CIPM vs FRM

Difference Between CIPM and FRM

CIPM offers job opportunities to individuals in investment banks, research firms, investment management, plan sponsors, GIPS verification firms, etc whereas FRM offers job opportunities to individuals who seek to work as an estate planners, retirement planners, risk managers, financial managers, etc.

In this comparative, we discuss the two certifications – CIPM and FRM.

CIPM-vs-FRM

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CIPM examCIPM ExamThe CFA CIPM® program is known around the world for its investment professionals' performance evaluation and presentation expertise. The CFA CIPM Principles Exam and the CIPM® Expert Exam are two challenging exams to be cleared.read more (offered by CFA Institute) mainly comprises of investment performance measurement and its attributes. On the other side is the Financial Risk Manager (FRM) is offered by GARP, which is all about Risk management.

CIPM vs. FRM Infographics


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Let’s understand the difference between these two streams with the help of this CIPM vs. FRM  Infographics.

CIPM-vs-FRM-infographics

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CIPM vs FRM Comprative Table

SectionCIPM FRM
Organizing BodyThe organizing body for the Certificate of Investment Performance Management (CIPM) exams is the CFA Institute, USA.The organizing body for the Financial Risk Manager (FRM) exams is the Global Association of Risk Professionals (GARP), USA
PatternThe course consists of two sequential levels

  • Level I (erstwhile Principles level)
  • Level II (erstwhile Expert level) The CFA charterholders are exempted from the Level I exam.
The course consists of two sequential parts

  • Part I
  • Part II

 

 

Duration of CourseThe candidates are usually able to complete the course in a span of 1.5 years.The candidates need to clear the Part II exam within 4 years of passing the Part I exam.
SyllabusThe syllabus of the course focuses on the following topics

  • Ethics and Professionalism
  • Performance Attribution
  • Performance Measurement
  • Performance Presentation
  • Performance Appraisal
  • Manager Selection
  • Global Investment Performance Standards
The syllabus of the course focuses on the following topics

  • Quantitative Analysis
  • Credit Risk, Market Risk & Operational Risk
  • Risk Models
  • Financial Markets & Products
  • Valuation
  • Investment Management
  • Treasury & Liquidity Risk Management
Exam FeesThe total cost of the course varies based on the time of registration and falls in the range between $950 and $1,350.The total cost of the course varies based on the time of registration and in the range between $1,175 and $1,775. It includes an enrollment fee and exam fees.
JobsSome of the common profiles include

  • Portfolio Manager
  • Financial Adviser
  • Investment Consultant
  • Investment Analyst
Some of the common profiles include

  • Risk Manager
  • Risk Analyst
  • Financial Risk Consultant
  • Investment Banker
DifficultyThe exams are quite difficult and the only 1/4th of the aspiring candidates are able to clear both levels. The pass rates for the exams conducted in September 2019 were

The exams are very difficult and only 1/3rd of the aspiring candidates are able to clear both parts. The pass rates for the exams conducted in 2019 were

  • Part I: 45.9%
  • Part II: 58.6% [Source: GARP]
Exam DateThe schedule of the upcoming exams for the year 2021 is as follows

  • Level I: Mar 16-31 & Sep 16-30
  • Level II: Mar 16-31 & Sep 16-30
The schedule of the upcoming exams for the year 2021 is as follows

  • Part I: May 08-21, Jul 10-23 & Nov 13-26
  • Part II: May 15 & Dec 04-10

Certificate in Investment Performance Measurement (CIPM)


CIPM is an international course that is available for professional candidates and also people who are starting their careers. CFA Institute offers CIPM, and it mainly comprises of investment performance measurement and its attributes which means, it is a  theory which studies the models to explain those processes.

In brief, some global investment firms are subjected to showing a great deal of variety in terms of regulations, international laws, market customs that state how investment performance should be measured and advertised.

GIPS, which is the standards of the global investment, is a set of rules which are laid down by the management industries to monitor the continuous growth in the worldwide patchwork of regulation covering investment return calculations and advertising and also since GIPS is the professional body of knowledge it also tests the competency of the people or organization’s associated with the field, and this is how the CFA formed the CIPM association.

Since this, a professional course for people from the financial field, one must adhere to professional ethics and conduct that have been laid down by the CFA and also proves one’s competence in the respective field.

Financial Risk management (FRM)


Financial Risk Manager (FRM) is offered by the Global Association of Risk Professionals (GARP), an international organization engaged in the promotion of industry standards in risk management. FRM is focused on financial risk management, which makes it a highly specialized certification program. This makes it suited for individuals planning to gain expertise in financial risk management instead of adopting a generalized approach. An increasing number of global organizations are looking for accredited risk professionals to add that competitive edge to survive in the modern industry.

CIPM vs. FRM – Exam Requirements


CIPM Exam Requirements

If you are thinking about appearing for a professional course, there are certain requirements every course has. Do not forget that these are professional financial examinations, and to know the requirements, just peep into the notes below.

