In all fairness everyone has a different level of understanding. Although there are certain variables when it comes to FRM preparation:
- What is your educational background?
- What is your current occupation: student or working professional?
- How much basic knowledge do you have in the finance domain?
Upon answering these questions you might fall into one of these categories:
- Student with zero knowledge in finance with completely unrelated educational background.
- Working professional in finance domain looking to upskill
- Student with basic education in finance but zero working experience
- Working professional looking for a career transition being a complete stranger to financial concepts.
Depending on the category you fall into, you will find FRM to be either fairly easy or difficult. No matter what, FRM does require a significant amount of time to prepare even if you fall under 2nd category. So there is no “best” way, rather there is a way which is suitable for you to prepare for FRM. Having cleared both levels recently, I will draw up a guideline which will be useful for you despite which category you belong to:
1) Study the concepts in depth: The exam questions of FRM are designed to test your understanding. You may find the language to be tricky with all the jargon, so in order to understand the questions, studying the concepts is crucial.
2) Practice: Practice over as many varieties of questions as possible. This will help you find your weak spots, give you enough understanding of questions and help you gain confidence.
3) Get assistance: Finding a good mentor/coach is equally important who can guide you through the preparation especially when you have doubts. I suggest choosing a GARP approved exam prep provider. There is a list of providers from all over the world on the GARP website but here is my top suggestion for those in India: The WallStreet School, our online lectures are convenient to study at your own pace and provide you constant assistance on your FRM prep journey.
4) Study in the order of: your previous knowledge on the subject as well as have the right study materials with you. In my view, the following is the best sequence of study:
Part 1: As a total amateur to risk management or finance, I would start with Quantitative Analysis because the concepts are familiar and will help you get in the zone.Then you may proceed with Financial Markets and Products, which is an extensive book that will demand time and attention. Moving forward, pick up Valuation and Risk Models as personally it was a tough one to deal with.Finally, end with the Foundation of Risk Management foundation because it is simple to learn and won’t take much of your time.
Part 2: Begin with Market Risk and Credit Risk, as these two are of extreme importance due to the complicated material.Once you’ve finished these two, move on to books 5 and 4, Risk and Investment Management and Liquidity Risk, which are both short but challenging.After you’ve finished the major topics, you can carry on to the lighter sections of Operational Risk and Current Issues.Although studying operational risk might be intimidating due to all of the theories, it is not difficult once you grasp it
5) Practice Mock Exams: It is essential to test yourself before giving the actual exam as it would help you boost confidence and help you figure out the topics you need to work on. Make sure to at least give 4 FRM Mock Tests before the exam and give it in a strict exam setting. Be your own judge and be hard yourself while checking your answers. Understand where you did wrong and practise it.
I hope these guidelines will help you with planning your own study plan.
Goodluck!
