Series 66 cheat sheet (NASAA): combined state law decision workflows, registration triggers, disclosures, custody/discretion, prohibited practices, plus key investment formulas and strategy anchors.
Series 66 is a combined exam. It rewards fast classification (who/what/which rule), clean disclosure decisions, and consistent ethics instincts. Use this cheat sheet with the Study Plan, Glossary, and Official Resources.
Quick links:
| If the question is really about… | Ask first… | Usually strongest answer direction |
|---|---|---|
| client recommendation | what constraint actually drives the recommendation? | check horizon, liquidity, risk capacity, tax, and cost first |
| adviser vs broker status | is this advice/management for compensation or transaction activity? | classify the role before choosing the rule set |
| state law | are we testing registration, exemption, custody/discretion, or fraud? | identify the legal bucket before solving the scenario |
| formulas | what relationship is this formula actually measuring? | classify the metric first, then calculate |
| ethics or disclosure | what fact or conflict is missing from the record? | disclose, document, and escalate rather than assume |
flowchart TD
A["Scenario"] --> B["Classify role<br/>IA / IAR / BD / Agent"]
B --> C["Classify product/activity<br/>security? recommendation? custody?"]
C --> D["Apply rule trigger<br/>registration / exemption / disclosure"]
D --> E["Choose safest compliant next step"]
E --> F["Document + retain records"]
| Topic | Weight |
|---|---|
| Topic I - Economic Factors and Business Information | 8% |
| Topic II - Investment Vehicle Characteristics | 17% |
| Topic III - Client Investment Recommendations and Strategies | 30% |
| Topic IV - Laws, Regulations, and Unethical Business Practices | 45% |
$$ HPR = \frac{(P_1 - P_0) + I}{P_0} $$
$$ CY = \frac{\text{Annual Coupon}}{\text{Market Price}} $$
$$ E(R_i) = R_f + \beta_i (E(R_m) - R_f) $$
$$ \text{Sharpe} = \frac{R_p - R_f}{\sigma_p} $$
Remember: Series 66 cares less about math tricks and more about choosing a product/strategy that matches constraints.
flowchart TD
A["Client profile"] --> B["Set objectives + constraints"]
B --> C["Select allocation"]
C --> D["Choose vehicles<br/>cost, tax, liquidity"]
D --> E["Monitor + rebalance"]
| If the client mainly needs… | Series 66 instinct | Common trap |
|---|---|---|
| near-term liquidity | emphasize liquid, lower-volatility choices | reaching for long-term or illiquid products because returns look better |
| tax-aware growth | compare account type, tax drag, and turnover | choosing a strategy on pretax return alone |
| inflation protection | consider real-return assets and allocation mix | assuming nominal yield solves inflation risk |
| income with low downside tolerance | focus on suitability of cash flow and credit/duration risk | chasing yield without matching risk capacity |
| If the scenario is mostly about… | You’re usually in… | What the exam expects |
|---|---|---|
| Ongoing advice/management for a fee | IA / IAR | fiduciary mindset, disclosures, contracts, custody controls |
| Effecting securities transactions | BD / Agent | registration triggers, communications, suitability-style logic |
| “Is it a security?” / exemptions | State administrator / USA | definitions + registration/exemption logic |
| Misleading statements / fraud | Antifraud | stop + disclose + document + escalate |
flowchart TD
A["What is the actor?"] --> B{"IA/IAR<br/>or BD/Agent?"}
B -->|"IA/IAR"| C["Check adviser definition<br/>advice + business + compensation"]
B -->|"BD/Agent"| D["Check BD/agent triggers<br/>effecting transactions"]
C --> E["State vs federal covered (concept)"]
D --> F["State registration + disclosures"]
E --> G["Ongoing compliance<br/>records, supervision"]
F --> G
G --> H["Antifraud always applies"]
flowchart TD
A["Ad / post / pitch deck"] --> B["Is it fair and balanced?"]
B --> C["Disclose fees, risks, assumptions"]
C --> D["Avoid guarantees and cherry-picking"]
D --> E["Supervisory review/approval"]
E --> F["Retain records"]
| Concept | Exam cue | Best-answer pattern |
|---|---|---|
| Custody | “holding client funds”, “direct access”, “fee deduction” | follow custody controls + segregate + document + escalate |
| Discretion | “trade without client pre-approval” | written authorization + supervision + audit trail |
When a red flag appears: stop -> escalate -> preserve records -> document.
Not legal advice. Exam outlines and rules can change; confirm current requirements with official sources.
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