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 course or both as a career option. Every prospective or current financial professional has probably encountered this question.
Both CFA and FRM need significant time and financial investment. While these two are the crown jewels of finance, they deal with very different areas of the industry. Since CFA is one of the most popular course among students from Finance and Accounting stream, there are comparison between CFA vs CA and CFA vs ACCA.
It is one of the hottest topics during your college days and is a debate that has been there for a long time now. Before you choose one, you should understand what each course entails and which one would be the best fit for your career.
Let’s try to understand each course in detail and then decide as to what suits you the best.
Difference between CFA and FRM
Firstly I’ll be giving a glimpse into both the courses from a broad perspective.
What is CFA
Chartered Financial Analyst is the most generic international course in finance, as it covers every topic of finance in absolute detail. CFA revolves around the subjects of investment banking and portfolio management.
As a CFA, you would be responsible for analysing the financial performance of your clients, developing and implementing the tools for the portfolios. The CFA candidates are required to pass Level I, II and III to complete the course along with 3-4 years of experience.
What is FRM
Financial Risk Manager (FRM) is the study of risk analysis and management. As a FRM you would be responsible for identifying and mitigating risks faced by the companies. You would also be developing and validating risk models.
Some of the main topics that you would be dealing with while preparing for this examination are market risk, credit risk, liquidity risk, valuations and risk models. To become a FRM holder, the candidate has to clear two rigorous examinations as well as provide two years of work experience in the financial risk or relevant field.
FRM and CFA Exam Fees
FRM Course Fees:
- There is a one-time enrollment fee of USD 400.
- Exam fee for Part 1 and Part 2 will cost you around USD 600 as an early bird.
- The standard fee for Part 1 as well as Par 2 is USD 800
- In total, it costs around USD 1000 to USD 1200 to register for the FRM exam.
CFA Course Fees:
- One time enrollment fee is USD 350 and is not applicable for subsequent exams.
- Early registration for each level is around USD 900 and standard fee is USD 1200.
- Rescheduling fee is applicable for USD 250.
CFA vs FRM Salary – Average & Charter Holder Salary
| Certification | CFA | FRM |
| Level 1 / Part 1 | 3 – 4+ Lakhs P.A. | 3 – 4+ Lakhs P.A. |
| Level 2 / Part 2 | 6 – 10+ Lakhs P.A. | 6 – 10+ Lakhs P.A. |
| Level 3 | 12+ Lakhs P.A. | – |
| Charter Holder | 12 – 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.
CFA average salary in India is between Rs 6 lacs and Rs 9 lacs for a newbie with no previous relevant experience. This number doubles as you earn experience.
Average salary of FRM ranges from Rs 5 lacs to Rs Rs 8 lakhs as a fresher. Depending on the risk profile along with the experience level, this may vary and increase.
CFA and FRM Exam Format
Exam Structure of FRM:
Part I :-
- Computer Based Testing (CBT) of four hours
- 100 questions of multiple-choice questions
- No negative marking
Part 2 :-
- Computer Based Testing (CBT) of four hours
- 80 questions of multiple-choice questions
- No negative marking
Exam Structure of CFA:
Level 1:-
- 180 multiple choice questions split in two sessions
- Each session is of 2 hours and 15 minutes
- First session covers topics relating to: ethics and professional standards, quantitative methods, economics, and financial statement analysis.
- Second session covers topics relating to: corporate issuers, equity, fixed income, derivatives, and portfolio management.
Level 2:-
- 22 vignettes and 88 multiple choice questions split in two sessions
- Each session is of 2 hours and 12 minutes, a total duration of 4 hours and 24 minutes with optional break in between.
Level 3:-
- 11 essay questions and 11 item sets for 12 points each/
- Each session is of 2 hours and 12 minutes, a total duration of 4 hours and 24 minutes with optional break in between.
- There are some new changes which are effective from February 2023.
- Unlike earlier, constructed response type questions or essay questions will be mixed into both sessions.
- There are 3 ways to answer constructed response questions: essay, numerical entry and multiple-choice.
Exam Passing Percentage (FRM & CFA)
FRM – According to GARP, passing rates for FRM November 2022 Part 1 and Part 2 are 50% and 59% respectively.
CFA – The CFA institute has provided with the average 10 year passing rate for
- Level 1: 41%
- Level 2: 45%
- Level 3: 52%
Post Exam Requirements
FRM – After clearing the two examinations of FRM, candidates are required to provide two years of relevant work experience in financial risks within 5 years.
CFA – Candidates must have 4000 hours of work experience, completed within a minimum of 36 months in evaluating financial data and reports as a part of the investment-decision making process.
CFA & FRM Syllabus
CFA Subjects – In total CFA has 10 subjects for Level 1 & 2and 7 subjects for Level 3
FRM Subjects – FRM has a total of 4 subjects for Part 1 & 5 subjects for Part 2
| CFA | FRM |
| 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) | – |
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 vs FRM Career Options
CFA Job Roles
The main profiles that you can get a job into are investment banker, financial analyst, financial advisor, and relationship manager.
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.
FRM Job Roles
Financial Risk Manager, on the other hand, is a very niche course that is focused entirely in risk management. The job perspectives after completion of FRM are risk manager, financial risk consultant and risk analyst. 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.
Career 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.
Top Firms in India Hiring CFA & 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
My Last Two Scents
While the CFA covers a wide range of subjects and topics in finance, economics, and accounting, the FRM is primarily focused on valuation, risk models, and risk management. There are many topics that overlap between CFA and FRM, but the latter goes into more depth.
Knowing where your interests and skills lie is critical when deciding between these two options. Keep in mind that these qualifications are merely a value-add to your CV; what is more important is the actual application of your knowledge and skills.
A successful career requires in-depth knowledge of the subject matter and a thorough comprehension of the key concepts. We at the WallStreet School passionately believe in this philosophy and are always there to assist you in the pursuit of a bright future.
