CFA and FRM: Best Way to Get Both Quickly

Key Takeaways:

• While the CFA designation aims at a specific career path with a specialisation in investment management, the FRM designation addresses financial risk management.
• Career fields ranging from portfolio management, investment banking, and risk analysis to treasury or compliance will all benefit from the FRM designation.
• The curriculum and the learning modules in the CFA and FRM programs are relatively similar, covering topics like quantitative methods, derivatives, fixed income and portfolio risk management.

Comprehensive Summary on CFA and FRM:

• Specialities of FRM and CFA: CFA deals with investment management, and FRM with risk management. Both certifications are respected worldwide in the finance industry.
• Exam structure: The CFA is structured in three levels, each one with its own exam, whereas the FRM consists of two parts with their respective exams.
• Prerequisite Requirements: CFA has a requirement for either education or professional experience, with an additional 4,000 hours of relevant work experience; FRM has a requirement for two years upon passing its exams.
• Syllabus: The CFA covers topics of investments, portfolio management, financial analysis, etc., while the FRM curriculum covers the market, credit, operational and liquidity risks.
• Career Prospects for FRM and CFA: CFA offers a good range of investment banking, asset management and equity research jobs, while FRM jobs relate to financial risk analysis, treasury and compliance positions.
• Both Course FRM and CFA Correct: Investing in a combination of CFA and FRM is a solid bet in the long term, as it balances your knowledge and skills for investment analysis with those relevant to financial risk management.

So, you are aiming to become a finance professional? In that case, you might have heard of the two best globally renowned certifications: the Chartered Financial Analyst (CFA) charter and the Financial Risk Manager (FRM) certification. Both these certifications help to fast-track your career, but the goals that they achieve are entirely different.

The decision of which one you should opt for between the two totally depends on what your ultimate aims are. If you aspire to become a professional to manage a portfolio, perform research, and build assets, then you should consider what is CFA charter. Or are you looking to focus on identifying, measuring, and managing financial risk? In that case, you need to pursue the FRM certification.

In this article, I will delve into the disparities between CFA and FRM with regard to structure, eligibility criteria, syllabus, careers, income, and what would be the better strategy if you aim to attain both.

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What Are CFA and FRM?

Both CFA and FRM are global finance qualifications that seek to develop specific knowledge and skills. They cover, however, different areas of the financial industry.

FRM Certification: Introduction and Issuing Body

The FRM certification is offered by the Global Association of Risk Professionals (GARP). It is a major institution for risk management professionals internationally. It offers a programme designed to cover financial risk management, quantitative analysis, market risk, credit risk, operational risk, and regulatory frameworks.

FRM professionals are much sought after by banks, asset managers, consultants, FinTech, insurance companies, and regulatory bodies.

CFA Charter: Overview and Governing Body

The CFA charter is given by the CFA Institute, which is known worldwide and is committed to investment excellence and ethical practice.

What exactly is CFA? The CFA programme provides in-depth knowledge in investment analysis, portfolio management, financial reporting, ethics, economics, and wealth management. The programme comprises three exam levels, which provide progressively advanced knowledge in investment.

Getting a CFA certification is a benchmark for investment professionals.

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CFA vs FRM: Key Differences at a Glance

While both qualifications strengthen your finance profile, they cater to different career objectives.

Similarities Between CFA and FRM

• Globally recognised accreditations
•  Keen focus on ethics and professionalism
•  Supported by multi-national organisations
•  Tests administered on computers
•  A very large overlap of quantitative finance subjects
• Highly relevant if you seek to head up the Finance division.

Core Differences in breadth, focus and depth:

While the CFA curriculum intends to educate students about the entire world of investing, FRM focuses on the risks of investing.

To put the difference between these two programs simply: 

• CFA – the basis of investment decision-making
• FRM – the basis of investment risk management

This is often stated by industry professionals as “Invest with CFA, Manage Risks with FRM.”

Things to Consider Before Pursuing CFA and FRM

There are a couple of points you should consider before determining whether you should prepare for the CFA or the FRM. Among the most important points to consider are your interests in the field, job positions you seek, study capability, future career ambitions, etc.

CFA vs FRM Exam Format

An in-depth analysis on CFA exam format and FRM exam format is mandatory prior to choosing a designation between the two.

