The 5 Critical Components of a FINRA Sponsorship

The 5 Critical Components of a FINRA Sponsorship

The Financial Industry Regulatory Authority, commonly known as FINRA, was created to ensure fair financial markets offer integrity and professionalism for investors. This government-created, not-for-profit organization oversees all broker dealers and, as such, holds professionals to the highest standards within the financial industry.

Because certain exams created by FINRA require a comprehensive degree of knowledge and expert understanding, sponsorships for professionals attempting to pass the exams are required. Each applicant must have a sponsoring broker dealer firm during the application process.

Component 1: Requirements for Series 7, 79 and 82 Exams

Each of the Series 7, 79 and 82 exams require sponsorship, as the applicant who passes moves to a higher range of risk and responsibilities within the financial industry.

The Series 7 exam is focused on assessing the ability of an entry-level professional to perform the functions of a general securities representative position. It must be taken in conjunction with the SIE exam prior to licensing.

The Series 79 exam moves the applicant from a position of a registered representative to the role of an entry level investment banker.

The Series 82 exam extends that role further to take the investment banker professional to a private securities offerings representative.

Each exam is unique; however, each builds on the others to create layers of depth and expertise as the professional advances within the field. For the reasons stated here, sponsorships are vital for anyone attempting to build personal cache and experience within the industry. 

Component 2: Responsibilities within Sponsoring Roles and Applicants

While the exams are specified and unique to themselves, the critical components of a FINRA sponsorship remain. Let’s examine the sponsorship from both sides.

First, the sponsoring firm assumes responsibility for the professional attempting to pass the exam. As such, the sponsoring firm will assign a team of in-house members to lead and train the professional in business conduct at a higher level of responsibility. The sponsoring firm completes the exam application and, at thirty-nine pages, it is not a fast turnaround effort.

The individual applying for the exam must answer several questions relating to personal and professional conduct, background experience, and demographic details. An application form is filed and fees are paid by the sponsoring firm. During the time that passes between the initial sponsorship application process and the exam, the applicant is schooled by the team of professionals within the sponsoring firm.

Component 3: Advantages and Benefits for the Sponsor and the Applicant

There are advantages for both the sponsoring firm and the professional being sponsored. While the applicant is offered an exemplary degree of training sessions, the sponsoring firm is able to realize advantages within the sponsorship, as well.

Finance analysis

One of the largest benefits of becoming a sponsoring firm is that of overseeing the building of a new business. The applicant is allowed by FINRA to launch a new business during the interim sponsorship period. The bridge between the sponsoring firm and that of the applicant creates a new business with generation opportunities for both parties.

This is a significant advantage for the sponsoring firm and can spark the interest of sponsors in the representatives who are seeking sponsorship prior to an exam. If, as an applicant to an exam, you are seeking the services of a finra sponsorship look for a well-known securities firm to take advantage of an interim sponsorship that will extend your possibilities for new internal business growth, as well as external opportunities for business expansion.

Component 4: Starting a New Business during Interim Sponsorship

As already stated, there are advantages for both parties in launching a new business during an interim sponsorship. Besides the primary reasons of optimizing growth for both parties, there are additional advantages that can be explored:

  • Shared resources and potential research lead to scaling opportunities, communication and plans for growth.
  • Informed results offer data and analysis for both parties. The launch of a new business during the interim sponsorship will inform both parties without long-term commitments.
  • An examination of funding and financial projections can be conducted without the pressure of permanence. 
  • The organizational launch of the new business allows both parties to either recognize, adopt and build on the premise of the other or choose to remain separate.

Component 5: Joint Returns on Exam Sponsorships

In addition to adding to the integrity of the financial industry, a FINRA sponsoring firm has added to the reputation of the industry by ensuring an applicant is fully prepared for an exam. This leads to potential long-term relationships. Such relationships reveal the expertise and strengths of each party during the sponsorship.

The critical components of the FINRA sponsorship offer a unique opportunity for the applicant to observe while learning and the sponsor to examine while training; and both to look at the advantages together.