Difference Between FRM and CAIA
FRM is the short form of Financial Risk Manager and this course lets an individual gain an expertise in skills pertaining to risk management whereas CAIA stands for Chartered Alternative Investment Analyst and this course focuses on letting students learn about the hedge funds, real assets, private equity, credit derivatives, CDOs and related products in detail.
Finance certifications have always been a lucrative career option. There are many of them, and it still a nightmare if we were to decide what it should be finally. To help you out on this process, let us grab a quick understanding of the two – FRM exams vs. CAIA exams through this article.
In this article, we discuss the following.
- What is the Financial Risk Manager (FRM)?
- What is the Chartered Alternative Investment Analyst (CAIA)?
- Exam Requirements
- Why pursue FRM?
- Why pursue CAIA?
What is FRM or Financial Risk Manager?
The Financial Risk Manager is a global certified program based in the US and offered by the Global Association of Risk Professionals. The course consists of two parts and prepares you for everything from risk management and measurement to quantitative analysis techniques and financial markets and products and evaluation models.
The FRM course requires the candidate to have two years of full-time working experience in the finance arena, which can be in the form of risk management, trading, academia, research, portfolio, management, auditing, economics, risk management, or risk consulting.
What is CAIA?
The Chartered Alternative Investment Analyst is a designation achieved by an investment professional after successfully clearing the CAIA exam conducted by the CAIA institution. The CAIA course requires the candidate to pass two examinations to be recognized as a specialist in a hedge fund, real estate investment, private equity, and venture capital. The CAIA exam is globally recognized and is a benchmark for professionals wanting to achieve a distinction in alternative investments.
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The course divided into two levels helps a professional to understand the fundamentals of each alternative investment class and apply the asset allocated information to achieve result-oriented decision making. The curriculum designed helps a professional understand a portfolio from the investor’s perspective and implement diverse strategies.
FRM vs. CAIA Infographics
- FRM: There is no prerequisite to take the FRM exam (educational or work experience); however, GARP Individual Membership must sit for the FRM exam. Individual membership costs around. $100
- CAIA: To appear for the CAIA exam, candidates must have at least one year of professional experience and a bachelor’s degree.
|Certification Organised By||Global Association of Risk Professionals||Chartered Alternative Investment Analyst Association|
|Levels and Exam Window||Part I and Part II|
The FRM Part I exam registration is done in three windows: Early, Standard and Late.
|Level I and II
Exams are held in February and March
Level I: February 27–March 10, 2017
Level II: March 13–24, 2017
Foundations of Risk Management
Financial Markets and Products
Valuation and Risk Models
Market Risk Management
Credit Risk Management
Operational and Integrated Risk Management
Risk Management and Investment Risk Management
Current Issues in Financial Markets
|Qualitative analysis, trading theories of alternative investments, Indexation and benchmarking.|
|Fees||New Candidate - FRM Exam Part I|
Early:- December 1, 2016 - January 31, 2017. $750. Enrollment fee $400. Exam fee $350
Standard:- February 1, 2017 - February 28, 2017. $875. Enrollment fee $400. Exam fee $475
Late:- March 1, 2017 - April 15, 2017. $1050. Enrollment fee $400. Exam fee $650
Returning Candidate - Part I/Part II
FRM Exam Part I- Enrollment $400, Early $350, Standard $475, Late $650
FRM Exam Part II- Enrollment N/A, Early$350, Standard$ 475, Late $650
|Early:- Oct 11–Nov 22, 2016 $1,150.
Enrollment fee:- $400. Exam fee $400.
Standard:- Nov 22,2016–Feb 14,2017. $1,250.
