Differences Between CFA and FRM
The primary difference between CFA vs. FRM is the topics that it covers. CFA, on the one hand, covers a broad range of topics in Finance like Corporate Finance, Portfolio Management, Accounting, Fixed Income, Derivatives, etc.. In contrast, FRM is a specialized exam for obtaining expertise in Risk Management. Additionally, CFA prepares you well for careers in Investment BankingCareers In Investment BankingAn investment banking personnel is a motivated professional who aims to help their clients reach their financial goals and objectives. The top four investment banking careers are - Analyst, Associate, Vice president, Managing director. , Portfolio Management, Financial Research. In contrast, FRM is suited for those who want to make a career in Risk management in Banks, Treasury Department, or in Risk Assessments.
Maybe CFA®, maybe FRM, or both? This is one of the most frequently asked questions when students make up their minds to advance their careers in Finance. Making the right choice is important because each of the examinations takes a lot of hard work, money, and of course, a lot of time. The choice, however, is sometimes difficult for those who are not aware of its key differences.
I was fortunate to pass both the CFA® and FRM exams and was lucky to go through the course details, benefits, and nuances of both the examinations. In the past, I have mentored hundreds of students for CFA® and FRM examination, and through this blog, I thought of preparing a quick guide on CFA® vs. FRM that will help students make an informed choice.
To show you the key differences between CFA® and FRM, I have created an infographic that will help you make an informed choice.
CFA vs. FRM Infographics
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CFA vs FRM – Comparative Table
|Organizing Body||The CFA Institute (USA) is the organizing body for the CFA exams.||The Global Association of Risk Professionals (USA) is the organizing body for the FRM exams.|
|Pattern||The candidates need to undergo three sequential exams – Level I, Level II & Level III, to complete the course.||The candidates need to undergo three sequential exams – Part I & Part II, to complete the course.|
|Duration of Course||On average, the candidates take 3-4 years to complete the course.||The candidates are mandated to clear the Part II exam within 4 years of passing the Part I exam.|
|Syllabus||The syllabus primarily covers the following topics||The syllabus focuses on the following topics |
|Exam Fees||The overall cost includes exam fees that vary in the range of $700-$1,000 based on the time of registration and the one-time registration fee of $450. The overall cost of the course falls in the range of $2,550 to $3,450 if the student can clear all the exams on the 1st attempt.||The overall cost of the course includes the enrollment fee and the exam fees, which vary based on the time of registration. The overall cost falls in the range of $1,175 and $1,775 if the student can clear all the exams on the 1st attempt.|
|Jobs||Some of the common profiles include ||Some of the common profiles include |
|Difficulty||The qualification exam for CFA is one of the toughest exams. The pass rates for the exams conducted in June 2019 were ||The qualification exam for FRM is very difficult. The pass rates for the exams conducted in 2019 were |
|Exam Date||The schedule of the upcoming exams for the year 2021 is as follows ||The schedule of the upcoming exams for the year 2021 is as follows |
Pro Tip: CFA vs. FRM
- Broad vs. Focussed – The key difference is that the CFA® curriculum covers a broad range of topics in Finance. However, FRM is a specialized exam for gaining expertise in Risk Management.
- Job Opportunities – This is especially useful for those who want to make a career in Portfolio Management, Investment Banking, Portfolio Management, or Financial Research. FRM opens up careers in Risk ManagementCareers In Risk ManagementA risk management personnel closely monitors data, trends, seeks and reports any risk regarding a company's operations, implements required changes as well. Top 3 careers in risk management are - Operations risk analyst, market risk analyst, credit risk analyst. in Banks, Treasury Department, or Risk Assessments.
- Passing Rates – Do not worry too much about the passing rates. Both the exams CFA® and FRM have a reasonable range of passing rates (30-50%).
- Competition – CFA® exam has no direct competition from other providers. If you want to make a career in Investment Banking or Portfolio Management, then the choice of CFA® is a no brainer. FRM examination has direct competition from PRM (Professional Risk Manager). If you want to make a career in Risk management, you are spoilt for choices as you may want to choose between the two exams – FRM or PRMFRM Or PRMA Financial Risk Manager (FRM) is a risk management professional certified by GARP who manages the risk involved in the financial services sector. In contrast, a Professional Risk Manager (PRM) approved from PRMIA holds the ability to assess and mitigate the financial risk.. My take is that FRM is rather a popular examination between the two, and for a newbie, it makes sense to appear for the FRM exam first.
- Examination Tips – CFA® is slightly easier for students who have an accounting background. CFA® curriculum relies heavily on Accounting Fundamentals. FRM examination, on the other hand, is slightly easier for those who have a quantitative background as the majority of foundation level topics are maths based.
- I have written an exhaustive post on CFA® and examination tips – Tips on passing CFA® Examination and Important CFA Dates.
- If you are confused between CFA® vs. MBA, then click here.
If you want to professionally learn Investment Banking Skills, you may also opt for this Investment Banking Training (99-course bundle)
So which one are you taking – CFA or FRM exam?
If you have any questions/feedback on these examinations – CFA® or FRM, please do drop a comment below