No matter which one you choose, actually earning the credential will require huge commitments in time, effort, and money (especially if you have to retake the exams).
In a nutshell, the difference between the CFA and FRM designations comes down to focus and interest. If you’re passionate about and interested in the assessment and management of financial risk, then the FRM designation is tailor-made for you. On the other hand, the CFA charter provides a thorough education on a broad range of financial analysis and investment topics and can lead to a wider range of career prospects, not to mention a higher salary.
Here’s an overview of how the two credentials compare:
|Administered By||GARP||CFA Institute|
|Exam Components||2 Parts||3 Levels|
|Study Hours||150-200 Hours Per Part||300+ Hours Per Level|
|Exam Pass Rates||Part I: 45.9%
Part II: 58.6%
|Level I: 38%
Level II: 43%
Level III: 54%
|Possible Job Roles||Risk Manager
Credit Risk Analyst
Chief Risk Officer
• Parts I and II of the FRM exam
Level 1 Exam (one of the three):
Levels 2 and 3 Exam:
CFA® Program Exam Difficulty
Each level of the CFA Program Exam is considered extremely difficult.
CFA Level 1 exam difficulty is primarily dependent on your educational and professional background, i.e. if you have a finance or statistics degree, you will have an easier time than someone with a philosophy degree.
Level 2 is considered the most difficult as the content is discussed in much finer detail.
Level 3 is also considered extremely difficult, although less so than the Level 2 exam. The Level 3 exam includes short answer, multiple choice, and long answer questions. Learn more about the exam curriculum and topic weights by exam level in our CFA Program Overview.
FRM® Exam Difficulty
Both parts of the FRM exam are considered extremely difficult.
The FRM Part 1 exam covers the foundations of risk management, quantitative analysis, financial markets and products, and valuation and risk models.
Part 2 covers market risk, operational risk and residency, credit risk, liquidity and treasury risk, and investment risk.
Here are some advantages of earning the CFA Charter:
- Universal recognition and prestigious reputation
- Broad-based foundational background in finance
- Enhances opportunities for higher paying career paths
- Low financial cost to attain
And, here are some advantages of earning the FRM designation:
- Specialized certification that provides opportunities for advanced careers paths in financial risk management
- Access to networking opportunities with other FRMs
- Certification with growing interest and credibility
- Strong knowledge and comprehensive of financial risk concepts that clearly sets you apart from your competition.
CFA or FRM: Why Not Both?
Yes, why not both the FRM and the CFA? While it will take quite a bit of time to earn the CFA and FRM together, it’s clear that they both provide unique value for finance professionals. Together, they can help you to truly stand out versus your peers, especially as the finance space becomes more complicated due to regulations and innovation.
How do CFA and FRM work together as stackable credentials?
There are many benefits to obtaining both a CFA and FRM. If you choose to pursue both, you will gain a broad and deep understanding of investment and capital markets processes. Many FRM-certified risk managers are also CFAs, and this combination can really advance your career. Learn some of the basics about how and why so many financial professionals pursue their CFA in this post.
One example we can look to is Steve, who holds both certifications. He has had a very successful career in risk and portfolio management and is only in his mid-30s. He is currently the head of analytics for a global risk solutions provider, and the knowledge he obtained through the CFA in particular has enabled him to understand a wide range of critical topics such as portfolio construction and the nuances of derivatives. He has a wide variety of choices on how to advance his career from here.
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