Complete Guide to Series 39: Everything You Need to Know

What is the Series 39 Exam?

The Financial Industry Regulatory Authority (FINRA) Series 39 exam, also known as the Direct Participation Programs Principal Qualification Examination, is a crucial step for individuals seeking to supervise and manage the sale of direct participation programs (DPPs). DPPs are investment programs that allow investors to directly participate in the cash flow and tax benefits of the underlying investment. These programs typically involve real estate, oil and gas, or equipment leasing ventures. Unlike traditional securities, DPPs are often illiquid and come with unique risks, making proper supervision essential.

The Series 39 exam is designed to assess a candidate's knowledge and understanding of the rules, regulations, and industry practices related to DPPs. It ensures that individuals responsible for overseeing DPP sales and marketing have the necessary expertise to protect investors and maintain the integrity of the market. Successfully passing the Series 39 exam grants individuals the authority to supervise registered representatives who sell DPPs, review and approve DPP offerings, and ensure compliance with applicable regulations.

Passing the Series 39 exam allows individuals to act as principals, meaning they can supervise and manage other registered representatives involved in DPP transactions. This supervisory role is critical for ensuring that investors receive accurate and complete information about DPPs and that sales practices are fair and compliant. The exam covers a wide range of topics, including the characteristics of DPPs, regulatory requirements, suitability standards, and supervisory responsibilities. Candidates must demonstrate a thorough understanding of these topics to pass the exam and obtain their Series 39 license.

The Series 39 exam is administered by FINRA, the self-regulatory organization responsible for overseeing broker-dealers and registered representatives in the United States. FINRA sets the standards for licensing and registration, conducts examinations, and enforces rules to protect investors and maintain market integrity. Candidates must register with FINRA and meet certain eligibility requirements to take the Series 39 exam. These requirements typically include being sponsored by a FINRA member firm and meeting the minimum age and educational qualifications.

Who Needs the Series 39 License?

The Series 39 license is specifically required for individuals who supervise, manage, and control the activities related to the sale of direct participation programs (DPPs) within a FINRA member firm. This means that if your role involves overseeing registered representatives who sell DPPs, reviewing and approving DPP offerings, or ensuring compliance with DPP-related regulations, you will likely need to obtain the Series 39 license. The license ensures that individuals in these supervisory positions have the necessary knowledge and expertise to protect investors and maintain ethical sales practices.

More specifically, individuals in the following roles typically require the Series 39 license:

• Compliance Officers: Those responsible for ensuring that the firm's DPP sales practices comply with all applicable FINRA rules and regulations.
• Supervisory Principals: Individuals who directly oversee registered representatives selling DPPs, including reviewing their transactions and communications with clients.
• Branch Managers: Managers of branch offices where DPPs are sold, responsible for ensuring that all sales activities within the branch comply with regulatory requirements.
• Product Managers: Individuals involved in the selection and due diligence of DPP offerings, responsible for ensuring that the products are suitable for the firm's clients.

It's important to note that the need for a Series 39 license is determined by the specific responsibilities of the individual, rather than their job title. If an individual is involved in the supervisory or managerial aspects of DPP sales, they will generally need to obtain the license. FINRA Rule 2210 governs communications with the public, and supervisors must ensure these communications are fair and balanced, a key area covered by the Series 39 exam.

To determine whether you need a Series 39 license, consult with your firm's compliance department or legal counsel. They can assess your specific responsibilities and advise you on the appropriate licensing requirements. Keep in mind that failing to obtain the required licenses can result in disciplinary actions from FINRA, including fines, suspensions, or even revocation of registration.

Furthermore, even if you are not directly involved in the sale of DPPs, but your role involves providing advice or recommendations to clients regarding these investments, you may still need to obtain other licenses, such as the Series 7 or Series 65. The specific licensing requirements will depend on the nature of your activities and the types of products you are involved with.

Series 39 Exam Format and Structure

The Series 39 exam is a computer-based test administered by Prometric testing centers on behalf of FINRA. It consists of 100 multiple-choice questions. Candidates are given 3 hours to complete the exam. A passing score of 70% is required to obtain the Series 39 license. The exam is designed to assess a candidate's knowledge and understanding of DPPs, related regulations, and supervisory responsibilities.

The exam questions are primarily application-based, meaning they require candidates to apply their knowledge to real-world scenarios. Candidates should be prepared to analyze complex situations, interpret regulatory requirements, and make informed decisions related to DPP sales and supervision. The questions are designed to test not only recall of information but also the ability to apply that information in a practical setting. Expect questions that require you to analyze scenarios involving suitability, disclosure requirements, and supervisory procedures.

