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 vs FRM - Eligibility, Salary, Fees and Duration

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.