Don’t schedule until 80%+.
The free Series 66 course covers all 39 sub-topics with interactive tools, comparison tables, and concept checks on every lesson.