The exam format includes four answer choices for each question, with only one correct answer. There are no penalties for incorrect answers, so it's always best to attempt every question, even if you're unsure of the answer. Candidates should carefully read each question and all answer choices before selecting the best option. It's also important to manage your time effectively during the exam. With 3 hours to complete 100 questions, you have approximately 1.8 minutes per question. It's advisable to pace yourself and avoid spending too much time on any single question.

Before taking the exam, candidates should familiarize themselves with the exam format and structure, as well as the types of questions that are likely to be asked. FINRA provides a content outline that details the topics covered on the exam. This outline can be used as a guide to focus your studying and ensure that you are prepared for the exam. Also, understanding the exam format can reduce test anxiety and improve your performance on the day of the exam.

Here's a summary of the key details of the Series 39 exam:

• Number of Questions: 100
• Question Format: Multiple-choice (4 answer choices)
• Time Allotted: 3 hours
• Passing Score: 70%
• Exam Provider: Prometric (on behalf of FINRA)

Remember, the Series 39 exam is a challenging test that requires thorough preparation. By understanding the exam format and structure, you can develop an effective study plan and increase your chances of success.

Topics Covered on the Series 39

The Series 39 exam covers a broad range of topics related to direct participation programs (DPPs) and their supervision. Understanding the relative weight of each topic is crucial for creating an effective study plan. FINRA provides a content outline that breaks down the exam into four major categories:

1. Overview of Direct Participation Programs (DPPs): This section covers the characteristics, types, and risks associated with DPPs. It includes topics such as real estate programs, oil and gas programs, equipment leasing programs, and other alternative investments. Candidates need to understand the unique features of each type of DPP and the potential benefits and risks for investors.
2. Registration and Regulation of DPPs: This section focuses on the regulatory framework governing DPPs, including registration requirements, disclosure obligations, and compliance procedures. It covers topics such as the Securities Act of 1933, the Securities Exchange Act of 1934, and FINRA rules and regulations related to DPPs. Candidates must be familiar with the specific rules and regulations that apply to DPPs and how to ensure compliance.
3. Sales and Marketing of DPPs: This section addresses the sales and marketing practices related to DPPs, including suitability standards, advertising rules, and communication with the public. It covers topics such as determining the suitability of DPPs for different investors, preparing and reviewing marketing materials, and avoiding misleading or deceptive sales practices. Candidates need to understand the ethical and legal considerations involved in selling DPPs and how to protect investors.
4. Supervision and Compliance of DPPs: This section focuses on the supervisory responsibilities of principals related to DPPs, including overseeing registered representatives, reviewing transactions, and ensuring compliance with applicable regulations. It covers topics such as establishing and maintaining supervisory procedures, conducting due diligence on DPP offerings, and handling customer complaints. Candidates must be able to effectively supervise DPP sales activities and ensure that the firm's compliance program is adequate.

While FINRA doesn't explicitly provide the exact percentage breakdown of each topic area, it's understood that Supervision and Compliance, and Sales and Marketing typically receive the most emphasis. This reflects the principal's primary responsibility of ensuring proper oversight and ethical sales practices.

Here's an approximate breakdown of the weighting of each topic area on the Series 39 exam:

• Overview of Direct Participation Programs (DPPs): 15-20%
• Registration and Regulation of DPPs: 20-25%
• Sales and Marketing of DPPs: 25-30%
• Supervision and Compliance of DPPs: 30-35%

It's important to note that these percentages are approximate and may vary slightly from exam to exam. However, they provide a general guideline for prioritizing your studying. Focus on mastering the concepts related to supervision and compliance, as well as sales and marketing, as these areas are likely to be heavily tested. Ensure you have a good grasp of FINRA Rule 2310 regarding direct participation programs.

By understanding the topics covered on the Series 39 exam and their relative weight, you can create a targeted study plan that maximizes your chances of success. Remember to review the FINRA content outline for the most up-to-date information and to focus your studying on the areas that are most heavily tested.

