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If you are planning on joining the finance world and working as a financial analyst or with investments, the FRM certification or CFA charter could help you achieve your career goals. To make the right choice, you need to know the difference between the two.
The financial risk manager (FRM) certification offered by the Global Association of Risk Professionals (GARP) aims to give you in-depth knowledge and understanding of risk management concepts and gives you skills to excel in the fast-paced and ever-changing financial markets.
Attaining an FRM certification will give you an edge in the industry and provides employers confidence that you understand risk management and your skills meet international professional standards.
The CFA Institute offers chartered financial analyst (CFA) accreditation. The charter is for investment and financial professionals. Its curriculum is broader and covers topics in both investment and finance.
The curriculum covers portfolio management, financial analysis, derivatives, stocks, bonds, and ethics. The course is offered internationally and recognized as the gold standard for all financial analysts.
The most significant similarity between the FRM certification and the CFA charter is that the curriculum has progressive levels. You must pass the first set of exams before progress to the next level.
FRM certification and CFA charter are challenging professional courses that require you to study hard and put in a lot of hours. Although these courses are challenging, you can work hard and achieve the certification.
The FRM certification is more specialized towards investments and risk management. The curriculum includes quantitative analysis, financial markets and products, foundations of risk management, valuation and risk models, market risk management, credit risk management, operational and integrated risk management, investment risk management, and current issues in financial markets.
The CFA charter curriculum covers a broader range of topics on financial analysis. The core topics in the CFA charter curriculum include; ethical and professional standards, quantitative methods, economics, financial reporting and analysis, corporate finance, equity investments, fixed income, derivatives, alternative investments, and portfolio management.
Another difference is that they have different exam structures. FRM has two levels, while the CFA program has three levels of exams.
To earn an FRM certification, you need to;
Requirements for earning a CFA charter are;
If you are considering studying for a CFA charter or FRM course, one of your concerns will be on the exam formats and how difficult it is to pass the exam.
The FRM curriculum consists of two levels, and the exams are offered twice a year; in May and November. Due to the postponed 2020 exams, the exam schedule in 2021 will be different. Level I will be offered in May, July, and November, while Level II sittings will be May and December.
You should pass level I exams before you can proceed to the next level. The exam format in both level exams is multiple choice. The exam pass rate for FRM exams in 2019 was;
The CFA program curriculum has three levels. Due to the postponed 2020 examinations, there will be more testing windows in 2021. Starting in 2022, the CFA Institute will offer Level I four times and Levels II and III twice a year.
Levels I and II CFA exams format are multiple choice-based, while level III CFA exam has multiple choice and written portions. The CFA Institute provided the pass rates for 2019 sitting as;
After looking at the differences and similarities between FRM certification and CFA charter, you should be closer to making a choice. Your choice will depend on the role you play as a financial analyst.
FRM certificate holders usually hold managerial and executive positions that focus on risk management and investment risk assessment. The job designations available to you will include credit risk manager and regulatory risk manager.
CFA charter holders are better suited to managing portfolios, becoming a financial risk analyst, or financial adviser.
If you are interested in both courses, you do not have to choose one over the other. You can hold both FRM certification and be a CFA charter holder. Regardless of the decision you make, you can get all the resources you need to succeed at Analystprep.com. We will help you achieve all your professional financial accreditations.
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