Saturday, September 8, 2012

CFA "Chartered Financial Analyst" or FRM "Financial Risk Manager"

CFA chartered financial analyst versus FRM financial risk manager
CFA "Chartered Financial Analyst" and FRM "Financial Risk Manager" are the two very well-known certifications in the financial industry around the world. Many people from different academic backgrounds are pursuing these financial examinations to improve their knowledge in finance and more particularly in investment, many students in master degree or MBA are taking the CFA or the FRM at the same time as it is easier to pass the test when the curriculum at university covers parts of the CFA or FRM.

Differences Between the CFA and FRM?

-CFA "Chartered Financial Analyst" certification covers more and it teaches the finance from every angle, indeed the CFA is divided in 10 topics such as Corporate finance, Derivatives, portfolio management, Quantitative methods, etc...  and it will help you to learn how the different aspects of finance are linked.
-The FRM "Financial Risk Manager" certification is more dedicated as you noticed to Risk Management, and it will teach you how to assess risk in finance.
 The FRM was believed to be easier than the CFA as it was a single examination but since 2009 the FRM has two levels making it tougher to pass it.

What to choose between CFA and FRM certification?

First, you have to understand that the CFA takes a lot of time compared to the FRM, indeed the CFA takes at least 3 years if you pass all 3 levels exams at the first attempt, while the FRM is only divided into two exams. The self-study program of the CFA is significantly heavier and more exhaustive than the FRM, most of people who took both tests said that the CFA level I has more content than the two FRM levels.
For candidates without niche specialization in finance, the CFA will be the best option, indeed it teaches about all the topics such as Derivatives, corporate finance, risk management therefore it has a much broader scope of knowledge. For example if you want to pursue a career in portfolio management, investment banking the CFA will fit the best.
On the other hand, if you identified risk management as your future career, there is no doubt that it will  be more beneficial to study for the FRM, as it really teaches you in details the scope of Risk management.

Does it bring weight to your resume if you only hold a CFA level I or II?

According to the CFA institute, lot of candidate doesn't continue till the level III, if you are already working in the financial industry and you only hold the level I, it won't be really interesting, on the other hand if you have just graduated from a bachelor degree and you are looking for a job as a financial analyst then the level I will help you to get some value added to you resume, but don't forget that it is not the only factor, outstanding GPA and extra-curricular activities will also play a major role in the decision.
The CFA level II is considered to be equivalent to the FRM certification, and the CFA level II already shows you got the skills!
Moreover for non-finance background people such as engineers, the CFA designation will definitely boost up your resume and certify that you have decent financial knowledge.


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