FRM vs Actuary – There’s common question among students who would like to be risk professionals. What should I choose, FRM or Actuary? This article will answer your query. In this article, we will discuss both of these certifications in depth, so that you can take an informed decision about what you should do. You need to realize that the scopes of both these courses are different. Not everyone will go for in-depth courses. And likewise, not everyone will entertain the idea of doing a course that touches the surface level of risk management. So choose according to your needs. Here’re some details to begin with.
- The curriculum of Actuary is much more in-depth than FRM. That doesn’t mean FRM just scratches on the surface. But Actuary goes deeper.
- Even if you want to go for both the courses, it’s prudence not to go for both. Because even if the curriculum of FRM & Actuary consist of risk management, they’re of different domain and need separate focus.
- If you would like to go for Insurance sector, you should go for Actuary. The curriculum of actuary is vast and once you clear 3-4 papers in the beginning, you can get a job in insurance sector. Yes, actuary is so valuable.
- If you think about FRM certification, it’s not enough to do just FRM. You should consider doing FRM once you have an MBA in Finance or CFA. CFA plus FRM creates a lethal combination and it would be easier for you to get a job as well. Albeit the scope of CFA and FRM is drastically different, doing these two courses will help you see the big picture and you would be better equipped to solve larger issues in finance.
Let’s get to the meat and understand in detail what FRM and Actuary is all about.
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FRM vs Actuary Infographics
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Lets understand the difference between these two streams with the help of this FRM vs Actuary Infographics.
FRM vs Actuary Summary
|Certifications organized by||FRM certification is one of the most sought after and popular international certifications in the world. It’s offered by Global Association of Risk Professionals (GARP), USA.||You can do your actuary certifications from two reputed institutes in the world – first is from Casualty Actuarial Society (CAS) and second is from Society of Actuaries (SOA). Now there’s also opportunity to study actuarial science in your graduation.|
|Number of Levels||To pass FRM, you need to clear two-practice-based exams. FRM Part I exam focuses on tools to assess the risk. The main focus of FRM Part II is the application of tools.||In case of actuaries there’re many levels you need to clear that’s why it takes 6-10 years to complete the actuarial certifications. If you’re going for actuary certification (Associate of the Society of Actuaries & Fellow of the Society of Actuaries) from SOA, then you need to go through ten separate modules. But if you do it from CAS, if you want to reach till Associate, you need to complete six exams. For fellowship, you need to sit for another three exams.|
|Mode/Duration of Exam||In Part I of FRM exam, you need to answer 100 multiple choice questions. Two things you need to keep in mind while giving the FRM Part I exam. First, you need to give it in the morning and second, you need to complete the exam within 4 hours. In Part II, you need to answer 80 multiple choice questions. And until you clear Part I, you won’t be allowed to sit for Part II. Thus, it’s prudence not to sit for both exams in one day.||In case of actuaries, the things are little different. There’re many exams you need to go through. If you do actuary from SOA, in each exam you need to answer Multiple Choice (MC) Questions and Written Answers (WA). The maximum time for any exam is 5.5 hours and the minimum time is 2 hour 15 minutes. The scope of each exam is different, thus the duration of each exam also varies. In case of CAS also you need to answer Multiple Choice questions and written answers and the duration of each exam varies (within 1.5 hours to 4 hours duration).|
|Exam Window||In 2017, the FRM Exam will be offered on May 20, 2017 and November 18, 2017.||In SOA, you need to sit in May & Oct-Nov for exams. In case of CSA, you need to sit for exam in May.|
|Subjects||Part I Exam Topics: |
Financial Markets and Products
Foundations of Risk Management
Valuation and Risk Models
Part II Exam Topics:
Market Risk Measurement and Management
Credit Risk Measurement and Management
Operational and Integrated Risk Management
Risk Management and Investment Management
Current Issues in Financial Markets
|1. Financial Mathematics
2. Financial Economics
3. Applied statistics
4. Construction and evaluation of actuarial models
|Pass Percentages||The pass percentage of FRM Part I and Part II is quite high. In 2015, the pass percentage of FRM Part I was 43% (May) and 49.2% (Nov). For Part II, the pass percentage was 52% (May) and 62.1% (Nov). |
In 2016, the pass percentage of FRM Part I was 44.8% and FRM Part II was 54.3%
|The passing percentage for actuary exams (all subjects in cumulative terms) is around 50%.|
|Fees||New Candidate - FRM Exam Part I|
Early Registration Fees:
December 1, 2016 - January 31, 2017
Enrollment fee $400
Exam fee $350
Standard Registration Fees:
February 1, 2017 - February 28, 2017
Enrollment fee $400
Exam fee $475
Late Registration Fees:
March 1, 2017 - April 15, 2017
Enrollment fee $400
Exam fee $650
|Exam S:- Candidates $425, Full-Time Students $340
Exams 5, 6, 7, 8, and 9:- Candidates $650, Full-Time Students $520
Online Courses 1 & 2 Retest†:- Candidates $315, Full-Time Students $315
Exam ST9:- Candidates $650, Full-Time Students $625
Refund (Exams S, 5-9, and ST9) $100
Change of Exam Center $60
Special Exam Center $60
Online Courses 1/CA1 and 2/CA2: Contact The Institutes for fees that apply.
|Job opportunities/ job titles||Once you complete your FRM, you would be able to get opportunity in IT, KPOs, Banks, Hedge Funds etc.||In case of actuaries, the best place to work is in Insurance industry.|
What is Financial Risk Manager (FRM)?
