Mastering the Series 86 and 87: The Ultimate Guide to the Research Analyst Qualification Examination
For professionals aspiring to become equity research analysts, the path to licensure involves more than just a deep understanding of financial markets. It requires passing the Research Analyst Qualification Examination, commonly known as the Series 86 and 87. These exams, administered by the Financial Industry Regulatory Authority (FINRA), are designed to ensure that individuals performing the functions of a research analyst possess the necessary analytical skills and knowledge of regulatory requirements.
Navigating the complexities of these exams can be daunting, especially when balancing a demanding career in finance. At Fraser Exam, we have helped countless professionals navigate the nuances of these certifications, providing the clarity and strategic insight needed to succeed in these high-stakes assessments. This guide serves as a comprehensive roadmap for candidates, covering everything from eligibility and exam format to study strategies and career outcomes.
Section 1: The Basics & Eligibility
The Series 86 and 87 exams are specifically tailored for individuals who will be involved in the preparation of “research reports” or whose primary job function is to provide information that forms the basis for investment decisions. While many people refer to them as a single entity, they are actually two distinct exams that test different skill sets.
What exactly is the Series 86 and 87?
The Series 86 is the Analysis portion of the qualification. It focuses on the fundamental analysis of equity securities, including financial statement analysis, valuation techniques, and economic principles. The Series 87 is the Regulatory portion, focusing on the rules and regulations governing the conduct of research analysts, including conflict of interest disclosures and communication standards.
Prerequisites and Eligibility
Unlike some introductory finance certifications, you cannot simply sign up for the Series 86 and 87 on a whim. There are strict prerequisites and sponsorship requirements:
- Sponsorship: You must be sponsored by a FINRA-member firm to take these exams.
- Corequisites: Before you can register for the Series 86/87, you must have passed the Securities Industry Essentials (SIE) exam and the Series 7 (General Securities Representative) exam.
- Waivers: One of the most significant aspects of the Series 86 is the waiver provision. Candidates who have passed Levels I and II of the Chartered Financial Analyst (CFA) exam or Levels I and II of the Chartered Market Technician (CMT) exam are often eligible for a waiver of the Series 86 portion. However, there is no waiver for the Series 87.
Age, Retakes, and Costs
Candidates must be at least 18 years old. If you fail an attempt, FINRA imposes a waiting period: 30 days after the first and second failures, and 180 days after the third failure. The costs for the exams are as follows:
| Exam Component | Exam Fee | Primary Focus |
|---|---|---|
| Series 86 | $225 | Analysis and Valuation |
| Series 87 | $150 | Rules and Regulations |
While these certifications are specific to the U.S. regulatory environment, they are highly respected internationally. Many global investment banks require their analysts in London, Hong Kong, or Tokyo to hold these or equivalent local certifications if they are contributing to research reports distributed to U.S. clients.
Section 2: Exam Format & Style
The Series 86 and 87 are administered via computer at authorized testing centers. Understanding the structure of these exams is critical for time management during the actual test.
Series 86: The Quantitative Challenge
The Series 86 is known for being mathematically rigorous. It consists of 100 multiple-choice questions. Candidates are given 270 minutes (4.5 hours) to complete the exam. The questions are designed to test your ability to apply financial concepts to real-world scenarios, often requiring multiple steps of calculation.
Series 87: The Regulatory Framework
The Series 87 is shorter and more focused on rote memorization and application of legal standards. It consists of 50 multiple-choice questions. Candidates are given 105 minutes (1 hour and 45 minutes) to complete the exam. This section tests your knowledge of FINRA and SEC rules, particularly those regarding the separation between research and investment banking (the “Chinese Wall”).
Scoring and Mechanics
- Closed-Book: Both exams are strictly closed-book. No outside materials are permitted.
- Scoring: The passing score for both the Series 86 and Series 87 is 73%.
- Negative Marking: There is no penalty for guessing. Your score is based solely on the number of correct answers.
- Computer-Based: The exams are delivered through the Prometric testing system. You can register on the official FINRA website once your firm has filed your U4 form.
