When considering a career in finance, two prominent certifications often come to mind: Chartered Financial Analyst (CFA) and Financial Risk Manager (FRM). Both are globally recognised and offer distinct advantages.
This blog provides a detailed comparison of CFA vs. FRM, syllabus, fees, salary, and other aspects, focusing on which career path to choose.
Overview of CFA and FRM
The CFA designation, awarded by the CFA Institute, emphasises investment management, financial analysis, and portfolio management. It is ideal for those aiming for roles as investment analysts, portfolio managers, or financial advisors.
Conversely, the FRM certification, offered by the Global Association of Risk Professionals (GARP), focuses on risk management and covers market, credit, and operational risk areas. It is suited for careers as risk analysts, risk managers, or credit risk specialists.
Syllabus breakdown of CFA vs. FRM
Choosing between CFA and understanding what curriculum it offers helps you determine which kind of financial management you want to learn. The CFA program offers a broad spectrum of financial topics, while the FRM focuses specifically on risk management.
CFA syllabus
CFA covers investment management and financial analysis. The syllabus includes:
Level I
- Ethical and Professional Standards
- Quantitative Methods
- Economics
- Financial Statement Analysis
- Corporate Issuers
- Equity Investments
- Fixed Income
- Derivatives
- Alternative Investments
- Portfolio Management
Level II
- Quantitative Methods
- Economics
- Financial Statement Analysis
- Corporate Issuers
- Equity Investments
- Fixed Income
- Derivatives
- Alternative Investments
- Portfolio Management
- Ethical and Professional Standards
Level III
- Asset Allocation
- Portfolio Construction
- Performance Measurement
- Derivatives and Risk Management
- Ethical and Professional Standards
- Pathways (Portfolio Management or Private Markets or Private Wealth)
FRM syllabus
FRM focuses on risk management and financial risks. The syllabus includes:
Part I
- Valuations and Risk Models
- Foundations of Risk Management
- Financial Markets and Products
- Quantitative Analysis
Part II
- Market Risk
- Operational Risk and Resiliency
- Credit Risk
- Current Issues in Financial Markets
- Risk Management and Investment Management
- Treasury and Liquidity Risk Management
Exam difficulty and structure
Both certifications are rigorous, but their structures differ. The CFA program requires a longer commitment due to its three levels, whereas the FRM can be completed more quickly but demands a strong grasp of risk management concepts.
| Aspect | CFA | FRM |
| Exam structure | Three sequential exams (Levels I, II, III) | Two sequential exams (Parts I and II) |
| Exam frequency |
|
|
| Time taken | 2-4 years to complete | 1-2 years to complete |
| Exam duration |
|
4 hours per part |
| Passing rates | Around 35-45% per level | Around 40-50% |
Which is more difficult?
- CFA is harder due to the three levels and a broad syllabus.
- FRM is tough but more specialised in risk management.
- CFA requires more years to complete, while FRM can be done in a shorter time.
Fees and costs
Cost is a significant factor in selecting between CFA vs. FRM in terms of which one is better for you. The CFA program generally incurs higher costs due to the additional exam level.
| Aspect | CFA | FRM | ||
| Enrolment fee | One-time fee of USD 350 | One-time fee of USD 400 | ||
| Exam fees | Level I and II |
|
Part I |
|
| Level III |
|
Part II |
|
|
| Total estimated cost | For all three levels, the cost is USD 3,470 to USD 8,970 (excluding study materials) | For both levels, the cost is USD 2,150 to USD 3,648 (excluding study materials) | ||
Salary prospects
Earning potential varies based on role, experience, and location.
| Aspect | Role | Average Salary |
| CFA charter holder | Investment Analyst | INR 2.5 – 31 lakhs |
| Portfolio Manager | INR 3 – 37 lakhs | |
| Financial Advisor | INR 1.2 – 8 lakhs | |
| Research Analyst | INR 1.8 – 10 lakhs | |
| FRM-certified professional | Credit Risk Analyst | INR 2.6 – 22 lakhs |
| Risk Manager | INR 5 – 25.7 lakhs | |
| Market Risk Analyst | INR 4.7 – 22 lakhs |
Conclusion
Choosing between CFA and FRM depends on your career objectives. If you’re interested in investment analysis and portfolio management, the CFA designation is suitable. If you prefer specialising in risk management, the FRM certification aligns with that goal. Both certifications offer valuable opportunities in the finance industry.
In summary, understanding the differences in the CFA vs. FRM syllabus, fees, salary, and exam structure is essential in making an informed career decision. Good luck!
FAQs
- Can I pursue both CFA and FRM together?
Many professionals pursue both to enhance their expertise in finance and risk management. However, managing study schedules for both demanding exams requires strong time management skills.
- Does CFA or FRM require work experience for certification?
Yes. CFA requires 4,000 hours of relevant work experience. On the other hand, FRM requires two years in risk management or related fields after passing both exam parts.
- Can CFA or FRM be completed online?
The CFA and FRM exams must be taken at designated testing centres. However, study materials, mock tests, and preparation courses are available online.
