What You Need to Know About FRM vs. CFA

frm vs cfa financial risk manager versus certified financial adviser professionals

You know that if you want to take your finance career to the next level, you will need to get some kind of certification. The two top certifications for finance are FRM and CFA.

Both certifications will advance your career and increase your income. However, they’re different certifications that could take your career in a new and different direction.

That’s why you want to get clear on the different certifications and your career trajectory. Are you ready to wade into the FRM vs. CFA debate and discover which certification is right for you?

Let’s get started on the differences between FRM and CPA!

What Does FRM Mean?

Let’s start with the basics. FRM means Financial Risk Manager. With this certification, you’re basically a Navy SEAL of risk managers. That’s how elite and exclusive it is.

The FRM certification is run by the Global Association of Risk Professionals (GARP). You guessed it, they create standards for risk managers around the world. This is because when you’re at this level, you’re likely to be working for a multi-national organization.

Governments, banks, and companies are all looking at ways to reduce financial risk. They’re still absorbing the lessons learned during the mortgage and financial crisis over a decade ago and trying to make sure that it doesn’t happen again.

The role of risk managers is a critical part of that process. Risk managers analyze an organization’s financial risk. They communicate those risks to stakeholders and decision-makers in the organization.

It’s also their job to develop strategies to minimize the risk.

How to Get an FRM Certification

If you want to get an FRM certification, you must study and study hard. You must take two exams given by GARP. The first exam is Part I of the certification, which is 100 multiple-choice questions. Part II has 80 multiple-choice questions.

There are specific dates for these exams, usually in the Spring and Fall of each year. You can take Part I in the Fall, and Part II in the Spring. You can also try to take them both on the same day.

You might already feel a little confident since the exams are multiple choice. Keep in mind that about 45% of people pass Part I.

It’s difficult, and it will take a lot of work to pass. You’ll want to read this for more info on FRM.  

What’s a CFA Certification?

A CFA is a Chartered Financial Analyst.  This is a certification given by the CFA Institute. The CFA designation is good for finance professionals who want a broad overview of finance.

Where the FRM designation is all about risk management, a CFA designation covers a wide range of topics. You’ll study equity investments, ethics, portfolio management, corporate finance, and accounting as you prepare for the CFA exams.

It’s a good certification to have if your career track is to be in financial research, investment banking, or portfolio management. You could get work in a number of different places with this designation. In investment banking, you can specialize in taking companies public or work on mergers.

You could also help clients with financial planning, or manage mutual funds and other assets.

How to Become CFA Certified

Like the FRM certification, you will have to pass exams. Instead of two exams, you’ll have to pass three levels of exams for the CFA certification.

The Level I exam is given twice a year, usually in December and June. Levels II and III are only given once a year.

CFA vs. FRM: Which One Should You Choose?

In comparing the two certifications, it can be hard to know which one is right for you. It really depends on you. You’ll want to ask yourself what your experience is in finance and where you want to go.

If you’re not sure, you may want to take a CFA exam first because it is a broader perspective on finance. That can open more doors to you in the future.

Are you sure that you want to be in risk management? Then you should get the FRM certification. This is highly recommended.

You may opt to take the long road to get both certifications. After all, they don’t directly compete with each other. They could complement each other as you further your career.

That will take a lot of time and money, but in the end, you will be prepared for just about any type of finance career. You could easily take your experience as an investment banker with a CFM and become a risk manager at a larger institution with an FRM certification.

You also want to weigh the competitive advantage of having one or both certifications. One of the main advantages of being certified in finance is to separate you from a crowded list of job candidates in the world of finance.

Since an FRM is so specialized and difficult to obtain, you could stand out from the pack simply because you hold that designation.

Advance Your Career Today

When you work in finance, the sky is the limit as to where your career can go. You could stay in the job that you have now and be perfectly content.

However, if you want to grow your career as a financial advisor, you’ll want to get certified to take on more responsibility. When you’re comparing CFA vs. FRM certifications, it can be hard to tell which one is right for you.

It all depends on your experience and where you want your career to go. A CFA certification will give you a leg up on managing investments, portfolio management, accounting, and corporate finance. An FRM will prepare you well to manage an organization’s financial risk.

Either one will be sure to take your career to the next level. Want to know more about finance? Check the finance and investing sections of this blog often for more great financial and investment content.

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