Comparing FRM and CFA: Essential Insights for Career Advancement
admin 28 Apr, 2024 Finance students aspiring for a thriving career often need help choosing between chartered financial analysis (CFA) and financial risk management (FRM). The finance field highly covets these two courses. Those who want to dive into the investment domain can opt for CFA, while aspiring risk professionals can pursue an FRM course. However, these lead to distinct paths. The key differences between these two courses are the concepts covered. The knowledge and skills imparted and imbibed vary as your goal to join various sectors of the finance domain is different.
FRM vs. CFA: Course Details
FRM specializes in risk measurement and management. Your focus will be on analysis and management. FRM focuses on credit risk, market risk, operational risk, and banking and treasury roles. The FRM course will be ideal if you are interested in quantitative risk analysis and assessment. You must spend one to two years to pursue this program. Some of the important subjects covered in the FRM include:
- Risk Measurement and Management
- Quantitative Analysis
- Financial Products and Markets
- Investment Management
- Risk Types
- Risk Modelling
- Other core topics
The risk segment in the finance space is progressing rapidly. Banks are no longer the sole employers of risk professionals. Once you finish an FRM course and have earned a certification, you can find jobs across various industries in India and globally. As a risk professional, you must remain updated on the positive impacts of automation and AI. Remaining up-to-date can streamline your tasks, making things simpler and more accurate in less time. Job sectors are emerging, and so are the top employers, so what are you worried about?
As a CFA aspirant, you must have a resounding grasp of investment analysis. You must also understand the complexities of portfolio management to make a mark in the finance domain.
Pursuing a CFA course as per the latest update for CFA 2024 aspirants and beyond will involve relevant core topics such as:
- Corporate Issuers
- Equity Investments
- Fixed Income
- Derivatives
- Alternative Investments
- Portfolio Management and Wealth Planning
- Ethical and Professional Standards
- Quantitative Methods
- Economics
- Financial Statement Analysis
You need at least two to three years to complete CFA, as all three levels are rigorous.Candidates planning to sit for the CFA exam in 2024 and beyond should be aware of the updated and modified curriculum. It offers a real-world edge and significant input from industry stalwaWe have reshaped the CFA curriculum to meet the evolving needs of the investment industry. The amendment also seeks to ensure that you, as acharterholder, remain relevant in the industry. You are job-ready once you pass the exams.
Top Employers for FRM Professionals
- Citigroup
- IBM
- Tata Consultancy Services
- Amazon
- Deloitte
- American Express
- Accenture
- Barclays
- KPMG
- Agricultural Bank of China
- Deutsche Bank
- NatWest Group
- UBS
- PwC
- HSBC
- & the like
Top Employers Who Recruit CFA Professionals
- Goldman Sachs Group, Inc.
- JPMorgan Chase
- Royal Bank of Canada
- BofA Securities
- UBS Group
- HSBC Holdings
- Wells Fargo and Company
- BlackRock
- TD Bank Financial Group
- Credit Suisse
- Deloitte
- Ernst and Young
- Citigroup
- PwC
- KPMG
- & the like
Exam Structure: FRM vs. CFA
The FRM and CFA exams have different formats and content.
FRM Exam:
- You must write Part I and Part II exams.
- Part I have a 4-hour computer-based testing session with 100 multiple-choice questions.
- When you write Part II, you must attempt 80 multiple-choice questions and complete the exam in 4 hours.
- Both parts do not have negative markings.
CFA Exam:
- Level 1 has 180 multiple-choice questions, divided into two sessions.
- Level 2 includes 22 vignettes and 88 multiple-choice questions split into two sessions.
- Level 3 comprises 11 essay questions and 11 item sets.
- Since February 2023, both sessions have included constructed response questions, offering three methods of answering: essay, numerical entry, and multiple-choice.
The FRM exam mainly consists of multiple-choice questions. Meanwhile, the CFA exams include a mix of multiple-choice and constructed response questions, with Level 3 incorporating essays.
FRM vs. CFA: Exam Dates or Month
- You can usually appear for FRM Part 1 three times a year. You can choose May, go for it mid-year in August, or choose the festive window in November.
- You can write the CFA exam in parts. You may take the CFA Level 1 exam in any of the four exam windows starting in February. You can choose May as the next exam window, followed by August and November.
