If you want to have a solid career in finance field these days, there are two global certifications with the utmost respect: Chartered Financial Analyst (CFA) and Financial Risk Manager (FRM).
They both provide entry to professional and lucrative careers that are intellectually relevant, but also vary greatly in focus, career trajectory and skill-set.
If you’re having trouble choosing between the two, here’s a comprehensive guide that delves into their differences and benefits — and which might be better for your goals.
Table of Contents
Understanding the CFA and FRM Certifications
What is CFA?
CFA (Certified Financial Analyst) CFA is conducted by CFA Institute(USA) which considers itself to be the gold standard in investment profession. It covers a wide range of topics including financial statement analysis, asset valuation, investment management, corporate finance and ethical standards.
Professionals who are looking forward to establish careers in :
- Equity research
- Portfolio management
- Investment banking
- Corporate finance
- Wealth management
CFA program is all about valuation, asset classes and investment strategies – the qualification covers almost everything a candidate who wants to enter the buy-side or investment analysis world would need.
What is FRM?
FRM stands for Financial Risk Manager. It is known world widely for its skill in risk management, particularly market risk, credit risk, operational risk and quantitative analysis.
It is appropriate for professionals who want to be in:
- Risk management
- Treasury and trading desks
- Regulatory compliance
- Financial institutions and consulting firms
The qualification is very quantitative and covers assessing the valuation of various types of risks that are faced by financial institutions.
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CFA vs FRM: Key Differences
| Category | CFA | FRM |
| Offered By | CFA Institute (USA) | GARP (USA) |
| Duration | Average 3 years | 1–2 years |
| Levels | 3 Levels | 2 Parts |
| Focus Area | Investment analysis, portfolio management, corporate finance | Risk management, financial markets, quantitative methods |
| Pass Rate | Around 40–45% per level | Around 45–50% per part |
| Exam Frequency | Conducted multiple times a year | Conducted twice a year (May & November) |
| Work Experience Requirement | 4 years of professional experience | 2 years of relevant experience |
| Global Recognition | Very high | Very high |
| Average Preparation Time | 300–400 hours per level | 200–250 hours per part |
Syllabus Comparison
CFA Curriculum Highlights
The CFA syllabus is more comprehensive, with the following:
- Ethical and Professional Standards
- Quantitative Methods
- Economics
- Financial Reporting and Analysis
- Corporate Finance
- Equity Investments
- Fixed Income
- Derivatives and Alternative Investments
- Portfolio Management and Wealth Planning
At micro and macro levels, it emphasizes investment decision-making and financial analysis.
FRM Curriculum Highlights
The FRM curriculum is also more specialized and quantitatively intensive, built around the area of risk:
- Foundations of Risk Management
- Quantitative Analysis
- Financial Markets and Products
- Valuation and Risk Models
- Market Risk Measurement and Management
- Credit Risk Measurement and Management
- Operational and Integrated Risk Management
- Risk Management and Investment Management
It has more of a focus on use of mathematics and statistics than CFA.
Career Opportunities
After CFA
CFA charterholders typically work in:
- Analyst or Associate (at an investment bank)
- Portfolio management firms
- Hedge funds and private equity
- Corporate finance departments
- Consulting firms
Top Job Roles:
- Equity Research Analyst
- Portfolio Manager
- Investment Banker
- Financial Analyst
- Corporate Finance Manager
Average Salary:
CFA charterholders earn from USD 80,000 to USD 150,000 annually worldwide based on work experience and geography.
After FRM
- Common FRM roles include: Where do FRM professionals work?
- Banks and NBFCs
- Central banks and regulatory bodies
- Risk consulting firms
- Insurance companies
- Asset management companies
Top Job Roles:
- Risk Analyst / Risk Manager
- Market Risk Specialist
- Credit Risk Analyst
- Treasury Manager
- Quantitative Analyst
Average Salary:
On average, FRMs make USD 70,000–120,000 a year and go above USD 200,000 for senior risk managers.
CFA VS FRM Difficulty Level and Exam Pattern
CFA Exam Pattern
All levels will focus on theory, practice, and ethics in combination.
- Level I: Introduction to fundamental terms and instruments of investment.
- Level II: Application of the investment tools and valuation process
- Level III: Portfolio Management and Wealth Planning
The test lasts approximately 4.5 hours, and is taken on computer; it consists of multiple choice and case based questions.
FRM Exam Pattern
- Section I: Introduction, Quantitative Analysis, and Financial Markets
- Section ii: Advanced risk management issues and the use of techniques
The examinations are also computer-based and take 4 hours for each part. FRM exam questions are both quantitative and analytical in nature, asking test takers to combine calculations with concept analysis and to apply the two into a formula.
Which Certification Should You Choose?
Which one is for you depends on your goal, either career or interest:
- Go for CFA if you are seriously into investment analysis, portfolio management and financial modeling.
- Choose FRM if you really love risk, derivatives or regulation.
- If you want to get into investment banks, asset management firms, or portfolio management itself; then CFA fits better.
- If you like risk divisions, treasury teams, or from the regulatory organizations then, FRM would add lot of value.
- Notably, many finance professionals go for both these certifications – they first prepare and clear FRM (since it is a shorter program) and later finish off CFA to pump up their profile.
FAQs: CFA vs FRM
Both are hard, but in different ways. CFA is a bit wider and covers a lot bigger syllabus, whereas the material covered in FRM is more technical and quant. If you have an inclination towards math and statistics, then FRM could appear easier than CFA or else the latter is better.
Yes. Both are available to follow either while at college or immediately after graduating. However, you do not get the charter until you have finished the work experience (4 years for CFA, 2 years for FRM).
CFA charterholders also tend to have higher maximum earnings long term because they will get even more career options. However, those with FRM qualifications can also demand similar salaries for risk-focused roles.
CFA: Approximately 3,000-4000 USD (For all three levels).
FRM: Approximately USD 1,200–1,800 (both parts).
If you are interested in a career tracking the capital markets and want to work on wall street at a bank doing investment banking / corporate finance, I think CFA is better. For all risk management, treasury or compliance reasons FRM is the way to go.
CFA vs FRM Final Verdict
Both CFA and FRM are internationally reputed credentials that can boost your finance career to an all-new level.
- Choose CFA if you want to work as an investment professional (such as analysing markets, valuing companies, or managing portfolios).
- Choose FRM if you wish to build up a career as a risk professional, including identification, analysis and mitigation of financial risks.
If you are desirous of getting the best of both then pursuing CFA and FRM courses can help you become whole as a finance professional and gives you a unique advantage in the competitive world out there.
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