FRM Part 1 Exam – 3-Month Study Plan

I sat and passed FRM Part 1 in May 2018, in Frankfurt. Easy as that sounds, make no mistake – it was a tough ride!

Even with an MSc. In Business Administration and specialty in corporate finance, I still knew I had a lot to do to crack FRM Part 1 in my first attempt. My five years of working experience as a financial consultant would definitely help, but deep down I felt that wasn’t enough. And as a full-time employee, I didn’t have a lot of free time. I had to strike a delicate balance between office work and study. With such a tight schedule, you have to make every minute count. For these reasons, I decided to dedicate three months to prep work.

If my profile sounds a lot like yours, you will find the following study formula immensely helpful.

What Do You Need?

As the very first step, you need to choose the materials you will use in your pursuit of the knowledge needed to pass the FRM Part 1 exam. Looking back in retrospect, my choice of prep material played an important role toward my success. And that’s because I didn’t just need books; No! I needed materials that would help me apply knowledge in a range of scenarios. I went out of my way and acquired learning materials even before I had officially registered for the exam. If you’re wondering just how many sets of prep materials are available, I have broken them down for you:

  1. Textbooks – there are three main alternatives
    1. GARP’s own books (can be purchased with your exam registration or at a later time; cost: USD 250-300 at!/frm/study-materials)
    2. 3rd party books – courtesy of a host of vendors. However, I’d advise you to do some research before making the order. Some vendors are better than others, no doubt about that!
    3. Direct sources – the textbooks and published research papers used by GARP while developing the FRM Part 1 curriculum (GARP provides the source of every chapter of its textbooks free of charge)
  2. Questions – the most critical aspect of your prep, if you ask me
    1. The GARP – provided sample test papers may be freely available, but there aren’t too many of them. In my opinion, these exams should be your supplements at best. To understand the application of all the main points in every chapter, you need much more. Perhaps even more crucially, beware that there are no questions in GARP’s textbooks.
    2. 3rd party question banks – available from vendors of FRM study material (e.g.,
    3. Direct sources – most of the textbooks used by GARP while assembling its own textbooks have questions after every chapter. (If you opt to take this route, you will emerge from it all with a rich vein of knowledge, but be sure to commit a lot more of your time to your prep. Not everything you might find there is relevant for the FRM Part 1 exam. And that’s partly why GARP has provided a list of learning objectives.)
  3. Other Performance tools – these include flashcards, quick sheets, mind maps, one-pagers, etc. Also qualified for this list are the study notes you will make in the study phase, but if you can outsource trustworthy summary notes, you might not need your own.

You have Your Prep Materials. What Next?

Preparing for the exam and having a full-time job (especially with dynamic workloads) can limit your ability to efficiently study the content and go through all the chapters in depth. I allocated two weeks to each book. In my experience, you might need more than a fortnight for each especially if you don’t have a strong financial background like me. It was a marathon! And of course, you cannot operate at 100% all the time. There were days when I wasn’t so productive. It happens to everyone, but the important thing is to fix your mind on the prize.

Weekends present an opportunity to catch up and make up for the time lost during the week. Personally, I spent nearly as much time studying over the weekend as I did in the rest of the week. Of course, this may not fit your schedule. And yes, you still need a round of golf once in a while. But you have to find your “weekend” and make the most out of it.

Do You Really Need to Peruse Through Every Page of the Official Study Books?

Doing so is highly recommended. In fact, if you have the resources and the motivation, it can be in your best interest to go through GARP’s sources (the relevant chapters from the list of recommended textbooks). However, the vast majority of the candidates (including me) do not have the time for such an extensive studying process.

That’s the reason why a vast majority of candidates go for GARP’s textbooks or 3rd party alternatives. Focusing precisely on what the exam covers is imperative for a time-efficient preparation. In addition, mind maps, formula sheets, or summaries offered by 3rd party vendors (or ideally your own notes) can be of help during the final revision.

In the course of studying for the FRM Part 1 exam, everyone will face different challenges. Your experience and mine cannot be the same. But there are certain things that you ought to know to make the whole process a lot more palatable to your specific situation. Here are my tips on how to approach each book:

Book 1 – Foundations of Risk Management

  1. Carefully go through the part covering past crises and “financial disasters” as well as the part about the principles for data aggregation & reporting. The milestones of modern financial history and the facts behind the events that shaped the financial industry – as we know it today – are easy fodder. These are sources of what I would call free marks in the exam. Not much changes in the actual exam. You only need to recite what happened in history, albeit in context. You can save yourself precious time for the quantitative section, which is more time-consuming.

