What Is the Series 86 Exam?

The Series 86 is one part of a two-part examination required for individuals seeking to become Research Analysts in the securities industry. This exam, officially known as the Research Analyst – Analysis, tests a candidate’s knowledge and ability to analyze financial statements and conduct fundamental analysis of equity securities. It is administered by the Financial Industry Regulatory Authority (FINRA) and is typically taken alongside the Series 87, which covers regulatory compliance and rules related to the role.

Passing both Series 86 and Series 87, in addition to meeting other registration requirements (such as passing the SIE and having a sponsoring firm), qualifies an individual to register with FINRA as a Research Analyst.

Purpose and Role of the Series 86

The primary function of the Series 86 exam is to assess an individual’s skill in analyzing corporate financial statements, understanding valuation methods, and performing sector and company-level analysis. These competencies are essential for producing investment research reports, which are often used by institutional and retail investors to guide investment decisions.

Unlike other exams that focus on securities sales, trading, or compliance, the Series 86 is deeply rooted in analytical and financial modeling skills. The exam targets professionals whose responsibilities include formulating investment opinions, forecasting company performance, and producing equity research reports.

Exam Structure and Format

The Series 86 exam consists of 100 multiple-choice questions and must be completed within 4.5 hours. It is typically administered in a single sitting and is known for its technical rigor.

The content of the exam is organized into three main functions:

1. Information and Data Collection – This area focuses on gathering and interpreting data from company filings, industry publications, economic indicators, and other sources that influence investment analysis.
2. Analysis, Modeling, and Valuation – The largest portion of the exam concentrates on building financial models, analyzing income statements, balance sheets, and cash flow statements, and applying valuation techniques such as discounted cash flow (DCF), price-to-earnings ratios, and others.
3. Formulating Recommendations – This section evaluates the candidate’s ability to draw conclusions from their analysis, form investment theses, and consider how macroeconomic, industry-specific, or company-level factors affect the outlook for a stock.

The passing score for the Series 86 is 73%, which means a candidate must correctly answer at least 73 of the 100 questions to pass.

Exam Prerequisites and Waivers

To sit for the Series 86 exam, a candidate must be sponsored by a FINRA-member firm. This requirement ensures that only individuals actively pursuing a role as a Research Analyst within the securities industry are eligible to take the test.

It is important to note that the Series 86 exam can be waived for individuals who have earned a CFA (Chartered Financial Analyst) designation. Specifically, FINRA allows candidates who have passed Levels I and II of the CFA program to apply for a waiver of the Series 86 exam, provided their job duties are consistent with those of a Research Analyst. However, even with this waiver, the Series 87 must still be completed to satisfy the full licensing requirements.

Series 86 vs. Series 87

While Series 86 focuses on analytical skills and financial modeling, the Series 87 is centered on regulatory compliance, including rules governing research reports, communications with the public, and conflicts of interest. Both exams are required unless the Series 86 is waived due to CFA exam completion.

Together, these exams make up the full Research Analyst Qualification Exam (RAQE). Individuals must pass both parts (or obtain a waiver for Series 86) to be eligible to function in a Research Analyst capacity at a FINRA-member firm.

Exam Preparation and Study Recommendations

The Series 86 is considered a difficult exam due to the level of financial knowledge it assumes. Most candidates come from backgrounds in finance, accounting, or economics and often have prior experience in investment analysis. Because the exam includes quantitative modeling and requires in-depth knowledge of financial statements, preparation typically involves reviewing accounting concepts, practicing valuation exercises, and completing multiple mock exams.

Many candidates use third-party study materials, attend prep courses, or work with colleagues who are already licensed. The exam’s length and complexity make time management and familiarity with financial models essential for success.

Registration and Career Relevance

Passing the Series 86 (and 87) allows professionals to register with FINRA as Research Analysts, a designation that opens the door to careers in equity research, investment banking support roles, and institutional asset management.

Registered Research Analysts play a key role in capital markets. Their work supports investment decision-making and often influences trading activity. Their reports are used by mutual funds, hedge funds, investment advisors, and retail brokers.

The license is often required by employers in sell-side research, particularly at broker-dealers that publish investment research for external clients. It may also be necessary for certain roles within buy-side firms that require analysts to contribute to published opinions or client-facing research.

The Bottom Line

The Series 86 exam is an essential credential for individuals who perform analytical work and produce investment recommendations in the securities industry. It tests the technical knowledge and modeling skills needed to evaluate financial data, interpret company performance, and develop investment opinions. Combined with Series 87, the Series 86 ensures that Research Analysts are not only proficient in financial analysis but also understand the ethical and regulatory environment in which their research is used.