CFA vs FRM - What is the Difference between CFA and FRM?

Last Updated On -03 Jul 2024

Students in finance who want to develop a successful profession sometimes get caught between CFA and FRM, the dilemma of CFA vs FRM which one is better? While both courses are quite popular in the finance industry, they can lead you in many different routes. The fundamental difference between the two study models is the topic content that you will cover.

The Global Association of Risk Professionals (GARP) manages the Financial Risk Manager (FRM) Certification, which is widely regarded as the most appropriate financial risk management certificate in international capital markets. The Chartered Financial Analyst (CFA) curriculum focuses on making investments, instruments such as derivatives, fixed-income securities, corporate finance, and analysis. After completion of the FRM course, individuals can pursue a career as a Finance Manager, Corporate Risk Officer, or Investment Controller

Opportunities, advancement, and pay increases will come with any career path you take, be it in CFA or FRM. However, if an individual has to choose between the two courses, he or she has to first examine the main distinctions between them.

FRM vs CFA - Which Course is Better for you?

CFA and FRM both have their characteristics when they’re to be compared. Several factors like career opportunities, FRM syllabus, and FRM vs CFA difficulty come into play.

Course Duration:

CFA usually takes 2 to 3 years to complete all three levels, however, FRM may be finished in 1 to 2 years with Part I and Part II examinations.

Difficulty Level (passing percentage):

The CFA examination pass rate ranges from 22% to 49% at level 1 but FRM has a passing rate of 45% for Part I and 63% for Part II.

Eligibility Criteria:

CFA aspirants can take Level 1 while in their last year of college or with relevant work experience. Undergraduates in their last year of college can apply for FRM; however, they must finish Parts 1 and 2 within 5 years and have two years of relevant experience.

Career Opportunities:

With the CFA credential, you may be able to work as an investment banking professional, hedge fund manager, financial analyst, project manager, or finance analyst. FRM, on the other hand, is intended to prepare individuals for positions such as Risk Analysis Manager, Market Regulatory Analyst, etc.

These aspects might help individuals in choosing the certification that lines up with their career objectives and interests.

The CFA course is comprehensive in the realm of finance, covering everything from investments to risk management. FRM is a specialized training that allows you to analyze price risks and incorporate them into all financial choices made by your company. Following the epidemic, demand for both of those specialists has risen. While every firm has an investment specialist to direct their finances, they also require a FRM manager to guarantee that their funds are safe and secure.

CFA vs FRM - Which one is more Difficult?

CFA is simpler for students with prior investment experience. Its curriculum is mostly focused on investing and market basics. The FRM course, on the other hand, is a little easier for people with a quantitative background because the majority of the foundational themes are statistical and mathematical.

FRM and CFA are both good certificates in their own right, but when combined, they allow you to construct a spectacular résumé and significantly expand your opportunities for quality jobs. However, it is suggested that you only pursue FRM if your interests lay in the risk management subject covered in the CFA course initially because this area is examined microscopically in the FRM course.

The FRM syllabus is broken into two portions that cover five key subjects. The first portion focuses on understanding the fundamentals of risk management, while the second section digs into quantitative analysis and financial markets.

The FRM curriculum is all-inclusive and includes key risk management topics such as market risk, credit risk, operational risk, and risk modeling methodologies. Candidates should be proficient and acquisitive in grasping complicated mathematical methods and likewise be able to take into account the difficulties of regulatory environments and financial markets. Many candidates find the FRM course thought-provoking since it is math-oriented.

The table below shows various aspects including FRM Difficulty vs CFA Difficulty

Aspect	CFA	FRM
Target Audience	Students with prior investment experience	People with a quantitative background
Curriculum Focus	Investing and market basics	Statistical and mathematical foundations
Certificate Combination	Can be combined with FRM for enhanced resume	Enhances job opportunities when combined with CFA
Interest Alignment	Pursue if interested in risk management	Microscopic examination of risk management in CFA course
Syllabus Structure	Single curriculum	Broken into two portions covering five key subjects
Key Subjects	-	Fundamentals of risk management, quantitative analysis, financial markets
Inclusivity	-	Includes market risk, credit risk, operational risk, risk modeling methodologies
Difficulty	Simpler for those with investment experience	Thought-provoking, math-oriented

Conclusion

In conclusion, while both the Chartered Financial Analyst (CFA) and Financial Risk Manager (FRM) certificates provide essential knowledge in the finance business, they target different skill sets and career objectives. CFA is appropriate for persons with past investment experience wanting a thorough grasp of investing and market fundamentals, whilst FRM is more suited to those with a quantitative background eager to dig deeply into risk management and mathematical analysis.

The decision between CFA and FRM is based on personal interests, career goals, and ability, with each qualification providing distinct prospects for professional development in the dynamic sector of finance.

Frequently Asked Questions (FAQs)

Is FRM harder than CFA?

The CFA curriculum is more extensive. This is one of the reasons why some parts of FRM could appear a little dry. Based on the difficulty level of the questions, both the FRM Part 1 and Part 2 tests are thought to be slightly more challenging than the CFA Level 1 exam.

Should I do both CFA and FRM?

FRM specializes in risk assessment and management, whereas CFA focuses on investing. If you want to obtain a CFA with a focus on risk management, both CFA and FRM are good.

Is FRM worth it in India?

Yes, a FRM certification can lead to various opportunities in finance and analytics, since it emphasizes quantitative thinking and applied statistics.

Are the FRM and CFA syllabi the same?

A significant part of the FRM exam is covered by the CFA syllabus, with most of the overlap between these designations found in the FRM Part 1 exam. We estimate that about 55% of FRM Part 1 is covered by the CFA program (all 3 levels), whereas that figure drops to about 15% for FRM Part 2

Can I crack FRM without coaching?

Certainly, one may pass FRM exams without receiving any coaching. This is for people with an extensive understanding of finance and a background in risk and statistics. If you are a fresher, it is advised that you get instruction because you have very little or no grasp of the principles.

Are 3 months enough for FRM Part 2?

Yes, you can study for both the FRM Level 1 and Level 2 tests in 3-4 months, but it will be a rigorous procedure requiring a very disciplined approach.

Which is easy CA or CFA?

The CFA course takes at least two years or more to finish. CA is regarded as the most difficult course in the world, with an average passing rate of 0.5%. CFA has a substantially greater passing percentage than CA. The average pass percentage appears to be 10%.