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What is the Difference Between FRM® Certification and CFA® Charter? All you need to Know

What is the Difference Between FRM® Certification and CFA® Charter? All you need to Know

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.

What is FRM Certification?

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.

What is CFA Charter?

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.

What are the Similarities Between the FRM certification and the CFA Charter?

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.

What are the Difference Between FRM Certification and CFA Charter?

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.

What are the FRM Certification and CFA Charter Qualification Requirements?

To earn an FRM certification, you need to;

  1. You should take and pass level I and level II exams. You do not need a degree or any work experience to enroll in the course.
  2. Work a full-time job for two years in a financial risk position.
  3. Demonstrate your professional experience in financial risk management to GARP and submit it within five years after completing level II.

Requirements for earning a CFA charter are;

  1. To enroll in the CFA program, you should hold a bachelor’s degree or an equivalent or be in the final year of your undergraduate studies. You are also eligible to register for the CFA program if you have at least 4,000 hours of relevant work experience or 4,000 hours of the combined university and professional experience.
  2. Sit for and pass all three levels of the CFA exams.
  3. You should agree to abide by the CFA Institute Code of ethics and become a member of the institute by paying the fee.
  4. You should provide proof of 4,000 hours of full-time work experience in a position involving decision-making on investments or a product that contributes to the decision-making process. The work experience can be from before or after you did the CFA exam.

What are the Exam Formats and Pass Rates of FRM and CFA Exams?

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;

  • Level I: May sitting -42% and November sitting -46%
  • Level II: May sitting -61% and November sitting -59%

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;

  • Level I – 41% June sitting and 42 % December sitting
  • Level II – 44%
  • Level III – 56%

How to Choose between the FRM Certification and CFA Charter

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.