CFA vs. FRM

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Difference between CFA and FRM

If you want to have a career as a financial advisor, there are quite a few requirements expected of you, one of the most important of which is certification by way of a standard test such as CFA and FRM. While these tests may be familiar to those who have gone through them already, others may not be as informed. Here then are the more important aspects of each. 

Profile

The CFA was originally intended primarily for equity analysts working in investment banking. Over the years however, the scope of the CFA has expanded to include consultants of different kinds. Nowadays, it isn't uncommon to see ads for consultants in which a CFA is given equal merit as an MBA.

As for FRM, it is typically an expected credential for bank personnel working in the capacity of risk manager. As with the CFA however, the scope of FRM has widened over the years, and it is now a common requirement even for potential applicants who aren't involved in risk management.

Value

A CFA is often considered equal to, or even more valuable than an MBA in Finance. The notable exception of course is when the MBA is earned from an intentionally accredited learning institution. CFA’s have also been proven to be beneficial for undergraduates who want to enter specific positions even without extensive prior experience.

As for the FRM, while it can really spruce up a candidate's resume, few positions actually require it specifically. While its importance to risk management candidates remains without question, it is more and more often being used to enhance a candidate’s portfolio instead of contributing to it directly.

In Training

The CFA curriculum tends to be very organized and specific in its content, while the FRM can be somewhat haphazard and uneven. Some of its readings are a bit outdated as well. Nevertheless, FRM does remain a relevant requirement, and its competencies in the areas of market, credit, operational risk, and investment risk remain valuable to this very day. In addition, FRM gives you the advantage of a solid grounding in traditional as well as modern theory.

Similarities and Differences

CFA

  • Originally intended primarily for equity analysts working in investment banking
  • Scope of the CFA has expanded to include consultants of different kinds
  • Given equal merit as an MBA
  • Beneficial for undergraduates who want to enter specific positions even without extensive prior experience

FRM

  • An expected credential for bank personnel working in the capacity of risk manager
  • Scope of FRM has widened over the years, and it is now a common requirement even for potential applicants who aren't involved in risk management
  • More often used to enhance a candidate’s portfolio instead of contributing to it directly

Which certification is more difficult?
  • CFA
  • FRM
 
 

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