Enrollment fee:- $400. Exam fee $400
|Pass Percentage||November 2016 Exams Pass Rates: FRM Part I: 44.8% | FRM Part II: 54.3%||CAIA Level 1 Exams 2015 Pass Rates :- 66%
CAIA Level 2 Exams 2015 Pass Rates :- 67.8%
CAIA level 1 and level 2 Exams 2016 Pass Rates :- 61% and 66%
CAIA level 1 Exams March 2017 Pass Rates :- 62%
|Job opportunities||Analytics Client Consultant – Risk Management Analytics|
- Risk Management Analytics Consultant
- Risk Manager, Personal Banking
- Corporate Risk – Managing Director – COO & Risk Officer for Global Asset
- Risk Quantification Manager
- Manager, Operational Risk Advisory and Oversight for Wealth Management
- Large Enterprise Commercial Risk Manager
- Senior Operational Risk Manager
- Credit risk specialists
- Market risk specialists
- Operational risk analysts
- Regulatory risk analysts
- Risk Manager, Prudential Risk
- Enterprise Risk Manager
- Risk Manager
|•Analysts at hedge funds or private equity funds|
Key Differences Between FRM and CAIA
- The Financial Risk Management course is conducted by the GARP or Global Association of Risk Professionals. The CAIA Association conducts a Chartered Alternative Investment Analyst or CAIA course.
- The subjects in the FRM course are financial markets and products, quantitative analysis, foundations of risk management, market risk measurement and management, valuation and risk models, credit risk measurement and control, current issues in financial markets, operational and integrated risk management, operational risk and resiliency, risk management and investment risk management, liquidity and treasury risk measurement and management, financial markets and products, etc..
The subjects in the CAIA course are indexation, managed futures, current and integrated topics, private equity, due diligence, hedge funds, asset allocation, and institutional investors, professional standards and ethics, introduction to alternative investments, structured products, qualitative analysis, benchmarking, trading theories of alternative investments, etc.
- A financial risk manager can apply for the job roles of risk manager, risk management analytics consultant, managing director for the management of corporate risk, personal banker, risk officer for a global asset, risk quantification manager, enterprise risk manager, credit risk specialists, senior operational risks manager, regulatory risk analysts, prudential risks manager, and so on.
On the other hand, a Chartered Alternative Investment Analyst can apply for the job title of an analyst in the fields of private equity funds, hedge funds, venture capital, etc.
- Aspirants pursuing a Financial Risk Manager course must dedicate a minimum study time of 200 to 240 hours for each round of exam. The aspirants seeking a Chartered Alternative Investment Analyst course must reserve a minimum study time of 200 hours for each level of exams.
- An aspirant applying for the FRM course must have worked as a full-time employee for 2 years in any financial risk role. In contrast, an aspirant applying for the CAIA course must have a bachelor’s degree and a minimum of 1-year professional experience or at least a professional background of 4 years in the absence of a valid degree.
Why pursue FRM?
FRM today is considered an alternative option to CFA Charter. While CFA and MBA remain the traditional choices to boost career prospects, FRM, as observed by industry experts, is poised for growth, considering that the market is less saturated with FRMs than CFAs at the moment.
Though FRM can boost your earning power, to believe that it would happen overnight and create you a millionaire is a wrong perception. The banks in the banks are still to be made aware of FRM as a certification, which is on par with a CFA (though less holistic and more narrow), and therefore, it is not a must-have while a candidate is being recruited.
FRM certified course is best suited for those individuals in the finance industries who play a senior role in management firms, government agencies, Investment banking firms, hedge funds, asset management firms, commercial banks, central banks, credit agencies, corporations, technology, and asset vendors, consulting firm and so on and want to jump up in their positions or are looking for a change in career domain.
Additional certification after a traditional degree is a pre-requisite considering the booming number of talented professionals in the industry. Thus FRM is for professionals who are looking to excel and make progress in their portfolio or who desire a shift in their career with a more diversified, analytical, and challenging role in their career. The syllabus of these certified courses have a much broader global perspective and has current relevance in today’s financial market scenario.
Why pursue CAIA?
CAIA is a perfect course for those individuals who wish to fill the educational gap to rise quickly in the alternative investment field. The program brushes up with you the core fundamentals of the other candidates in the industry. Moreover, CAIA is globally recognized and is a well-respected course, giving you credibility in the alternative investment field.
The program is the highest achievement an individual can achieve in this field, which directly increases his career opportunities. It opens up doors to reach more client base and professional networking connections through membership in global chapters.
This has been a guide to FRM vs. CAIA. Here we discuss the differences between FRM and CAIA along with infographics and comparative table. You may also have a look at the following articles –