Book 2 – Quantitative Analysis

  1. If you were not a mathematics major or did not take econometrics classes at university, you might have to dedicate quite a huge chunk of your time to this book. In a nutshell, there’s a lot of statistical terminologies, linear algebra, and a bit of calculus. You need to do a good amount of exercises and grasp, not just the concepts but also sufficiently master the steps followed in every type of problem. Essentially, an exam question is a combination of concepts. As such, understanding each point in isolation is key.
  2. Bayesian Analysis is my personal favourite. The abstract and the accompanying theory might appear rather straight-forward, but therein lies a labyrinth of complex and intriguing concepts, so watch out!
  3. As for the modeling chapters, be prepared to show that you know the definitions, understand the concepts, can differentiate the models, and are able to use the stated formulas.

Book 3 – Financial Markets & Products

The book is about the financial markets and financial products. It is similar to what you have learned either in the CFA level 1 exam or in your Bachelor in commerce classes, that is, if you were lucky enough. You have to know the content by heart… every part of it. A thorough revision of the content, chapter-related questions, as well as questions covering the book “as a whole”, are a must for your preparation.

Book 4 – Valuations & Risk Models

In my opinion, here lies the core of the FRM Program. You must understand the theory behind the different risk models and be able to apply it very quickly. You need to be able to perform VaR and duration calculations, derivatives pricing, etc., so you need to practice a lot.

What’s Up Next? Revision!

Your prep won’t stop once you have read all the study notes. In fact, the next phase – revision – is even more important. This is where you should endeavor to assimilate all the key points and test your understanding through exam-style questions. The following time plan would be helpful.

After study notes, you will have followed your study program for about two months. Naturally, the content you covered first has started to fade. The next three weeks present the time to consolidate all you have learned in the past two months by doing exercises on the full syllabus (1) constantly “refreshing” the knowledge and (2) training yourself to apply it quickly. I can assure you that in the exam, the clock moves fast!

I spent about a week and a half revising and answering questions on each topic. After that, I migrated to timed sets of 50 questions covering the full syllabus for a couple of days. I preferred sets of 50 questions for two simple reasons. First, I needed shorter correction cycles to be able to analyze my mistakes more often and to identify weak spots. This provided me with the opportunity to revisit the theory whenever I felt the need to. Secondly, working for four hours at full capacity, and “jumping” from topic to topic (yes, the questions on the exam are not sorted out!) is quite a challenge and it’s only wise to gradually build this skill. After this phase, I switched to a timed full set of 100 questions. This brings me to mock exams. In my opinion, mock exams present the phase that gave me the biggest bust of confidence.

Mock Exams

This is where it starts to get real… Normally, mock exams are more difficult than isolated questions and offer cross-topic problems like the ones you are going to face on the big day. I used a combination of AnalystPrep mock exams as well as GARP’s mock exams. Here, timing yourself is imperative. As a rule of thumb, don’t spend too much time on one question. If a question appears complex, move on to the next and come back to it later. Your score is determined by your performance across the whole exam.

On the last day, I didn’t study intensively. I took the time to quickly go through high-level mind maps and formula sheets. I would recommend something similar.

The Exam

Here, I can only share my own exam experience and some things I did not know and wished I would have beforehand.

  • During the exam, you are allowed to use only one calculator at any given time. Your spare one (if you have any) stays under your table/chair.
  • You are allowed to only have the exam sheet on your table, the (one) calculator and up to two HB pencils. Nothing more. The exam ticket and your identification card are on the side of the table available to be checked at any moment. The remaining of your stuff (wallet, keys, non-smart(!) watch, etc.) remains under your table/chair.
  • The HB pencils that you are allowed to use are given to you and are most basic. Your own pencils are not allowed (be aware of that!).
  • You do not need an eraser as correction guidelines do not require it.
  • You are allowed to make only one correction on the answer sheet since it is done by filling in a second answer and writing the letter of your final answer on a dedicated place on the side of the answer sheet.
  • During the exam, you will naturally need more than two pencils. Simply raise your hand and another set of two pencils will be brought to you (I personally used five sets of two!).
  • In the exam room, there might not be a clock on the wall. Therefore, you either bend over and look at your non-smart(!) watch under the table or use the proctor’s announcements every 30 minutes.
  • If you want to eat or drink something, you must go outside. You cannot even drink water in the exam room.

All in all, I would say that the controls are tighter than on the CFA Exams (I did the CFA L2 in 2015), but there are fewer people and, therefore, the rooms are smaller and quieter as compared to the CFA exam locations in Munich and Frankfurt. I took the FRM Part I exam in May 2018 in Frankfurt and we were about 120-150 people in a single conference room, whereas the CFA Exam was conducted in a single whole floor in an exhibition center building with a couple thousand candidates in the same area.

Final Word

To sum up my thoughts, have a plan and follow it! There is no way to overemphasize the importance of organizing your time. Neither when studying for the exam nor on the exam day itself. The FRM Part I curriculum comprises a broad area of topics that need to be covered which takes time. The time needed heavily depends on your background as well as on your ability to comprehend and apply new knowledge, so having a study plan tailored to your strengths and weaknesses will for sure ease your learning phase.

Photo by Andrew Neel on Unsplash


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