Practice Series 39 questions

How to Create a Study Plan for the Series 39

A well-structured study plan is essential for success on the Series 39 exam. Given the breadth of topics covered, a systematic approach will help you stay organized and ensure you cover all the material effectively. Here's a step-by-step guide to creating a study plan that works for you:

1. Assess Your Current Knowledge: Before diving into the material, take a diagnostic practice exam. This will help you identify your strengths and weaknesses and pinpoint the areas where you need to focus your attention. Many providers offer free diagnostic exams online.
2. Set Realistic Goals and Timelines: Determine how much time you can realistically dedicate to studying each week. Most candidates need at least 60-80 hours of study time to adequately prepare for the Series 39 exam. Break down the overall study time into smaller, manageable chunks and set deadlines for completing each section of the material.
3. Gather Your Study Materials: Obtain a comprehensive study guide and practice questions from a reputable provider. The official FINRA content outline is a must-have reference. Consider using multiple resources, such as textbooks, online courses, and flashcards, to reinforce your understanding of the material.
4. Prioritize Topics Based on Weight and Difficulty: As mentioned earlier, supervision and compliance, as well as sales and marketing, are heavily weighted on the exam. Focus your initial efforts on mastering these areas. Also, identify the topics you find most challenging and allocate extra time to studying them.
5. Create a Daily or Weekly Schedule: Develop a detailed study schedule that outlines what you will study each day or week. Be specific and realistic, and stick to your schedule as closely as possible. Incorporate regular breaks and time for review to prevent burnout and reinforce learning.
6. Use Active Learning Techniques: Don't just passively read the material. Engage with the content by taking notes, summarizing key concepts, and working through practice questions. Active learning techniques, such as teaching the material to someone else or creating flashcards, can significantly improve your retention.
7. Practice, Practice, Practice: The key to success on the Series 39 exam is to practice as many questions as possible. Use practice exams to simulate the actual testing environment and identify areas where you need to improve. Review your answers carefully and understand why you got each question right or wrong.
8. Seek Help When Needed: Don't hesitate to ask for help if you're struggling with a particular topic. Reach out to your colleagues, mentors, or study group members for clarification. Consider hiring a tutor or enrolling in a review course if you need additional support.
9. Review and Revise: Regularly review the material you've already covered to ensure that you retain the information. As you get closer to the exam date, focus on reviewing your weak areas and taking practice exams. Revise your study plan as needed based on your progress and performance.
10. Take Care of Yourself: Get enough sleep, eat a healthy diet, and exercise regularly. Managing stress is also crucial for optimal performance. Avoid cramming the night before the exam and take some time to relax and clear your head.

Remember, consistency and discipline are key to success on the Series 39 exam. By following a well-structured study plan and dedicating sufficient time to studying, you can significantly increase your chances of passing the exam and obtaining your Series 39 license.

Series 39 Difficulty Level and Pass Rates

The Series 39 exam is generally considered to be a moderately difficult exam. It requires a solid understanding of direct participation programs (DPPs), their regulatory framework, and the responsibilities of a principal in supervising DPP sales activities. While not as notoriously difficult as some other FINRA exams (like the Series 7 or Series 24), it still demands dedicated study and preparation.

One of the key factors contributing to the perceived difficulty is the specialized nature of DPPs. Unlike more general securities products, DPPs have unique characteristics and risks that candidates need to understand. The exam also tests candidates' ability to apply their knowledge to real-world scenarios, which requires a deeper understanding of the material than simply memorizing facts.

Another factor is the emphasis on supervisory responsibilities. Candidates must be familiar with the rules and regulations governing DPP sales activities and be able to effectively supervise registered representatives to ensure compliance. This requires a strong understanding of ethical considerations and the potential consequences of non-compliance.

Unfortunately, FINRA does not publicly release the exact pass rates for the Series 39 exam. However, based on industry estimates and anecdotal evidence, the pass rate is generally believed to be in the range of 60-70%. This suggests that a significant portion of candidates fail the exam on their first attempt, highlighting the importance of thorough preparation. Some sources suggest the Series 39 exam has a slightly lower pass rate compared to the Series 79 exam, but this is based on limited data.

Here's a hypothetical comparison of pass rates for several FINRA exams:

It's important to note that these pass rates are estimates and may not reflect the actual pass rates for each exam. However, they provide a general sense of the relative difficulty of the Series 39 exam compared to other FINRA exams.

To increase your chances of passing the Series 39 exam, it's essential to develop a comprehensive study plan, use high-quality study materials, and practice as many questions as possible. Seek help when needed and don't underestimate the difficulty of the exam. With diligent preparation and a solid understanding of the material, you can successfully pass the Series 39 exam and obtain your Series 39 license.

Career Paths After Passing the Series 39

Obtaining the Series 39 license opens up a range of career paths within the financial services industry, particularly in areas related to direct participation programs (DPPs). This license demonstrates your competence in supervising the sale and marketing of these complex investment products, making you a valuable asset to firms that offer DPPs to their clients.