FRM Part I includes 100 questions, while Part II consists of 80 questions.

CFA and FRM: Eligibility and Work Experience Requirements

Eligibility for CFA Charter

As per the CFA Institute, eligible candidates should fulfil any of the following CFA eligibility criteria: have a Bachelor’s degree, be within 23 months of graduation, or have experience combined with college work. Candidates also have to have 4,000 hours of relevant professional work experience to get the charter.

Eligibility for FRM Charter

No academic qualifications are needed to appear for the FRM exams, but candidates are required to show two years of work experience to be issued the FRM certification, and this has to be acquired within ten years prior to passing the FRM Part II.

CFA and FRM: Syllabus

The CFA syllabus covers:

• Ethics and Professional Standards
• Quantitative Methods
• Equity Investments
• Fixed Income
• Derivatives
• Economics
• Financial Statement Analysis
• Corporate Issuers
• Alternative Investments
• Portfolio Management

The FRM syllabus covers:

• Market Risk
• Credit Risk
• Operational Risk and Resilience
• Foundations of Risk Management
• Quantitative Analysis
• Financial Markets and Products
• Valuation and Risk Models
• Liquidity and Treasury Risk
• Risk Management and Investment Management

CFA and FRM: Syllabus Overlap

Both CFA and FRM curricula share considerable overlap, especially in quantitative analysis, derivatives, fixed income, and portfolio risk management. As candidates tend to appear for both professional certifications at one time or another, preparation for the other will help refresh the concepts.

FRM Part I Topics & Its Integration with CFA Levels:

The topics that come in FRM Part I overlap with the following CFA Levels:

• CFA Level I: Quantitative Methods
• CFA Level I: Fixed Income
• CFA Level II: Derivatives
• CFA Level II: Portfolio Management

FRM Part II: Commonalities and linkages with CFAs

FRM Part II topics are common to the following:

• CFA Level III Portfolio Management
• Risk Management implementation
• Fixed Income strategy
• Investment management theory and practice

Pass Rates and difficulty for CFA and FRM:

Both courses are challenging. The CFA course is characterised by its breadth, and the FRM by its specialisation and depth on the quantitative side. Candidates generally state that:

• CFA Level I has a large and, hence, a difficult curriculum
• CFA Level II is difficult due to the complexity of the analysis
• FRM Part I has the depth and focus required for the quantitative knowledge
• FRM Part II tests the practical aspect

A majority of candidates feel that FRM requires understanding the risk concepts on a much deeper level, whereas for CFA, one needs comprehensive subject coverage.

CFA and FRM: Fee Structure

Both programmes offer early registration discounts.

CFA and FRM: Time Commitment and Study Hours

Most candidates spend:

• 300-350 hours on each CFA level
• Approximately 240 hours for each part of the FRM exam

CFA Vs FRM – Career Opportunities

What would be a normal CFA career path?

• Equity Research Analyst
• Portfolio Manager
• Investment Banker
• Wealth Manager
• Asset Manager

What would be a normal FRM career path?

• Risk Analyst
• Credit Risk Manager
• Market Risk Analyst
• Treasury Manager
• Model Validation Specialist

Why go for FRM rather than CFA?

FRM is best for:

• Banking risk functions
• Treasury management
• Credit risk
• Regulatory compliance
• Quantitative risk modeling

Who Should Pursue Both CFA and FRM?

Consider doing both if you want to establish breadth and depth in investments and risk management. These programs are particularly good for roles such as the following:

• Asset Management
• Investment Risk
• Portfolio Risk Analytics
• Chief Risk Officer paths
• Possible Plan of Action

The sequence chosen can potentially reduce study time by leveraging syllabus overlap.

Recommended Plan of Attack

The order of completion is key to shortening study time and maximising the overlap with the syllabus.

Which to Do First: CFA or FRM?

The CFA is usually better to start with, as it provides a general understanding of finance topics. The FRM could be the second to delve into deeper detail regarding risk. However, professionals with experience in the risk function may consider doing FRM first.

Timelines for completion of both CFA and FRM.

