Differences Between CFA and FRM

The primary difference between CFA and FRM is the topics they cover. CFA encompasses a broad range of subjects in finance like corporate finance, portfolio management, accounting, fixed incomeFixed IncomeFixed Income refers to those investments that pay fixed interests and dividends to the investors until maturity. Government and corporate bonds are examples of fixed income investments.read more, derivatives, etc. In contrast, FRM is a specialized exam for obtaining expertise in risk management. Additionally, CFA prepares you well for careers in Investment Banking, portfolio management, financial research. At the same time, FRM is suited for those who want to make a career in risk management in banks, treasury departments, or risk assessments.

If you have to choose between the two – CFA® or FRM, which one will you take?

CFA®, or FRM, or both? That is one of the most frequently asked questions when students decide to advance their careers in FinanceCareers In FinanceA appropriate degree, such as a B. Com, CPA, or MBA, is required to pursue a career in finance. Then one can choose from a variety of financial careers such as equity analyst, investment banking, asset management, risk management, corporate finance, and so on.read more. Making the right choice is important because each examination takes a lot of hard work, money, and of course, a lot of time. However, it is sometimes difficult for those not aware of its key differences.

I was fortunate to pass both the CFA® and FRM exams and was lucky to go through the examinations’ course details, benefits, and nuances. In the past, I have mentored hundreds of students for the CFA® and FRM exams. So, I thought of preparing a quick guide on CFA® vs. FRM to help students make an informed choice through this blog. To show you the key differences between CFA® and FRM, I have created an infographic to help you become well-versed.

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CFA vs. FRM Infographics

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CFA vs FRM – Comparative Table

Pro Tip: CFA vs. FRM

  • Broad vs. focussed – The key difference is that the CFA® curriculum covers a wide range of topics in finance. However, FRM is a specialized exam for gaining expertise in risk management.Job opportunities – This course is especially useful for those who want to establish a career in portfolio management, investment banking, portfolio management, or financial research. In addition, FRM opens up careers in Risk ManagementCareers In Risk ManagementA risk management personnel closely monitors data, trends, seeks and reports any risk regarding a company’s operations, implements required changes as well. Top 3 careers in risk management are -
  • Operations risk analyst, market risk analyst, credit risk analyst.
  • read more in banks, treasury departments, or risk assessments.Passing rates – Do not stress about the passing rates. Both the exams CFA® and FRM have a reasonable range of passing rates (30%-50%).Competition – CFA® exam has no direct competition from other providers. So, if you want to make a career in Investment BankingCareer In Investment BankingThe entry-level investment banking jobs for graduates mainly belong to categories such as markets, specialist markets, investment management, corporate banking, risk management, structured finance, technology, operations, private wealth management.read more or portfolio management, then the choice of CFA® is obvious. On the other hand, the FRM examination has direct competition from PRM (professional risk manager). So, if you want to make a career in risk management, you are spoilt for choices as you may want to choose between the two exams –financial riskFinancial RiskFinancial risk refers to the risk of losing funds and assets with the possibility of not being able to pay off the debt taken from creditors, banks and financial institutions. A firm may face this due to incompetent business decisions and practices, eventually leading to bankruptcy.read more.” url=”https://www.wallstreetmojo.com/frm-vs-prm/”]FRM or PRM[/wsm-tooltip]. I think FRM is rather a popular examination among the two, and for a newbie, it is sensible to appear for the FRM exam first.Examination tips – CFA® is easier for students with an accountingAccountingAccounting is the process of processing and recording financial information on behalf of a business, and it serves as the foundation for all subsequent financial statements.read more background. The CFA® curriculum relies heavily on accounting fundamentals. FRM examination, on the other hand, is somewhat easier for those who have a quantitative background as the majority of foundation-level topics are maths-based.I have written an exhaustive post on CFA® and examination tips – Tips on passing CFA® Examination and Important CFA Dates.If you are confused between CFA® vs. MBA, then click hereClick HereCFA focusses on imparting skills associated with Investment Management including Investment Analysis, Portfolio Strategy, Asset Allocation, and Corporate Finance. MBA focusses on overall Management Skills like Marketing, Operations, Finance, Human Resource Accounting, etc.read more.
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