The one pressing question for every finance student is that what should he opt for- CFA or FRM to further his career in the finance field. Making this is a very crucial choice as this will decide as to where the individual’s career will be directed. Here, we present to you some basic differences between the two exams, which might help you choose the one best suited to you.
CFA, conducted by CFA institute is a broad spectrum course dealing with major areas of finance, whereas FRM conducted by Global Association of Risk Professionals (GARP) is a specialized course that deals majorly risk analysis and assessment. This is the major difference between the two.
The passing rates for both CFA and FRM are reasonable and lie in the range of 30%-50%. But as per statistics, CFA is more popular in terms of both the charter holders as well as exam takers.
Post CFA you can get to make a career in Investments Banking, Portfolio Management and Financial Research. FRM restricts you to Risk Management jobs in Bank, Treasury Department or Risk Assessment. Thus, CFA opens greater avenues than FRM when it comes to job.
The CFA exam is a three level exam, which will cost you between 1100 USD to 1700 USD, and to progress to next level you’ll have to clear the predecessor. The CFA level 1 is conducted twice a year in the months of December and January, while Level 2 &3 are conducted annually. This course demands 300 study hours for each level. Its major areas are- Ethics, Portfolio Management, Accounting, Corporate Finance, Fixed income and Equity Investments. This will be an easier for candidates with accounts background as it relies on accounting fundamentals.
Coming to FRM, it is a two level exam, and both the levels can be taken on one day. Although, if you clear level 2 and not level 1, you’ll have to give both again. Both the levels are conducted twice a year in the months of November and May. This course costs about 1050 USD to 150 USD and demands 150 hours of study for each level. The focus areas of this course are- Quantitative Analysis, Derivatives, Value at risk, Credit risk, Operation risk and Basel norm and hence will be a prudent choice for candidates who have a mathematics base. FRM has a competitor- PRM (Professional Risk Manager), although FRM is suggested owing its greater popularity.
Market acceptability for both the courses is good in India, as well as abroad and you can bag a secure job on completion of any of the two. The major difference that will influence your choice is to figure out as to where your interests lie- broader finance or risk management. Know your strengths and interests and choose the one you think is the best for you.
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