The generally realistic timeline is:

• Year 1 CFA Level I
• Year 2 FRM Part I and CFA Level II
• Year 3 FRM Part II and CFA Level III

How to Prepare for CFA and FRM 

Intelligence is a given; persistence will ensure your success.

Study materials and prep providers.

Resources:

• The official CFA Institute learning ecosystem.
•  GARP-approved study materials and prep providers.
• Practice exam sources and question banks

Exam Registration: Dates, Windows, and Deadlines

Pre-register at the earliest to ensure discounted fees and an earlier seat allocation.

While CFA offers test centres 3 times a year, FRM testing is offered 3 times a year (May, August and November).

• Avoiding fatigue and M25 phase:
• Take scheduled breaks
• Form study groups
• Take practice tests and measure how far you’ve gone
• Recognise small milestones and celebrate them

How to Avoid Burnout and Stay Motivated 

• Take regular breaks
• Join a study group
• Track your progress using mock exams
• Reward your achievements for completing small steps along the way

Remember, the CFA and FRM are marathons, not sprints.

CFA & FRM Salary: How much to expect

Your salary can vary with region, industry, experience, and role.

FRM Salary Average in India and the World

The FRM certified professionals earn an average of INR 22 Lakhs per year in India annually depending on their level of experience and the role they play.

Internationally, FRM professionals with years of experience can earn anywhere between $85,000 to $150,000 yearly.

CFA Salary Average in India and the World

In India, the CFA charter holders may earn anywhere from ₹8 to ₹65 LPA on average. Worldwide, the CFA professionals may earn anything between $100,000 to $150,000+ each year, especially if working as portfolio managers and in investment banking.

Top Employers Hiring CFA and FRM Professionals

Leading employers include the following:

• Morgan Stanley
• BlackRock
• HSBC
• JPMorgan Chase
• Goldman Sachs
• Deloitte

Conclusion

The decision whether to pursue CFA or FRM rests entirely on what you want from your career.

If your interest lies in gaining broad knowledge of investments, and your aspirations are in portfolio management, equity research or investment banking, the CFA certification would be the right choice.

If your passion is in risk management, regulatory bodies, treasury operations or quantitative analysis, then FRM would be a very focused path to take. Professionals aiming to be one step ahead in today’s competitive financial market should not be afraid to combine both CFA and FRM, resulting in a versatile profile.

FAQs on CFA and FRM

For a career in high finance, is FRM better than CFA?

No, not necessarily. FRM will give a higher value to a career in risk-focused roles, while CFA is for those pursuing investment or portfolio management positions.

Should I consider getting both CFA and FRM in order to maximise my career advantage?

If your career interest spans both investment and risk management, then pursuing both will surely bring your profile a higher standard.

Which one is more difficult: CFA or FRM?

While CFA is more spread out and time-consuming, FRM is specialised and quantitative.

Which of them (FRM or CFA holders) gets a better salary?

Typically, CFA charter holders are usually able to bag higher salaries due to the availability of roles geared towards investment.

Is the syllabus of FRM and CFA the same?

No. Though there is a lot of relevant material to the other in terms of quantitative techniques, derivatives, fixed income and portfolio management.

Does JP Morgan hire FRM & CFA professionals?

Yes, the globally renowned financial institutes such as JPMorgan hire CFA & FRM certification holders.

Can an average student pass the FRM exam without a mathematics background?

Yes, the FRM involves quantitative terms, but apart from an in-depth understanding and rigorous preparation, the degree of advanced mathematics doesn’t play any role.

What is the approximate total expenditure on preparing for the FRM & CFA exam?

Total cost, including preparation and registration fees of the FRM program, varies between 1.55 Lakh to 2.2 Lakh for both parts. For the CFA program, the total cost varies between 3.5 Lakh to 5.5 Lakh for all three levels.

Can both CFA and FRM be done simultaneously?

Yes, it is especially feasible because the syllabus is more or less the same but requires a focused and determined preparation plan due to the heavy involvement of time.

Current Role

Co-Founder & CEO at Zell Education

Education

• ACCA – Association of Chartered Certified Accountants, Finance (2011 – 2014)
• Bachelor of Commerce (BCom), Financial Markets from H.R. College Of Commerce & Economics (2010 – 2013)

Location

Mumbai, India

Expertise

ACCA Certified