- FRM is one of the most sought after risk certifications in the world. Whether you’re pursuing a career in finance or looking to break into finance domain, FRM certification would act as a catalyst, because people who do FRM certifications are the ones who’re serious about being risk professionals.
- FRM is not an easy certification as most students think before getting into. To complete FRM, you need to sit for two rigorous, practice-oriented papers that include core subjects in financial risk management. Also you need to have two years of financial risk management experience to avail the FRM certificate.
- FRM is often not perceived as per the merit of corporate, because there’s mismatch between the curriculum and the exam. The exam is much easier than the depth of the curriculum. Thus to make a mark, you shouldn’t study just for the exam, but also for knowing the subject through & through.
- The best part of FRM is that anyone can sit for FRM. There’s no eligibility criteria for getting into FRM.
What is Actuary?
- An actuary is a business professional who uses analytical methods to understand the financial consequences of risk. Actuary professionals are not only great at financial theories, but they also have depth of knowledge in mathematics and statistics. If you would like to go for actuary, think about your inclination toward these two subjects.
- Actuary professionals focus on a particular type of risk. They basically deal with risks related to insurance and pension programs. Once they understand the risk of these sectors, they evaluate the possibility of these events, find ingenuity to reduce the possibility and lastly, try to pare down the impact of these possible events.
- It’s one of the newly evolved finance careers. So if you can become an actuary (you’ll know how in a minute), you will be counted among top-wage earners in the country.
- To be an actuary, you need to pass a series of examinations via Casualty Actuary Society or Society of Actuaries. It may take you around 6-10 years to pass all the exams. But after passing few entry level exams, you may get hired as an entry level professional. Then you can take subsequent exams while you work as an actuarial assistant.
Key Differences – FRM vs Actuary
There are many differences between FRM and Actuary. The only similarity is they both cater to risk professionals.
- Intensity: If you think about how deep you need to go in each certification, actuary is much intense than FRM. Of course, it’s said that you need to study at least 200 hours to prepare for FRM; but for actuary, it’s much more because you need to take almost 8-9 exams.
- Focus of subjects: With a good knowledge of financial theory and valuation, you would be able to crack two exams of FRM. But to become an actuary, only having knowledge in financial theory is not enough. You also need to have in-depth knowledge in mathematics and statistics.
- Perspective: The main difference between FRM and Actuary is not subject-oriented, but in perspective. In case of FRM, you need to be more generalist than specialist whereas if you’re in an actuarial science profession, your emphasis would be on speciality. Moreover, when you decide to do FRM, it’s usually because you’ve a keen interest in business and finance, whereas the part and parcel of actuarial science is to evaluate the risk of insurance/retirement/pension programs and take measures to reduce the risk.
- Value in the market: The value of FRM certification holder is of course great. But if Actuaries have more value in the market due to two basic reasons. First of all, Actuary is relatively a new finance profession the market (of course, it has started a long time ago, but very few went for it in the past). The second reason is if you do Actuary with all your heart, you don’t need any other qualification to get a job. But in case of FRM, you need to have at least an MBA in Finance to be counted.
- Difference in salary: At a global level, there’s not very much difference in the salary part of both FRM and Actuary. But Actuary is paid slightly higher than the FRM professionals. On an average, the Actuary earns around US $200,000 per annum whereas a FRM professional earns around US $175,000 per annum.
Why pursue FRM?
- The first reason to pursue FRM is its eligibility criteria. All you need to have is your willingness to do the course and you’re in. You don’t need to adhere to anything else to sit for exam.
- The second reason you should pursue FRM is its curriculum. It has only two levels. Of course, you need to go through rigorous study if you want to get placed, but it’s only two levels and nine subjects.
- The third reason for which you should pursue FRM is its international repute. Very few courses have this sort of royal reputation in the world.
- The fourth and last reason is the fees of this course are very reasonable if you compare with other international courses. Moreover, it helps you get placed easily if you’ve gone through the curriculum well enough.
Why pursue Actuary?
- If you want to pursue a specialist profile, actuary is for you. Actuary is a die-hard course for insurance risk. And once you do this course, you would be an expert in the field of insurance risk.
- The curriculum of actuary is very comprehensive. Thus once you persist and complete all your exams, you’re good to go. Moreover as actuary is a relatively new profession, you would have more opportunity in the market.
- If you do actuary from CAS or SOA, then you would be internationally certified. And you certification would be valid anywhere in the world.
In the final analysis, it’s evident that if want to study a specialist profile and have willingness to devote 6-10 years of your life, you can choose Actuary. Or if you want to pursue your career in risk profile in banks and for large funds, FRM is the right option for you.