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FRM vs CFA: Battle of Financial Certifications

July 20, 2016
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For all the students going for International Finance Certifications, it is the most common point of debate whether to go for CFA or FRM or both. Both certifications have international recognition and offer a wide range of enriching and rewarding career prospects. This is where the question arises "CFA vs FRM: Which certification to go for?"

It is very crucial for students to choose the right certification as for both certifications they have to put a lot of money, dedicate all their time and study rigorously. This all shouldn't go as a waste. Moreover, they have to live with the career they choose and few years down the line they shouldn't regret their choice. To an informed person, there might be a world of difference between these two certifications, but to a novice there is very little difference.

Let's take a look at both of these certifications, their scope as a career and their prospects.


CFA Certification

The Chartered Financial Analyst (CFA® Program) was originally intended for equity analysts working in the investment banking sector. Over a period of time (since its inception in 1963), its scope and importance has been recognized to the level where the CFA Program now is often compared to Masters in Business Administration (MBA).

It has become one of the de-facto certifications that a professional graduate goes for when trying to target some specific positions in the investment and banking industry.

Career Prospects and Roles as a CFA charterholder:

  • Portfolio Managers
  • Fund Managers
  • Risk Managers
  • Financial advisers
  • Private bankers
  • Consultant
  • Research Analysts
  • Accountants
  • Chief Executives
  • Auditors
  • Hedge fund Research
  • Investment Banking
  • Investment Management
  • Relationship Manager

Eligibility Criteria for CFA exam:

  • A bachelor's (or equivalent) degree or be in the final year of your bachelor's degree program
  • Four years of professional work experience (does not have to be investment related)
  • A combination of professional work experience and education that totals at least four years (part time experience not counted)

FRM Certification


The Financial Risk Manager (FRM®) certification was originally intended for candidates who wanted to pursue the profession of a risk manager in financial institutions.

With increasing business competition and rapid changes in the finance industry, businesses require professionals who can manage risk, money and investment efficiently. This has raised the importance of Financial Risk Management and thus given this certification a recognition which it deserves.

Career Prospects and Roles as an FRM charterholder:

  • Chief Risk Officer
  • Senior Risk Analyst
  • Head of Operational Risk
  • Director
  • Investment Risk Management

Eligibility Criteria for FRM exam:

  • No educational or professional pre-requisites required to sit for either part of the FRM Exams
  • Minimum of two years of full-time professional experience required in risk-related profile

FRM vs CFA comparative analysis

The course contents of FRM and CFA Program also vary a lot from each other. The CFA Program covers more on financial analysis, ethics, asset valuation and portfolio management, whereas FRM covers more topics on risk, valuation at risk, models of risk, credit risk and so on. There is some common overlap between these two courses which are areas like credit derivatives, hedge funds, fixed income, basic statistics, risk/return metrics and correlation.

NOTE: The areas which do not overlap are as diverse as the careers they cater to.

Head-to-Head comparison:

FRM
CFA
Conducted by
GARP
CFA
Exam Parts
FRM Part 1
FRM Part 2
CFA level 1
CFA Level 2
CFA Level 3
Fee (indicative and overall)
FRM Part 1 - $650 to $950
FRM Part 2 - $350 to $650
CFA Level 1 - $1080 - $1660
CFA Level 2 - $1070 to $1650
CFA Level 3 - $1060 to $1610
Pass rate (Approximate)
40% to 45%
35% to 42%
Exam Months
May/Nov
June/Dec
Relevant For Candidates looking for jobs in
Banking, Risk Management, Financial Institutes
Research, KPO, Investment banking
Course Stucture:
Emphasis on
Quants,derivatives, Portfolio Management,
Market Risk, value at Risk, Credit Risk, Operation Risk & Basel
Quants, FSA, Ethics,
Economics, Corporate Finance, Equity, Fixed Income
Kind of Qustions Asked
Multiple choice questions
Multiple choice questions
FRM vs CFA Salary (Average)
US - $70,000
India - INR 5,00,000
US - $75,000
India - INR 6,00,000
EduPristine Official Course Provider
CFA Course Page
FRM Course Page

Seeing the overwhelming response on this topic, we have created a video. Check it out!

Authorized by CFA Instititute and GARP for CFA> and FRM respectively, EduPristine provides the best online and classroom training for these courses

We hope this comparative analysis will help you in choosing the right career for yourself. In case of any queries or doubts about these certifications, feel free to comment below.

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About the Author
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Trusted by Fortune 500 Companies and 10,000 Students from 40+ countries across the globe, it is one of the leading International Training providers for Finance Certifications like FRM®, CFA®, PRM®, Business Analytics, HR Analytics, Financial Modeling, and Operational Risk Modeling. EduPristine has conducted more than 500,000 man-hours of quality training in finance.

Disclaimer

Global Association of Risk Professionals, Inc. (GARP®) does not endorse, promote, review or warrant the accuracy of the products or services offered by EduPristine for FRM® related information, nor does it endorse any pass rates claimed by the provider. Further, GARP® is not responsible for any fees or costs paid by the user to EduPristine nor is GARP® responsible for any fees or costs of any person or entity providing any services to EduPristine Study Program. FRM®, GARP® and Global Association of Risk Professionals®, are trademarks owned by the Global Association of Risk Professionals, Inc

CFA Institute does not endorse, promote, or warrant the accuracy or quality of the products or services offered by EduPristine. CFA Institute, CFA®, Claritas® and Chartered Financial Analyst® are trademarks owned by CFA Institute.

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