Section 3: Difficulty & Passing Rates
The difficulty of the Series 86 and 87 depends largely on the candidate’s background. For those who have already completed the CFA program, the Series 86 (if not waived) may feel like a review of Level I and II concepts. However, for those coming from a non-finance background, it represents a significant hurdle.
Historical Passing Rates
FINRA does not publicly release exact passing rates for specific exams. However, industry consensus suggests that the Series 86 has a lower first-time pass rate than the Series 87 due to its quantitative complexity. Many candidates find the time pressure of the Series 86 to be the most challenging aspect, as some valuation questions can be quite lengthy.
Struggle Areas
In the Series 86, candidates frequently struggle with Equity Valuation Models (specifically multi-stage DCF models) and Accounting Adjustments. In the Series 87, the most common pitfalls involve the specific timelines for “quiet periods” and the nuances of disclosure requirements for analyst compensation. Understanding the subtle differences between FINRA Rule 2241 and Rule 2242 is often the difference between passing and failing the Series 87.
| Exam Component | Topic Weighting | Difficulty Level |
|---|---|---|
| Series 86 | Information & Data Collection (10%), Analysis/Modeling (90%) | High (Quantitative) |
| Series 87 | Preparation of Research Reports (64%), Dissemination/Conduct (36%) | Moderate (Legal/Ethics) |
Section 4: Preparation Strategy
Success on the Series 86 and 87 requires a structured approach. Because these exams are highly specialized, generic finance knowledge is often insufficient. Many candidates who’ve used Fraser Exam resources report feeling more confident on exam day because they focused on the specific question styles favored by FINRA.
Recommended Study Hours
For the Series 86, we recommend between 80 to 100 hours of study, depending on your familiarity with financial modeling. For the Series 87, 40 to 60 hours is usually sufficient to master the regulatory rules. If you are taking both back-to-back, plan for a total of roughly 150 hours of dedicated preparation.
Study Resources and Scheduling
Self-study is possible, but most candidates find that a dedicated prep course significantly reduces study time by highlighting the “most testable” material. You should aim to schedule your exam 3 to 4 weeks after you finish your initial reading to allow for intensive practice testing. According to feedback from Fraser Exam users, taking at least 5-7 full-length practice exams is the most effective way to build the necessary stamina for the 4.5-hour Series 86 session.
| Timeline | Focus Area |
|---|---|
| Weeks 1-3 | Read primary study manual; focus on Financial Statement Analysis. |
| Weeks 4-6 | Deep dive into Valuation Models and Series 87 Regulatory Rules. |
| Weeks 7-8 | Intensive practice exams and reviewing weak areas. |
Section 5: Career & ROI
The Series 86 and 87 are more than just regulatory hurdles; they are the “Gold Standard” for equity and fixed-income research professionals. Passing these exams signals to your firm and the broader market that you possess a verified level of competency.
Job Roles and Salary
The primary role for those holding these licenses is Research Analyst (Associate or Senior level). You might work in Equity Research, Credit Research, or even specialized roles in Private Equity and Hedge Funds that require a high degree of regulatory oversight. In major financial hubs like New York or Chicago, a licensed Research Associate can expect a base salary ranging from $125,000 to $175,000, with significant bonuses based on performance and ranking.
Expiration and Maintenance
Your Series 86 and 87 licenses will remain active as long as you are employed by a FINRA-member firm. If you leave the industry, your licenses will typically expire after two years. To keep the license active, you must comply with Continuing Education (CE) requirements, which include a Regulatory Element and a Firm Element. Failure to complete these will result in your registration being marked “CE Inactive,” preventing you from performing your duties.
Section 6: Exam Day Logistics
When the day of the exam arrives, you want to focus entirely on the questions, not on administrative hurdles. Being prepared for the logistics of the testing center is half the battle.
What to Bring
You must bring a valid, government-issued photo identification (such as a passport or driver’s license). The name on your ID must match the name on your exam registration exactly. You should arrive at the testing center at least 30 minutes early to complete the check-in process, which includes a security screening.