FRM vs. CFA: Job Titles
Both certifications hold international recognition and respect within the finance realm.
Job Titles for FRM-certified Risk Professionals
- Risk Analyst
- Chief Risk Officer
- Risk Quantification Manager
- Credit Risk Specialist
- Market Risk Specialist
- Enterprise Risk Manager
- Operational Risk Analyst
- Regulatory Risk Manager
- Liquidity Risk Analyst
- Business Analyst
- Compliance Officer
- Loss Control Consultant
- Environment Compliance Specialist
- Claim Adjuster
- Internal Auditor
- & many more job titles
Jobs Titles for Charterholders
- Investment Banker
- Investment Manager
- Equity Trader
- Treasury Analyst
- Financial Planner
- Chief Financial Officer
- Chief Investment Officer
- Research Analyst
- Portfolio Manager
- Private Wealth Manager
- Asset Manager
- Data Scientist
- Credit Analyst
- Relationship Manager
- Financial Advisor
- and the list goes on.
FRM vs. CFA: Job Roles at a Glance
A risk professional, no matter which job role they fill, has to carry out several tasks, which broadly cover:
- Identify potential risks by analyzing vast volumes of data, observing existing processes, and encouraging interdepartmental communication.
- Research is needed to find potential threats in the operating domain and gauge an organization's risk appetite.
- Draft, prepare, and offer financial reports and presentations, including essential findings.
- Measure and control potential risks, and recommend solutions for avoiding or mitigating them.
- Develop appropriate risk assessment models.
- Forecast future trends and risk potential following a critical analysis of assets, investment decisions, and more.
- Offer red alerts and green flags to an organization’s senior management about decision-making.
An investment professional has a lot of duties and roles to play, which mostly involve:
- Carry out independent investment research and analysis.
- Scrutinize and examine previous investment decisions to weigh their pros and cons.
- Collaborate, network, and communicate with fund managers and industry practitioners to gain insights.
- Use high-end analytical tools to streamline investment management processes and aid in decision-making.
- Stay alert and updated with new financial trends, emerging opportunities, and potential risks.
- Create detailed and accurate financial reports for the management.
- Suggest recommendations and assist in policy formulation for enhancing investment portfolios.
- Keep everything documented and maintain seamless investment relationships with shareholders.
- Design financial models in alignment with investment goals.
FRM or CFA Preparation: Make it Smooth with NorthStar Academy!
Do you wish to pursue FRM or CFA and crack the corresponding exams? Let NorthStar Academy be your professional guide, helping you sail through your chosen finance course. Candidates love and trust NorthStar Academy for several reasons:
- Top-tier faculty with years of expertise, industry knowledge, and global recognition.
- The Academy collaborates with official content partners to offer candidates top-notch course materials.
- Flexible and amiable online learning environment.
- Mentors offer personalized mentoring and academic as well as emotional support.
- First-attempt pass rates are quite impressive.
- Interactive learning sessions make the exam-preparation process smooth.
- A series of mock tests, practice exams, and revision kits will prepare candidates for the crushing exams.
- Students can approach educators and instructors via WhatsApp.
- Candidates receive career advice, resume-building tips, and job placement assistance.
FAQs
- What salary can I expect as an FRM after 5 years of experience?
According to Ambitionbox, those with 5 years of work experience after obtaining FRM certification can draw anywhere between INR 18 lakh and INR 25 lakh. However, the actual salary depends on the organization and the position that you work in. Your expertise and experience do matter, though.
- Is FRM tougher than CFA?
Both exams are tough nuts to crack. You will find CFA more suitable if you have investment knowledge, focus on market fundamentals, and want to be an investment professional. In contrast, FRM might seem more manageable if you have a knack for the critical and the analytical and want to be a part of the risk segment in the finance domain.
- Should we do FRM before CFA?
There is an overlap in curriculum between the examinations. If you clear the first two levels of CFA and then pursue FRM Part 1, you will find it easier.
Conclusion
Preparing yourself to face the competition in the professional domain is not an easy task. You must understand what your true calling is. Everything, from choosing the right finance course to the online training institute to your approach to excelling in the FRM or CFA exam, matters. Your positive outlook and confidence in NorthStar Academy supporting your every move in your academic journey can help you be a go-getter and live your professional dreams. So, choose NorthStar Academy and enroll today!