Both, Financial Risk Manager (FRM) and Chartered Financial Analyst (CFA) are designated credentials that represent professionals who possess the knowledge in the field of finance and are capable of analyzing investment opportunities. Even though both the certifications are finance based, they are entirely different in nature and allow their holders to perform varied tasks and specialize in a different set of activities. Let us take a look at the differences between the two.
What are the Key Differences Between a CFA and FRM?
What is an FRM?
Financial risk management (FRM) certification is offered exclusively by the Global Association of Risk Professionals (GARP). This certification is recognized both nationally and internationally. Financial risk managers facilitate the assessment of an organization’s vulnerability to risks and potential threats and help develop strategies to minimize or offset it. Financial risk managers generally work in banking industries, private corporations, management firms, and public sector firms.
What is a CFA?
CFA is a certification that can be earned via the CFA Institute. CFAs exhibit a high level of expertise in the field of investment study. Some of their job titles include portfolio manager, research analyst, and investment bankers.
CFA vs FRM – Career Path Differences
Financial risk managers are in high demand because of their broad curriculum and skills, especially for managerial positions. A financial risk manager analyzes risk and figures out ways to subdue it within a company. They typically hold managerial and executive-level positions who concentrate on financial, credit, market, and investment risks.
CFA’s, on the other hand, is specialized in analysing investment opportunities and maximizing a firm’s profit, which can cast a wide net, career-wise. They typically work in hedge funds, investment banks, and corporate finance.
FRM or CFA: Why not have Both?
There is no particular reason why you can’t have both CFA and FRM certifications. It entirely depends on what you want to pursue careerwise. The most logical scenario for having both the credentials is you are a CFA and you are looking to specialize in risk management. Since FRM is a much more specialized designation, it could be advantageous for you to take up advanced financial risk management courses or basic risk management courses to attain adequate knowledge about the domain.
Remember, availing both the certifications is extremely difficult and time-consuming. It is advisable to take a peep into what you want to do with your career and pick one. After you have gained some industry experience, you can decide if it would be beneficial for you to pursue the other one.
CFA vs FRM – Which is better?
Both the designations are equally respectable; both CFA and FRM support financial professionals. Thus, neither one is better than the other; they are simply different from one another. While CFA is broader in scope, FRM focuses solely on assessing and managing the risk of an organization. If you choose FRM, you will need the guidance of advanced financial risk management courses; and if you prefer CFA, you will need to take a specialized course from a CFA Institute. But again, it completely depends on where your interests lie and what ticks you more.