What Is the Research Analyst Qualification Exam (Series 86/87)?

The Research Analyst Qualification Exam, commonly referred to as the Series 86/87, is a two-part exam developed by the Financial Industry Regulatory Authority (FINRA). It is designed to assess the competency of individuals seeking to become equity research analysts in the securities industry. Together, the Series 86 and Series 87 exams evaluate an individual’s ability to analyze and communicate investment research in accordance with regulatory standards and industry expectations.

Purpose and Function

The Series 86/87 exam is a mandatory requirement for professionals whose responsibilities include preparing written investment research reports or making public appearances in which investment recommendations are made. These individuals typically work for broker-dealers or financial institutions where their research and analyses can influence investment decisions and market behavior.

The exam ensures that analysts understand the financial and analytical tools necessary to evaluate securities and can apply appropriate standards when publishing opinions or recommendations. It also helps protect investors by requiring analysts to adhere to ethical and disclosure requirements that reduce the potential for conflicts of interest.

Exam Structure and Content

The Series 86 and Series 87 are separate but complementary exams:

Series 86: Analysis

The Series 86 exam focuses primarily on the analytical and financial modeling skills required to perform fundamental equity research. It tests an individual’s ability to assess financial statements, build earnings models, evaluate valuation methodologies, and conduct industry and company analysis.

Candidates are expected to demonstrate proficiency in areas such as:

• Financial accounting and reporting
• Discounted cash flow (DCF) analysis
• Ratio analysis
• Forecasting and projections
• Understanding of economic and industry trends

This portion of the exam consists of multiple-choice questions and includes scenarios that simulate real-world analysis. The test is typically administered in a single session and must be completed within a designated time limit.

Series 87: Regulatory Framework

The Series 87 exam covers the regulatory aspects of research reporting, including applicable FINRA and SEC rules. This portion ensures that analysts understand the legal and ethical requirements involved in preparing and distributing research, especially when it comes to disclosures, conflicts of interest, and fair dealing.

Topics in this section include:

• Analyst compensation and disclosures
• Quiet periods and blackout rules
• Supervision and approval of research reports
• Limitations on communications with investment banking
• Recordkeeping and documentation standards

Series 87 places emphasis on regulatory compliance and professional conduct, reinforcing the obligations analysts have to clients, firms, and the broader financial system.

Prerequisites and Registration

Before taking the Series 86/87, candidates must first pass the Securities Industry Essentials (SIE) exam and be associated with a FINRA-member firm. The candidate must also be sponsored by that firm to register for the exams.

There is no required order for taking Series 86 and 87, but both parts must be passed within two years of each other to receive full qualification. Some individuals with advanced degrees in finance, or holders of certain professional designations like the CFA charter, may be eligible to apply for an exemption from the Series 86 exam. This is granted at FINRA’s discretion and based on the applicant’s background and experience.

Exam Difficulty and Preparation

Both Series 86 and 87 are considered rigorous, particularly Series 86 due to its heavy emphasis on financial analysis and modeling. The exam is best suited for individuals who already have a foundation in accounting, economics, or corporate finance.

Preparation often involves a combination of structured study programs, practice exams, and real-world modeling experience. The use of financial calculators, spreadsheets, and analysis software is common during training but may be limited during the actual test.

Candidates typically spend several weeks to months preparing, depending on their prior experience. Successful performance on the Series 86/87 exams requires not just technical knowledge, but also the ability to apply that knowledge to realistic and time-sensitive research scenarios.

Maintaining Qualification

Once a candidate has passed both Series 86 and 87, they are fully qualified to function as a research analyst under FINRA Rule 1220(b)(6). However, analysts must remain registered with a FINRA-member firm and comply with ongoing regulatory requirements, including continuing education and firm-specific policies.

If an analyst leaves the industry or is not registered for two years or more, their qualification may lapse, requiring reexamination upon reentry into the field.

The Bottom Line

The Research Analyst Qualification Exam (Series 86/87) plays a central role in upholding the integrity and quality of investment research in the U.S. securities markets. By requiring analysts to demonstrate both analytical rigor and regulatory awareness, the exam helps ensure that published research serves the needs of investors while complying with professional standards. It remains a key credential for anyone seeking to build a career in equity research or related fields in the investment industry.