Here are some of the common career paths that individuals pursue after passing the Series 39 exam:

• Compliance Officer: Series 39 licensed individuals often work as compliance officers, ensuring that their firm's DPP sales practices comply with all applicable FINRA rules and regulations. This involves reviewing marketing materials, monitoring sales activities, and conducting internal audits to identify and address potential compliance issues.
• Supervisory Principal: This is perhaps the most direct career path for Series 39 holders. As a supervisory principal, you are responsible for overseeing registered representatives who sell DPPs. This includes reviewing their transactions, approving their communications with clients, and providing guidance and training on regulatory requirements.
• Branch Manager: In branch offices where DPPs are sold, the branch manager typically needs to hold a Series 39 license. This role involves overseeing all sales activities within the branch, ensuring compliance with regulatory requirements, and managing the performance of registered representatives.
• Product Manager: Individuals involved in the selection and due diligence of DPP offerings often hold a Series 39 license. This role involves researching and evaluating potential DPP investments, assessing their suitability for the firm's clients, and providing ongoing monitoring and oversight.
• Training and Development Specialist: With a deep understanding of DPPs and their regulatory framework, Series 39 licensed individuals can work as training and development specialists, creating and delivering training programs for registered representatives on DPP sales practices and compliance procedures.

Beyond these specific roles, the Series 39 license can also enhance your career prospects in other areas of the financial services industry. For example, it can be beneficial for individuals working in risk management, internal audit, or regulatory affairs. The knowledge and skills gained from studying for the Series 39 exam can be applied to a wide range of situations, making you a more versatile and valuable employee.

It's important to note that the specific career paths available to you will depend on your experience, education, and other qualifications. However, the Series 39 license provides a solid foundation for a successful career in the DPP industry and can open doors to a variety of exciting and rewarding opportunities.

Furthermore, continued professional development is essential for staying current with the evolving regulatory landscape. Consider pursuing additional certifications or licenses, such as the Certified Regulatory and Compliance Professional (CRCP) designation, to further enhance your skills and knowledge.

Salary Expectations with a Series 39 License

Salary expectations with a Series 39 license can vary significantly based on factors such as experience, job title, location, and the size and type of firm. However, holding this license generally leads to higher earning potential compared to those without it, as it demonstrates specialized knowledge and supervisory competence in direct participation programs (DPPs).

Individuals with a Series 39 license typically hold positions with supervisory or compliance responsibilities, which tend to command higher salaries than entry-level roles. The increased responsibility and expertise required for these positions justify the higher compensation.

Here's a general overview of salary expectations for some common roles held by individuals with a Series 39 license:

• Compliance Officer: The salary range for a compliance officer with a Series 39 license can vary widely depending on experience and the size of the firm. Entry-level compliance officers may earn between $60,000 and $80,000 per year, while experienced compliance officers can earn upwards of $150,000 or more.
• Supervisory Principal: Supervisory principals with a Series 39 license typically earn between $80,000 and $120,000 per year. The salary can be higher for those with extensive experience or those who manage large teams of registered representatives.
• Branch Manager: Branch managers with a Series 39 license can earn between $90,000 and $150,000 per year, depending on the size and profitability of the branch. Branch managers often receive bonuses based on the performance of their branch.
• Product Manager: Product managers with a Series 39 license can earn between $80,000 and $130,000 per year. The salary can be higher for those who manage a large portfolio of DPP products or those who have a proven track record of success in product development.

It's important to note that these are just general estimates, and actual salaries may vary. Factors such as the location of the job, the specific responsibilities of the role, and the overall economic climate can all influence salary levels.

Here's a sample chart illustrating potential salary ranges for different roles:

In addition to base salary, many firms offer benefits packages that can include health insurance, retirement plans, and paid time off. Some firms also offer performance-based bonuses, which can significantly increase overall compensation.

To maximize your earning potential with a Series 39 license, focus on gaining experience in the DPP industry, developing strong supervisory skills, and staying current with regulatory changes. Consider pursuing additional certifications or licenses to further enhance your expertise and make yourself a more valuable asset to potential employers.

Top Study Tips for the Series 39

Passing the Series 39 exam requires a dedicated and strategic approach to studying. Here are some top study tips to help you prepare effectively and increase your chances of success:

