Most of the students who are in their college graduation and want to make a career in finance ask the question of whether they should pursue CFA or FRM or both as a career option.

It is one of the hottest topics during your college days and is a debate that has been there for a long time now. Let’s try to understand each course in detail and then decide as to what suits you the best.

Which is more SUitable?

Firstly I’ll be giving a glimpse into both the courses from a broad perspective.

CFA is the most generic international course in finance, as it covers every topic of finance in absolute detail and it is the most highly recognized and respected course in the field of finance throughout the world. CFA is best suited for students who want to build their career in :

  • Equity Research
  • Investment Banking
  • Mergers & Acquisitions
  • Private Equity
  • Corporate Finance
  • Portfolio Management
  • Financial Advisory

Roles related to equity research, portfolio management is where you research and identify some investments that best suits your client’s interests and manage their money in order to generate returns for them. Investment banking is where you help corporate companies in fund raising, consultation, Merger and Acquisitions, etc.

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FRM, on the other hand, is a very niche course that is focused entirely in risk management. FRM also is recognized internationally and is a highly respected course. FRM is conducted by GARP which was founded in the year 1996 and is headquartered in New Jersey U.S.A. FRM is best suited for profiles like :

  • Credit Risk
  • Market Risk
  • Operational Risk
  • Banking and Treasury
  • Quant Trading

All these roles might seem a little scary and confusing to some of you who are a complete newbie in financial markets. To give a brief on these roles related to risk management is where you access and analyze various types of risks and take precautionary measures to avoid risks beyond a certain limit.

Verdict – To sum it all up one should pursue FRM as a career option if he/she is more inclined towards risk management and quants. On the other hand, CFA as a career option should be pursued if one is more inclined towards equity markets. CFA also covers some portion of risk management but is not that deep as FRM is.

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Difference between CFA and FRM

CriteriaCFAFRM
EligibilityMust be in the final year or have a bachelor degree/ 4 years of work experience in any fieldNo work experience or educational qualification is required
Exam DetailsLevel – I 240 MCQ Questions Exams held in June & December Level – 2 120 MCQ Questions Exams held only in June Level – 3 10 essay type questions and 60 MCQ Questions Exams held only in JunePart – 1 100 MCQ Questions Exams held in May & November Part – 2  80 MCQ Questions Exams held in May & November
Passing RatesLevel – I     42% Level – 2    45% Level – 3    52%Part 1   43% Part 2   54%
Time taken2-3 Years1 year
Fees$450 Registration Fees (Valid Throughout) $700/$1,000/$1,350 for each level depending on the time of registration$400 Registration fees (Valid for 4 Years) $350/$475/$650 for each Part depending on the time of registration

Which is more Difficult CFA or FRM?

Candidates who have done both CFA & FRM usually state that FRM is comparatively more difficult as the questions in FRM are all application based as there is very little theory in FRM. Although the course structure of CFA is lengthier and takes much more time to prepare. The most common reason candidates say that FRM is more difficult is due to the use of advanced mathematics which is not required in CFA. So, if you are good in mathematics and you are keen on a future related to it, FRM is a better choice for you.

CFA and FRM Subjects

In total CFA has 10 subjects for Level 1 & 2and 7 subjects for Level 3

FRM has a total of 4 subjects for Part 1 & 5 subjects for Part 2 

CFAFRM
Ethical and Professional Standards (Level 1,2,3)Foundations of Risk Management (Part 1)
Quantitative Methods (Level 1,2)Quantitative analysis (Part 1)
Economics (Level 1,2,3)Financial Markets and Products (Part 1)
Financial Reporting and Analysis (Level 1,2)Valuations and Risk Models (Part 1)
Corporate Finance (Level 1,2)Market Risk Measurement and Management (Part 2)
Equity Investments (Level 1,2,3)Credit Risk Measurement and Management (Part 2)
Fixed Income (Level 1,2,3)Operational and integrated Risk Management (Part 2)
Derivatives (Level 1,2,3)Risk Management and Investment Management (Part 2)
Alternative Investments (Level 1,2,3)Current Issues in Financial Markets (Part 2)
Portfolio Management (Level 1,2,3)                                        –

Top few firms that recruit CFA and FRM

  • Deutsche bank
  • Citi Group
  • Goldman Sachs
  • J.P. Morgan Chase
  • Morgan Stanley
  • HDFC Bank
  • ICICI Bank
  • SBI Bank
  • Black Rock
  • Mirae Asset Management
  • Morning Star
  • Nomura
  • CRISIL
  • Care Ratings
  • Bloomberg
    And many more

Average CFA Salary/Package Vs FRM Salary in India

CertificationCFAFRM
Level  1 / Part 13- 4+ Lakhs P.A.3- 4+ Lakhs P.A.
Level  2 / Part 26- 10+ Lakhs P.A.6- 10+ Lakhs P.A.
Level 312+ Lakhs P.A.
Charter Holder12-18+ Lakhs P.A.12-16+ Lakhs P.A.

As you can see on the salary side both the courses are almost similar. Also, note these figures are based on assuming that the candidate is a fresher in the industry.

CA Manoj Goel
Author

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