There are many opportunities if you are interested in building a career in the world of finance. The FRM® and and the CFA® are two top certifications in the financial industry that are internationally recognized.
Attaining these rigorous certifications can improve your chances of rising to the top of your field, but which qualification is best for you?
To help you decide, we have summarized the differences between these two certifications and the main reasons for pursuing them below.
The Chartered Financial Analyst® (CFA) credential is the professional qualification offered by the CFA® Institute for investment and finance professionals. A CFA® is recognized worldwide and is comparable to holding a master’s degree in finance with minors in economics, accounting, statistical analysis, or portfolio management. For more information about preparing for the exam, see our comparison of the Best CFA exam study materials.
Some of the main requirements for becoming a CFA® charter holder include completing a university degree (or equivalent), having four years of professional work experience, agreeing to follow the CFA® Institute’s Code of Ethics and Standards of Professional Conduct, passing all three levels of the CFA® exam, becoming a member of the CFA® Institute, and applying for membership in a local CFA® society. Here are more details concerning CFA requirements.
If you are interested in a career as an equity analyst, fund manager, asset management, or hedge fund manager, the CFA® is an excellent choice.
The Financial Risk Manager® (FRM®) designation is an international professional certification offered by the Global Association of Risk Professionals. To achieve the FRM® designation, you must complete a challenging, two-part, practice-oriented examination that covers the major topics in financial risk management. You must also demonstrate two years of relevant professional work experience. This designation is not as broad as the CFA® and is most useful for you if you focus on risk management in the financial industry.
See our comparison of the best FRM exam study materials.
CFA® vs FRM® Exams
The CFA® Exam covers a broader range of financial topics than the FRM. These include ethical and professional standards, quantitative methods, economics, financial reporting and analysis, equity investments, and fixed income. For more detail on how the different topics are weighted for this exam, click here.
You must complete each level of the CFA exam before you can move on to the next. The CFA Institute recommends preparing for each exam at least 6 months in advance and studying for at least 300 hours for each level. It takes the average candidate 4 years to obtain the credential.
The CFA® exam is only offered once a year in June (except the Level I exam, which is offered twice a year, in June and December). The exam consists of two three-hour sessions, one in the morning, the other in the afternoon. All candidates take the exam on the same day. The CFA Institute offers the exam at test centers in many locations around the world.
The FRM® Exam is different in that it focuses on the topic of risk management in various areas of the financial industry. Both parts of the FRM® Exam are pencil and paper multiple-choice exams. Offered in English only, this exam can only be taken on two days a year (in May and November.)
Each part of the FRM exam is four hours in length. You can choose to sit for one or both parts of the exam on the same day, however, if they fail Part I in the morning session, Part II of the exam (taken in the afternoon) will not be graded. Part I contains 100 multiple choice questions, and Part II contains 80 multiple choice questions. Be sure to compare the top FRM courses before you buy if you decide to tackle this exam.
FRM® vs CFA® SALARY
The median annual salary for a CFA® with one to four years of industry experience is approximately $68,383. In general, CFAs can expect to earn between $65,000 and $150,000 or more a year.
In comparison, the average salary for those with FRM® certification is approximately $86,000 a year.
Note that salaries will vary significantly according to type of employer, location, industry, and professional experience.
The financial services industry is an extensive field and a number of different qualifications and certifications can help you rise through the ranks to reach the top of the profession. Additional certifications will take time, energy and money to attain, but may very well be worth it if they give you a competitive edge in the job market.
If you ultimately decide that becoming a CFA® is the right path for you, then you need to prepare yourself as best as possible. One of the first steps in your preparation should be choosing a test prep that will lead you to success!