FRM vs CFA – The Differences between These Certifications

The financial services industry is a wide field and offers many different opportunities to those interested in the world of finance. There are therefore a number of different qualifications and certifications one can, and should, pursue to reach the top of the profession and industry. Two of the top, globally recognized, certifications in the financial industry include the FRM and CFA certifications. These certifications will take you to the top of your field, but students may not know which qualification is best for them. The Financial Risk Manager (FRM) Certification: Level I course offers fifty hours of online lectures and recordings to help you acquire the globally recognized FRM accreditation. It includes over eight hundred quiz questions and mock tests to ensure you are ready for the FRM level 1 examination. It also includes complimentary access to various webinars on Risk Management topics. The course also contains fifteen hours of summarized content to help you prepare for the examination. Fitch Learning offers the Complete CFA Level I – 2014 curriculum course that focuses on the four main areas of the CFA level 1 syllabus. Fitch Learning as a global leader in CFA training, offers top class innovative CFA instruction. With over seventy four hours of content, Fitch have broken down the intimidating CFA material into small, easy to understand lectures. Fitch Learning also offers insight into the industry as the company has ties with top investment banks and fund managers located around the globe.

FRM vs CFA Differences

There are a number of differences between the CFA and FRM. The biggest difference between the two certifications is perhaps the areas of specialty offered by the qualifications.

The CFA is more general in nature than the FRM. The CFA qualification focuses on ethics and standards, financial reporting and analysis, quantitative methods, fixed income and economics. It concentrates on subjects that are more general in application and ensures that candidates who receive the charter understand many facets of the financial industry. The CFA qualification consists of three levels of exams and also requires four years of relevant experience as a prerequisite of obtaining the charter.

The FRM on the other hand is more specialist in nature and specifically focuses on the management of risk. The course topics included in the FRM includes: market risk measurement and management, credit risk management, risk management and investment and current financial market issues. The FRM certification consists of two levels of exams and the certification also requires two years of relevant work experience.

Financial Risk Manager (FRM) Certification: Level II  includes recorded lessons covering all the FRM level 2 exam topics. The course also contains mock tests to help you prepare for the exam format and the exam itself. The course offers comprehensive reading material that can be studied and registration for the course enables students to take part in forums allowing students to interact with faculty members as well as other students.

The FRM is therefore shorter than the CFA however, this difference should not be seen as a measure of how difficult the certification is to obtain. In fact, many students report that the FRM is more difficult to obtain than the CFA charter.

FRM vs CFA Course Similarities

The CFA exam is offered by the American based CFA institute. Exams are held in various locations globally and level 1 and 2 exams are held twice a year. CFA exams are generally held in June and December of each year whilst FRM exams are generally held in May and November of each year. The CFA level 3 exam is an exception, being held only once a year. Exams for the CFA charter level 1 and 2 consist of multiple choice type questions and the level 3 exam consists of essay type questions as well as multiple choice questions.

The FRM certification is offered by the Global Association of Risk Professionals or GARP. Exams are also held globally at various testing locations.

As far as costs are concerned, the costs of registration and writing the exams required for the CFA charter as well as the FRM certification are similar in costs. Generally the CFA costs candidates between $1000 and $1300 and the FRM generally costs candidates between $ 1000 and $1400.  The pass rates between these two certifications are also similar with average pass rates ranging in the early to mid-forty percent range. The FRM level 1 and 2 exams also consist mainly of multiple choice questions.

Both courses cover quantitative methods as one of the examination topics but the courses focus on different aspects of the financial industry with the FRM focus specifically on risk management and assessment. Both courses also require enormous amounts of study time and dedication.

Career options for FRM vs CFA

As mentioned before, the CFA charter focuses on a wider area of the financial services industry than the FRM. The CFA charter therefore opens the doors to more career options than the FRM. Career options for a CFA charter holder include investment banker, investment analyst, portfolio management, chief level executives in the commerce and financial industries.

The FRM, with its narrower scope and focus offers more focused opportunities within the risk sectors of the financial industry. The FRM opens doors to careers involving the management or assessment of risk within the financial industry.

The CFA and FRM are Not Mutually Exclusive

These certifications are not mutually exclusive. For those with CFA charters who are interested in furthering their career opportunities within the risk sector of the financial industry, the FRM would offer a way of climbing the corporate ladder.

The CFA® Level I course helps you to prepare for the level 1 CFA exam by covering the topics of quantitative methods, ethical and professional standards, analysis and financial reporting. The course also explains corporate finance, equity investments, fixed income, derivatives, alternative investments and portfolio management. With over four hundred lectures on the various topics mentioned, the course ensures that students are prepared for the CFA level 1 exam. The course also provides comprehensive study and reading materials related to the various CFA level 1 topics.