FRM vs. CFA: Which is the Best Option for You

Professionals working in accounting and finance positions often need to obtain certificates to prove their qualifications or grow in their careers. The Financial Risk Manager (FRM) and Chartered Financial Analyst (CFA) certifications are two that you can obtain; they are used for distinct professional pathways. Finding out more about these certificates might assist you in choosing the best one for your interests and career aspirations. This article explains the distinctions between FRM and CFA and goes over how to choose which is best for you.

What’s the CFA Certification?

The CFA Institute offers a professional certificate that is comparable to a master’s degree called the Chartered Financial Analyst (CFA) Program. 

It has become the industry standard in finance and investment management, providing you with practical skills and competence in investment analysis.

What is the FRM Certification?

The Global Association of Risk Professionals (GARP) offers the Financial Risk Manager (FRM) certification as the top risk manager credential. Additionally, it is a worldwide recognized certificate comparable to a master’s degree. 

Gaining and honing your abilities in risk identification, analysis, and mitigation at an advanced level is possible with the FRM certification, which is highly sought after by leading businesses and financial institutions worldwide.

FRM vs. CFA: Concentration and Expertise

• Financial analysis, ethics, and portfolio management are just a few of the many areas in finance that CFAs cover.
• It provides a thorough understanding of the industry and is comparable to a Swiss Army knife for finance experts.
• FRM, on the other hand, focuses exclusively on risk management, thoroughly examining aspects such as credit and market risk.
• See it as a magnifying lens that lets you investigate the complex realm of financial hazards.

FRM vs. CFA: Career Paths 

• Becoming a CFA can help you advance in traditional finance positions such as asset management, research, and investment management.
• It serves as your entry card into the financial industry, where you manage and increase investments.
• Your specialization in FRM opens doors to risk-specific positions, especially in banking, financial consultancy, and risk analysis.
• It’s similar to being the defender of economic stability, making sure businesses can manage risks sensibly.

CFA vs. FRM: Prerequisites

Candidates appearing for CFA exams should fulfill the below criteria: 

• Have completed a bachelor’s degree program or are presently enrolled in the last year of one.
• Accumulated a minimum of 4,000 hours of formal job experience.
• Possess both the professional and educational prerequisites.
• Possess fluency in the English language.

For the FRM certification, candidates need to:

• Complete parts one and two of the exam.
• Pass the exam’s second section four years after passing the first.
• Possess a minimum of two years of expertise in the field of professional financial risk management.

FRM vs. CFA: Exam Structure 

Exam formats are another distinction between these two certificates. There are three levels to the CFA certification exam, which covers a wide range of subjects. The subjects may consist of:

• Classes of assets
• Finance
• Professional and ethical norms
• fixed earnings
• Investment instruments
• Portfolio Administration Skills
• Capabilities for managing wealth

There are two sections to the FRM certification exam. The implementation of theories and instruments related to financial risk management is the main focus of the course and test. You might study about some of the following subjects if you go for this certification:

• Models of business and financial risk
• Products and Financial Markets
• Basics of probability
• Risk of the market
• Analyses with numbers
• Unpredictable elements

CFA vs. FRM: Salary

In the field of portfolio management, a CFA charterholder earns an average income of US$126,000 and a total pay of US$177,000.

The general salary for a financial risk manager is $102,000, with a total annual package of $128,000. 

CFA vs. FRM: Course Fee

You need to pay the CFA Institute a one-time registration fee of around $450.

Then there are the CFA Level 1 examination fees, which are

Exam fees range from 700 to 1000 dollars for CFA Level 1, and 700 dollars for CFA Level 2 and CFA Level 3.

On the other hand, the one-time enrollment fee for FRM is $400. Following the enrollment fees, each of the two sections of FRM (FRM sections 1 and 2) includes an exam fee. The exam fee ranges from $400 to $700, depending on when it is paid.

Bottom Line

Selecting between the FRM and CFA certifications is an important step that can influence your future. Certifications in CFA and FRM are highly respected on a national and international level. They distinguish distinct paths in the financial industry: FRM focuses on organizational risk management, whereas CFA emphasizes investment management. All certifications serve different career interests and aims, but none is superior to the other. The decision you choose between CFA and FRM should be in line with your interests and unique career goals.

To succeed in the CFA exams, prospective financial analysts need to possess a wide range of knowledge and abilities. Getting through these tests can be difficult if you don’t have the right help. Mirchawala’s Hub of Accountancy provides unwavering assistance during your CFA path, guaranteeing that you’re well set for your success.  

Frequently Asked Questions (FAQs)

Q: Is FRM more difficult than CFA?

Ans: FRM and CFA both are difficult to pass. If you are interested in becoming a professional investor, have experience with investments, and concentrate on market fundamentals, CFA may be a better fit for you. On the other hand, if you’re good at analysis and critical thinking and want to work in the risk area of finance, FRM can appear more doable. 

Q: Should we complete FRM before the CFA?

Ans: There are curriculum overlaps between the exams. It will be simpler if you complete the first two CFA levels and then go on to FRM Part 1.