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Which is a better course CFA OR FRM?

Better? Seriously? I'd answer as if which is more apt. I don't understand superior inferior classification.

Academicians compare the difficulty of FRM exams with that of actuary exams. FRM might be a notch or two easier, but there's no denial of the fact that it's a very technical syllabus. Unfortunately many aren't aware of the complex nature before signing up for the course, because people search for 'scope over the syllabus'. I have a friend who's studying financial engineering at Rutgers. To him, adapting and enjoying the FRM syllabus is something that comes naturally. He has that inclination for statistics, you see. But for the majority of us, an hour of studying stats will seem too long.

FRM - harder while studying, but easier to pass. CFA is easier to study (relatively), but harder to pass.

Despite all of it, you might wonder why I say that passing would be relatively easier. Well, there are so so many people who end up not completing the paper, many not understanding almost half of the questions in the exam and they still manage to get through! The pass % is good enough, if not low. Half pass the test. The pass marks wouldn't be that higher, and after all, there are no negative marks for wrong answers, so random marking could make your luck work on the D-day ;)

    Work Profile:

There are 132000 CFAs and 32000 Financial Risk Managers. Rightly so, the world requires lesser risk professionals. FRM is very specific and a specialised degree that not everyone is going to need. After FRM, you would work as a credit risk analyst or become a risk manager while a CFA would be seen all over, in diverse departments. Usually investment banks like Goldman, JP Morgan would hire CFAs while a risk manager would be hired by the credit rating agencies like S&P (Crisil) and corporate banks. Corporate banks need risk managers for designing structured products, where they combine derivative instruments for hedging strategies. So you're combining various products and analysing the impact of combining a long call with a short put. And if you're hearing these terms for the first time, there's a long way to go before you sign up for the exam.

    Syllabus:

Studying for FRM involves topics like Market Risk, Value at Risk (VAR), Credit Risk, Operation Risk, Basel norms and so on. Even though complex, it takes lesser time than CFA would. CFA is voluminous with ten topics, but FRM is just half of it! The time you devote studying for the two parts of FRM combined would be 400 hours. CFA level 2 alone would take that much time. Technical Topics from CFA like Fixed Income, Derivatives, Portfolio, Quants would form the knowledge body for the FRM. For someone who has studied the three levels of CFA, FRM Part 1 is overlapping. Though, I don't believe in piling up certificates just because they come without an incremental effort. Many suggest to take up the FRM only after the CFA level two. Level two not only sets the ground to digest the FRM but also the CFA exposure gives clarity regarding personal interests and likings. If you take up FRM Part one in November (between CFA Level 2 and 3), the risk management module of CFA Level 3 will be a repeat. If you're keen on it, then register for the FRM part one only after the CFA Level 2 results. The CFA Level 2 results come sometime in July third week while the FRM Part one's first deadline falls on the last day of July. And yes - it's not a coincidence but a strategic timing decision.

--------------William Jones

No. Both are different. However, both goes hand in hand. You need not be an FRM for getting into financial risk management. The same goes for CFA, you need not be a CFA to get into investment related fields. The FRM is a qualification for risk management professionals, particularly those who are involved in controlling, analyzing, or evaluating potential credit risk, liquidity risk and market risk as well as non-market related financial risks. For CFA, the qualification entails people who are infused with asset-management skills, can formulate investment strategies and perform investment analysis or creating new financial instruments (financial engineering). Now if you have both of them its like a cherry on top. You will be skilled in investment analysis with an expertise on risk management. As you think, there can be a lot of combinations, CFA+FRM, CFA+MBA, MBA+FRM, CA+CFA, CA+CFA+FRM or MBA+CFA+FRM. Each will give you a different set of skills that will support the other. However, always remember, Bulge bracket Investment banks, PE firms, Hedge Funds or MF companies usually pick up candidates with aptitude rather than looking for any specific qualification. It could be a grad from a top tier college, an Economics grad, MBAs or even engineers. The only different is the designation and pay. MBAs always commands the higher packages. An if you come with a combination, like an MBA+CFA/FRM, you can negotiate a higher one than the firms usually pay. There are no such hard and fast rule that firms will hire FRM guys for an opening in risk management. I tell you there are a bunch of people in global investment banks who have got social science background and they works for biggies in Investment banking. You should be more concerned with what value it will add to your existing knowledge of finance. That in turn will put you in a better place than anybody out there.

--------------------Sourav Ghosh

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CFA and FRM are certification dedicated to the field of finance but then these two courses are not similar, and therefore, the merit and the persistence level that you require for these are also different. But before opting for anyone or doing both, you must know career options, the job role that you can get, and what are the ways in which you can be a part of an adaptive and all-round learning environment. CFA teaches you the inside-out of finance, FRM is a designation which is dedicated to risk management. CFA is broad based whereas FRM is more specific.

But in the end it depends on which field you want to go into, both FRM and CFA are related to investment management. Whereas But then CFA has almost no value outside Finance.

CFA and FRM are offered by CFA Institute and GAARP.

CFA is flexible, you can study as you work full time. The curriculum will make you sharper and will prepare you for Portfolio Management or any investment related field. If cleared, you will be treated as an expert in investment domain. If your goal is to become a Portfolio Manager or go into the field of Equity Research or to investment domain, CFA will definitely help. But you need to study 1000+ hours to clear 3 levels which may seem very grueling while working full time simultaneously. Also to note CFA has almost no value outside finance. You also need to have 4 years of relevant experience to get the certification and it has almost no value outside finance. On an average it takes 3 years to complete.

FRM adds tremendous value which will help you become an expert in Financial Risk. FRM will get you jobs in Financial Modelling, Risk, Treasury and Financial Valuation and some others only. Other pointers to note are that it’s not only a theory course, but it teaches practical application as well. For FRM you need to have 2-year work experience in risk domain to be certified. Exams might be a little more difficult compared to CFA.

====================Chasity Miles

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