FRM vs MBA

Difference Between FRM and MBA

FRM is the short form for Finance Risk Management and it is taken up by individuals who want to specialize themselves in skills and knowledge pertaining to Risk Management whereas MBA stands for Masters in Business Administration and it is chosen by individuals who are willing to expertise themselves in management-related skills.

Finance is a very lucrative career and yet very boring for those who are not interested. So if you are confused between whether to take the FRM examination or complete your MBA or both, do have a look at this quick guide to help you phase out the dilemma.

FRM-vs-MBA

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FRM vs MBA Infographics

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

FRM-vs-MBA-infographics

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FRM vs MBA Comparative Table

SectionFRMMBA
Organizing bodyThe exams are managed and controlled by the Global Association of Risk Professionals (GARP), USA.The exams are managed and controlled by individual institutions and universities.
PatternThe FRM course study is divided into 2 parts.
  • Part I
  • Part II
The degree course is either divided into semesters or trimesters depending on the institutions.
Duration of courseThe Part II exam must be cleared within 4 years from passing the Part I exam.The course duration can be 1 year, 1.5 years or 2 years, depending on the institution and the program type.
SyllabusThe syllabus primarily includes
  • Quantitative Analysis
  • Valuation
  • Financial Markets & Products
  • Risk Models
  • Credit Risk, Market Risk & Operational Risk
  • Treasury & Liquidity Risk Management
  • Investment Management
The syllabus primarily includes
  • Accounting
  • Business Statistics
  • Business Ethics
  • Managerial Economics
  • Operations Research
  • Financial & Marketing Management
  • Human Resource Management
Exam feesThe course’s overall cost lies in the range of $1,175 to $1,775, which includes an enrollment fee of $400 and exam fees of the two parts that vary depending on the time of registration.The overall cost of the course depends on the institutes and the type of program. The cost usually varies in the range of $40,000 to $60,000.
JobsSome of the common profiles include
  • Risk Manager
  • Financial Risk Consultant
  • Risk Management Analyst
  • Investment Banker
Some of the common profiles include
  • Operations Manager
  • Human Resource Manager
  • Marketing Manager
  • Financial Advisor
  • Financial Analyst
DifficultyIt is one of the most difficult credentials to earn as only 1/3rd of the candidates can clear both parts. During 2019, the pass rates for Part I and Part II were ~46% and ~59% respectively. [Source: GARP]The level of rigour varies across institutions, but the difficulty level of the exams is fairly reasonable. Almost all the students who enrol in an MBA program, pass the exams.
Exam dateThe schedule for the upcoming exams during the year 2021
  • Part I: May 08-21, Jul 10-23, and Nov 13-26 (all computer-based)
  • Part II: May 15 (paper-based) and Dec 04-10 (computer-based)
The schedule of the exams varies across institutions. In the case of the semester system, the exams are conducted at an interval of every 6 months, while for the trimester system, the exams are conducted at an interval of every 4 months.

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 marketsFinancial MarketsThe term "financial market" refers to the marketplace where activities such as the creation and trading of various financial assets such as bonds, stocks, commodities, currencies, and derivatives take place. It provides a platform for sellers and buyers to interact and trade at a price determined by market forces.read more 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, equity research, portfolio management, auditing, economics, risk management, or risk consulting.

What is an MBA or Master of Business Administration?

A master’s degree in business administration prepares you for the field of business and is typically for people who want to make a career in marketing and general management.  The two-year course offered in business schools prepares you for management analysis and strategy while providing a thorough knowledge of accounting, finance, marketing, and human resources.

The MBA course is available in full-time, part-time, and distance learning processes, each having a significance in the industry.

FRM vs MBA Requirements

The cost often plays a huge deciding factor for many and is one of the biggest disadvantages of an MBA program. While an MBA is a two-year rigorous study filled with internships and exams, passing the FRM certified course is more difficult as it requires a great amount of dedication and hard work from the entrant. During 2019, the pass rates for Part I and Part II were ~46% and ~59% respectively, which gives a fair indication of the exams’ difficulty level. In 2021, FRM will move to computer-based testing, and the Part II exam to held on 15th May 2021 will be its paper-based exam.

The MBA program can be either in a semester or trimester mode, and the duration of the course can vary in the range of 1 to 2 years, depending on the institutions and the type of program. The success rate of a candidate in this program depends on his GPA, test score, strong work ethics and internships, great recommendations by professors as well as industry professionals with whom he has rubbed his shoulders, and his leadership qualities and abilities to come out with an edge amongst his peers. Thus career prospects vary and depend on an individual’s talent and hard work.

Why pursue FRM?

FRM today is considered as an alternative option to CFA.CFA.The Chartered Financial Analyst (CFA®) Program offers a graduate-level curriculum and examination program designed to expand your working knowledge and practical skills related to investment decision-making. read more 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 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.

#Tip: Dedication and Patience are a must quality for a candidate to clear FRM exams.

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 looking to excel and make progress in their portfolio or desire a shift in their career with a more diversified, analytical, and challenging role in their careers. The syllabus of these certified courses have a much broader global perspective and has current relevance in today’s financial market scenario.

Why pursue an MBA?

MBA provides good business skills and is appropriate for you if you want to climb the corporate ladder.  With a degree in IT, Finance, or Marketing, it is worth the pain to study MBA as it will prepare you to excel in managerial roles. However, an MBA is a rigorous study course. It is vast in its syllabus, touching upon the various topics perhaps not in great detail but preparing you in general for diversification.

# Tip: It is, however, my observation that an MBA is a must as it prepares you for business entirely while a certification course is supplementary to an MBA enhancing your abilities, analytical skills, and ethical grounding.

Conclusion

Monetary issues guide our choices, and often lack of interest and talent is overridden in making a career choice. However, most repentant is the one who makes a career choice to go with the flow without adequately researching the various industries and the courses. Choose FRM if you are interested and passionate about Finance and Risk Management. Choose an MBA if you are interested in the management and business aspects of a company.

Reader Interactions

Comments

  1. Winnie says

    Thank you very much Dheeraj. Your articles are always amazing. I feel more informed and enlightened. Keep up the good work.

  2. Aditya chaturvedi says

    Hello sir,
    I am perusing frm course, I have done b.com and also a CA student. I want to know is there really good scope for frm after doing normal b.com or I want another courses, degrees to make good career. And what is its difficulty.

    • Dheeraj Vaidya says

      Hey Aditya,

      You need not worry too much about this as of now. You are already pursing CA which is one of the most sought after degrees. you are doing great :-)

      However, I have seen that in most cases, CA opt for CFA certification instead of FRM. I guess this could be due to common overall of curriculum of CFA with CA as well as their career choice of being in the Investment Management industry.

      Thanks,
      Dheeraj

  3. mich says

    hi.
    I am a finance degree graduate. working as an accounts assistant.
    this is clearly not my thing , and am would like to have a career change to the finance industry.
    can I take FRM as my first step to a career switch?
    Thanks

    • Dheeraj says

      Hi Mich,

      I hope you are not thinking of FRM just because of frustration in your current job. if you are interested in Risk Management profiles, then FRM can add lot of weight to your resume and help you in career switch.

      Thanks,
      Dheeraj

  4. radhe says

    Nice one

    • Dheeraj says

      Thanks Radhe :-)

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