Calculators and Scratch Paper
You are not allowed to bring your own calculator. The testing center will provide you with a basic financial calculator (often a TI-Plus or similar model) or a virtual calculator on the computer screen. You will also be provided with scratch paper or a dry-erase whiteboard, which must be returned at the end of the session. To find a location near you, you can visit the official Prometric testing center locator.
Results and Failure
One of the benefits of the computer-based format is that you will receive your results immediately after completing the exam. You will get a printout showing whether you passed or failed, along with a diagnostic report showing your performance in each major content area. If you do not pass, use this diagnostic report to focus your studies for the retake.
Comprehensive FAQ Section
Is online/remote proctoring available for the Series 86/87?
Currently, FINRA offers limited remote proctoring for certain exams under specific circumstances, but most candidates are still required to take the Series 86 and 87 at a physical Prometric testing center due to the length and complexity of the exams.
How do I schedule my exam date?
Once your firm has filed your Form U4 and paid the fees, you will receive an enrollment window (usually 120-180 days). You can then schedule your appointment through the Prometric website or by phone.
What is the cancellation or rescheduling policy?
You can reschedule or cancel your exam, but fees apply if you do so within 10 business days of your appointment. If you cancel within 2 business days, you may forfeit the entire exam fee.
Am I allowed to bring a calculator?
No. You must use the calculator provided by the testing center to ensure no unauthorized data or formulas are brought into the room.
Are bathroom breaks allowed during the exam?
Yes, but the clock does not stop. For the long Series 86 exam, it is wise to plan your breaks strategically. You will have to go through security screening again every time you re-enter the room.
What items are strictly prohibited in the testing room?
Prohibited items include cell phones, watches, hats, bags, study notes, and any electronic devices. Most centers provide lockers for your personal belongings.
What is the current pass rate for this exam?
While not official, the estimated pass rate is around 65-70% for the Series 86 and 80-85% for the Series 87. The 86 is universally considered the more difficult of the two.
How many hours should I study?
We recommend a total of 150 hours for both exams combined. If you have a waiver for the Series 86, 50 hours for the Series 87 is usually sufficient.
Does the exam change every year?
FINRA updates the question bank periodically to reflect changes in tax laws, accounting standards, and regulatory rules. It is essential to use the most up-to-date study materials available.
Do I get my results immediately?
Yes, you will see a “Pass” or “Fail” on the screen as soon as you submit the exam. A detailed score report will be handed to you by the test center staff.
If I fail, how soon can I retake the exam?
There is a 30-day waiting period after the first and second attempts. If you fail a third time, the waiting period increases to 180 days.
Will I receive a breakdown of my score?
If you pass, you generally only receive the “Pass” notification. If you fail, you receive a detailed breakdown of your performance by section to help you prepare for the retake.
Does this certification expire?
It remains valid as long as you are registered with a member firm. If you leave the industry for more than two years, you will likely need to retake the exams to become re-licensed.
Are accommodations available for candidates with disabilities?
Yes, FINRA provides accommodations under the Americans with Disabilities Act (ADA). You must submit a formal request and documentation to FINRA prior to scheduling your exam.
Is the exam available in languages other than English?
Currently, the Series 86 and 87 exams are only administered in English.
Conclusion
The Series 86 and 87 exams represent a significant milestone in the career of any research analyst. While the quantitative demands of the Series 86 and the intricate rules of the Series 87 can be intimidating, they are manageable with the right preparation. By understanding the exam format, focusing on high-weight topics, and utilizing rigorous practice exams, you can position yourself for success.
Here at Fraser Exam, we recommend starting your preparation at least 3 months in advance to ensure you have ample time to master the material without burning out. Our team at Fraser Exam has compiled the most effective strategies and study plans to help you bridge the gap between financial theory and regulatory practice. With the right mindset and a disciplined study schedule, you will be well on your way to earning your Research Analyst qualification and advancing your career in the financial services industry.