1. Start Early and Stay Consistent: Don't wait until the last minute to start studying. Begin your preparation well in advance of the exam date and establish a consistent study schedule. Regular, focused study sessions are more effective than cramming.
2. Understand the Content Outline: Familiarize yourself with the FINRA content outline for the Series 39 exam. This outline provides a detailed overview of the topics covered on the exam and their relative weight. Use the outline to guide your studying and ensure that you cover all the material.
3. Use a Variety of Study Materials: Don't rely on just one source of information. Use a combination of study guides, textbooks, online courses, and practice questions to reinforce your understanding of the material. Different resources can provide different perspectives and help you grasp complex concepts.
4. Focus on Understanding, Not Just Memorization: The Series 39 exam tests your ability to apply your knowledge to real-world scenarios, not just your ability to memorize facts. Focus on understanding the underlying principles and concepts, rather than simply memorizing definitions.
5. Practice Questions, Practice Questions, Practice Questions: The more practice questions you complete, the better prepared you will be for the exam. Use practice questions to test your knowledge, identify your weak areas, and simulate the actual testing environment. Review your answers carefully and understand why you got each question right or wrong.
6. Simulate the Exam Environment: When taking practice exams, try to simulate the actual testing environment as closely as possible. Find a quiet place where you won't be disturbed, set a timer for the allotted time, and avoid using any outside resources. This will help you get used to the pressure of the exam and improve your time management skills.
7. Identify and Focus on Your Weak Areas: As you study, identify the topics that you find most challenging and dedicate extra time to studying them. Don't neglect your strengths, but make sure to address your weaknesses so that you are well-prepared for all areas of the exam.
8. Seek Help When Needed: Don't hesitate to ask for help if you're struggling with a particular topic. Reach out to your colleagues, mentors, or study group members for clarification. Consider hiring a tutor or enrolling in a review course if you need additional support.
9. Take Breaks and Avoid Burnout: Studying for the Series 39 exam can be demanding, so it's important to take breaks and avoid burnout. Schedule regular breaks during your study sessions and make sure to get enough sleep, eat a healthy diet, and exercise regularly.
10. Stay Positive and Confident: Believe in yourself and your ability to pass the exam. Stay positive and confident throughout your preparation and on exam day. A positive attitude can make a big difference in your performance.

By following these study tips, you can maximize your chances of success on the Series 39 exam and obtain your Series 39 license.

Frequently Asked Questions

Here are some frequently asked questions about the Series 39 exam, designed to provide clarity and guidance for candidates preparing for the exam.

1. What is the passing score for the Series 39 exam?

   The passing score for the Series 39 exam is 70%. You need to answer at least 70 out of the 100 questions correctly to pass the exam.

2. How long is the Series 39 exam?

   The Series 39 exam is a 3-hour exam. You have 180 minutes to complete the 100 multiple-choice questions.

3. How many questions are on the Series 39 exam?

   The Series 39 exam consists of 100 multiple-choice questions.

4. What topics are covered on the Series 39 exam?

   The Series 39 exam covers a range of topics related to direct participation programs (DPPs), including DPP characteristics, registration and regulation, sales and marketing, and supervision and compliance. FINRA provides a detailed content outline that lists all the topics covered on the exam.

5. How should I prepare for the Series 39 exam?

   To prepare for the Series 39 exam, it's important to develop a comprehensive study plan, use high-quality study materials, and practice as many questions as possible. Focus on understanding the underlying principles and concepts, rather than simply memorizing facts. Seek help when needed and don't underestimate the difficulty of the exam.

6. Can I use a calculator during the Series 39 exam?

   No, calculators are not permitted during the Series 39 exam. All necessary calculations can be performed manually.

7. What happens if I fail the Series 39 exam?

   If you fail the Series 39 exam, you must wait 30 days before retaking the exam. If you fail the exam three times, you must wait 180 days before retaking it again.

8. How long is my Series 39 license valid?

   Your Series 39 license remains valid as long as you are associated with a FINRA member firm and maintain your registration. If you leave the industry, your license will become inactive, and you may need to retake the exam if you wish to become registered again in the future.

9. What is the difference between the Series 7 and Series 39 licenses?

   The Series 7 license allows you to sell a wide range of securities products, including stocks, bonds, and mutual funds. The Series 39 license is specifically for supervising the sale of direct participation programs (DPPs). If you want to sell DPPs directly to clients, you would typically need a Series 7 license in addition to the Series 63 or Series 66. The Series 39 is for supervising those who sell DPPs.

10. Where can I find more information about the Series 39 exam?

    You can find more information about the Series 39 exam on the FINRA website (FINRA.org). The FINRA website provides the content outline, exam specifications, and other important information about the exam.

11. Is the Series 39 exam difficult?

    The Series 39 exam is considered moderately difficult. It requires a solid understanding of DPPs, their regulatory framework, and supervisory responsibilities. While not as challenging as some other FINRA exams, it still demands dedicated study and preparation.

12. What are Direct Participation Programs (DPPs)?

    Direct Participation Programs (DPPs) are investment programs that allow investors to directly participate in the cash flow and tax benefits of the underlying investment. These programs typically involve real estate, oil and gas, or equipment leasing ventures. Unlike traditional securities, DPPs are often illiquid and come with unique risks.