FINRA Series 6 Course Notes

Series 6 Domain 3 is the exam core (50%). Match products to the customer's risk tolerance, time horizon, liquidity needs, objectives, and total cost. Know mutual fund structure and pricing: open-end funds transact at the next calculated NAV (forward pricing), closed-end funds and ETFs trade intraday in the secondary market, and UITs generally hold fixed portfolios. Be able to calculate NAV and POP, distinguish sales charges from ongoing expenses, compare share classes, and recognize breakpoint considerations. Reinvested mutual fund distributions may still be taxable. For variable annuities, separate accumulation units from annuity units, understand the separate account, AIR, surrender charges, ordinary-income tax treatment of earnings, death-benefit features, and the suitability/principal-review requirements for exchanges. Know the Series 6 municipal fund products in scope: 529 plans, ABLE accounts, and LGIPs. Customer protection also includes complete disclosures, temporary holds when exploitation is reasonably believed, accurate confirmations, proper transfer handling, and complete account records.

• Choosing a product from headline return alone and ignoring risk, liquidity, horizon, or cost.

• On suitability/recommendation questions, start with the customer's profile before looking at the product.

Domain 1 (24%) is communications and selling activity. First classify the audience and communication type, then apply the required review and content standard. Retail communications are generally sent or made available to more than 25 retail investors within a 30-calendar-day period; correspondence is generally 25 or fewer retail investors in that period; institutional communications are directed only to institutional investors. Regardless of label or approval, communications must be fair and balanced and must not omit material risks. Know product-specific communication rules for mutual funds and variable contracts, and distinguish registered offering documents from Regulation D exempt-offering communications. Rule 504, 506(b), and 506(c) differ by size, investor eligibility, and general-solicitation conditions. Misleading, unapproved, or noncompliant material should be escalated through supervision.

• Reversing the retail-communication threshold and correspondence threshold.

• Step 1 on every communication question: identify the recipient and distribution count.

Domain 2 (16%) covers account opening, customer identification, investment profiles, Reg BI, discretion, and supervision. Obtain and maintain required customer information and make reasonable efforts to obtain a trusted contact for non-institutional accounts; a trusted contact does not gain trading authority. CIP uses risk-based procedures to verify identity within a reasonable time and requires core identifying information. Identity-verification failures can require restrictions or escalation. Discretion generally requires prior written customer authorization and firm acceptance; time-and-price discretion is limited in the source material to the business day unless extended in writing. Before recommending, know the customer's investment profile. Reg BI requires acting in the retail customer's best interest and evaluating risks, rewards, costs, conflicts, and reasonably available alternatives. Supervisory review and firm procedures remain central throughout the account lifecycle.

• Treating a trusted contact as an authorized trader.

• Account-opening questions are process questions: collect -> verify -> document -> supervise.

Domain 4 (10%) covers customer orders, best execution, settlement, confirmations, errors, and complaints. Know how market, limit, stop, and stop-limit orders behave, especially in fast markets. Best execution requires reasonable diligence and consideration of relevant market factors; payment for order flow does not eliminate that duty. The source material uses T+1 as the standard settlement cycle for most transactions. Confirmations and order tickets must contain accurate trade details, and discrepancies should be investigated and escalated rather than casually altered. Agency trades involve commissions; principal capacity has different disclosure/compensation implications. Written customer complaints must be documented and routed through the firm's supervisory process.

• Thinking a market order guarantees a particular price.

• For order questions, separate trigger behavior from execution behavior.