  1. Experience of more than two years in calculations, showing investment results, analyses, giving consultation services, evaluating different investments, legal and regulatory services, directly supporting investment either technically or through accounting, standard verification and compliance experience of GIPS, teaching investments, or even monitoring people dealing in investments either directly or indirectly.
  2. Otherwise, you need more than four years of experience in the industry of investments that usually involves applying and evaluating financials of people, working on economic and statistical data of clients, manages marketing for investment products and services, monitoring the investment firms to make sure that they comply with the regulatory standards, evaluating and recommending investment managers.

FRM Exam Requirements

FRM has very clear 3 requirements we will explain in detail

  1. Clearing the FRM examination Part I
  2. You will also have to clear Part II within 4 years of clearing part I
  3. You will have to have a complete 2 years of full-time experience in financial risks.

Besides the above 3 criteria’s the candidate has to submit a letter that describes his professional role in managing financial riskFinancial RiskFinancial risk refers to the risk of losing funds and assets with the possibility of not being able to pay off the debt taken from creditors, banks and financial institutions. A firm may face this due to incompetent business decisions and practices, eventually leading to bankruptcy.read more in about 4 to 5 sentences. This application needs to cover ‘My Programs’ within your account. This work experience that is submitted need not be more than 10 years before appearing in the FRM examination part II. Relevant work experience is counted as a research analyst in financial risk management, financial risk, academic teaching, and practitioners.

Experiences that will not be counted are teaching students, part-time jobs or internships, or any other jobs that are pursued during school days. The candidate has 5 years of submitting his work experience after he has cleared his FRM part II. In case he does not, or in case he fails to do so, he will have to reappear his examinations of FRM part I and II, along with paying the fees again. He cannot use the FRM certification unless the association has certified him.

Why pursue CIPM?


CIPM certifications help you in the highly specialized investment industry and also gives you an upper hand in investment decision-making processes, firm’s asset-gathering, a position as an analyst at an accounting firm with a GIPS verification practice, or an analyst’s position at an investment consulting firm that conducts manager searches and monitors institutional clients’ investment results. As we already know that the prestigious CFA institution backs CIPM, so there are the best minds in the investment industry who are involved who are dedicated, ethical, in-depth knowledge of investment performance, and know the GIPS “cold.” Salary is the most important basis in any career, so according to the survey in 2016, a candidate can get paid anywhere between $100 to $150K in the United States of America.

Why pursue FRM?


Becoming an FRM has its perks and Advantages. It is one of the most renowned qualifications, and it will also make the individual an all-rounder in domains that involves risk, like operational, market, credit, or investments. Also, when you are an FRM certified individual, it gives you an edge over your peers and widens horizons, and also will be like an extra feather in your cap.

Benefits of FRM certification are Enhance your reputation, Develop your knowledge and expertise, Stand out to employers, and set yourself apart, Demonstrate your leadership at work, Increase your opportunities across the globe.

Salary is the basis of everything, so if you are in the States, your salary can range anywhere between 250000$ to 300000$ per year. In India, your salary per year can be anywhere between 9-12 Lakhs per annum and additional perks like paid vacation, bonuses per year, pension life, and medical insurances.

A few employers for FRM Individuals are UBS, Deutsche Bank, and HSBC, auditing firms Ernst & Young (EY), PricewaterhouseCoopers (PwC) and KPMG, etc.

Career prospects for an FRM executive are Risk Management Analytics Consultant & personal banking, Senior Operational Risk Manager, Corporate Risk COO& Risk Officer for Global Asset Liability ManagementAsset Liability ManagementAn asset/liability management is paying off liabilities from assets and cash flows of a company. Its proper implementation reduces the risk of loss for not paying the liabilities on time. Companies must ensure that assets and cash flows are available on time to avoid additional interest and penalties.read more, Risk Manager, Prudential Risk, to name a few. So FRM certified individuals are in great demand and its niche market, and very few people are involved with the rite certifications. If you have an FRM certification, you have the edge over your contemporaries.

Conclusion


If you are interested in studying the performance of investment and managing the same for the public, then this is just what you would like to do a certification backed by the CFA is an absolute yes when it comes to making a career in finance. This certification helps you gain a good start package, along with great recognition, and also grow well in your professional aspects. This course is not all that difficult to start with, giving you a confirmation if you work a little hard, chances are you might crack the examination well.

Risk management is such a term for the finance people. All the investments revolve around this aspect for a risk manager who balances to minimize risk. And if you think you can have this big responsibility for your client’s money, then you do not have a better job than this. If you want to reach the high designations of financial risk management, this course will help you reach your desired designation.

Reader Interactions

Comments

  1. Colton Simon says

    Great Article, provides good insight about CIPM and FRM. Can you post any study material on FRM?

  2. Dakota Dubois says

    This is really amazing. Great resource!! Thank you sir for giving in-depth knowledge about both these certifications. Do you have any detail about CFA CIPM Examination, like about its fees and how to complete this exam? I will be glad if you could send me all the details regarding this.

  3. Anupam Singh says

    what is the time a student take to pass FRM (average) and officially how much time it takes to clear FRM.

    • Dheeraj Vaidya says

      Hi Anupam, As per GARP, it takes 1 year on an average to pass FRM exam. You can pass this exam on a single day (taking both the exam at once!) :-)

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