Overview
One question I have come across again and again during my career in education industry is which professional finance course students should take, Chartered Financial Analyst ® (most commonly called International CFA in India) or Financial Risk Manager ®. Quite often students don’t know what these courses mean and what career opportunities open-up after clearing these courses. This blog would help students in understanding this area of discussion. We hope this becomes cornerstone in career of Finance Professionals who are seeking clarity before investing their time and energy in the educational assets.
What you can expect from this blog:
§ Description of Courses
§ How many people take these courses?
§ What career paths open after clearing these exams?
§ How much these exams cost?
§ Who can register for this exam?
§ How much preparation time it takes to complete these exams?
§ What study material is present?
§ Where can you go for preparation?
§ Summary
§ Discussion Forum
§ About ItsCONCEPTS
Course description
Chartered Financial Analyst ® is a consummative course in Finance. Started in 1963 it has seen 5 decades of expert finishing, bringing it in the present shape. Many countries and firms have made it mandatory to take CFA® charter or at least clear some levels of CFA® before practicing career in Investment Banking. In its present form, CFA® Institute divides course into 3 levels; covering below mentioned four broad subject categories. ‘Ethical and Professional Standards’ is a consistent constituent in all three exams, however, ‘Investment Tools’ has wider presence in Level 2 and ‘Asset Classes’ and ‘Portfolio Management’ in Level 3.
Subject Categories in CFA® Program:
1. Ethical and Professional Standards
2. Investment Tools
3. Asset Classes
4. Portfolio Management and Wealth Management
According to CFA® Institute, following is the percentages of various subjects across 3 levels of exam.
Quite visibly the spread of this exam is very vast and it touches nearly all fields of Finance
Topic Area | Level I | Level II | Level III |
Ethical and Professional Standards | 15 | 10 | 10 |
Quantitative Methods | 12 | 5-10 | 0 |
Economics | 10 | 5-10 | 0 |
Financial Reporting and Analysis | 20 | 15-25 | 0 |
Corporate Finance | 8 | 5-15 | 0 |
Investment Tools | 50 | 30-60 | 0 |
Equity Investments | 10 | 20-30 | 5-15 |
Fixed Income Investments | 12 | 5-15 | 10-20 |
Derivatives | 5 | 5-15 | 5-15 |
Alternative Investments | 3 | 5-15 | 5-15 |
Asset Valuation | 30 | 35-75 | 35-45 |
Portfolio Management and Wealth Planning | 5 | 5-15 | 45-55 |
Financial Risk Manager, FRM® is a course offered by Global Association of Risk Professionals most commonly called (GARP), which is a not-for-profit organization and it claims itself to be the “Only Globally recognized membership association for Risk Managers” (Please visit this link for more information on their website). GARP is much recent organization in comparison for CFA Institute. Founded in 1996 and it claims to have 24,548 FRM holders (data taken from website – www.garp.org/garp/about-us.aspx – on 06 Feb 2011) FRM® distinguishes itself by focusing the curriculum on the niche field of Risk Management. Following are the constituent subjects in FRM® exam (as on Feb 2011, source official GARP website:
§ Foundations of risk management
§ Quantitative analysis
§ Financial markets and products
§ Valuation and risk models
§ Market risk measurement and management
§ Credit risk measurement and management
§ Operational and integrated risk management
§ Risk management in investment management
§ Current issues in financial markets
How many people take these courses?
According to CFA® website there are +90,000 charter holders as on Feb 2011. According to one estimate India had +12,000 students registered for CFA® exam in 2010 and India ranked 4th, just standing behind USA, Canada and China in the number of students who were enrolled for this exam. CFA® Institute has maintained and to some extent increased the standard of the exam. From 1963, when the exam was first administered, success rate for this exam has dropped continuously. On an average not more than 50% students who appear for the exam clear it
FRM® exam has also maintained equally tight standards, if not more. The exam is known for its toughness in Quantitative Analysis. Since its genesis in 1996 there are 24,548 FRM holders (data taken from website – www.garp.org/garp/about-us.aspx – on 06 Feb 2011)
What career paths open after clearing these exams?
According to the CFA® Institute its charter holder are engaged in following job profiles:
§ Portfolio Manager: 22%
§ Research Analyst: 15%
§ Chief Executive: 7%
§ Consultant: 5%
§ Relationship Manager, Sales + Marketing: 5%
§ Risk Manager: 4%
§ Financial Advisor: 4%
§ Corporate Financial Analyst: 4%
§ Investment Banking Analyst: 4%
No such data is available for Financial Risk Manager FRM®; however, people with this education are often very highly sought in following careers:
§ Chief Risk Officer
§ Senior Risk Analyst
§ Head of Operational Risk
§ Investment Risk Management
How much these exams cost?
Fee Structure for CFA® Exam
CFA® Fee Structure for June 2011 Exam | | |
| Enrolled By | Enrolled By | Enrolled By |
| 22-Sep-10 | 16-Feb | 16-Mar |
Program Enrollment (one time) | $405 | $405 | $490 |
Exam Registration | $630 | $720 | $970 |
Curriculum eBook version | save $40 | save $40 | save $40 |
Total | $995 | $1,085 | $1,420Bottom of Form |
| | | |
CFA® Fee Structure for December 2011 Exam | | |
| Enrolled By | Enrolled By | Enrolled By |
| 16-Mar | 24-Aug | 14-Sep |
Program Enrollment (one time) | $405 | $405 | $490 |
Exam Registration | $630 | $720 | $970 |
Curriculum eBook version | save $40 | save $40 | save $40 |
Total | $995 | $1,085 | $1,420Bottom of Form |
Fee Structure for FRM® Exam:
FRM® Fee Structure for 21 May 2011 | | |
| Enrolled By | Enrolled By | Enrolled By |
| 31-Jan | 28-Feb | 15-Apr |
Program Enrollment | $300 | $300 | $300 |
Exam Registration | $350 | $475 | $650 |
Total | $650 | $775 | $950 |
| | | |
FRM® Fee Structure for 19 Nov 2011 | | |
| Enrolled By | Enrolled By | Enrolled By |
| 31-Jul | 31-Aug | 15-Oct |
Program Enrollment | $300 | $300 | $300 |
Exam Registration | $350 | $475 | $650 |
Total | $650 | $775 | $950 |
Who can register for this exam?
Following is the Eligibility criteria for CFA® Exam as mentioned on their website as on 06 Feb 2011:
§ Have a bachelor's (or equivalent) degree
- or be in the final year of your bachelor's degree program at the time of registration
- or have four years of qualified, professional work experience
- or have a combination of work and college experience that totals at least four years (Note: Summer, part-time, and internship positions do not qualify)
- If you initially enroll/register as a final year undergraduate student with a degree in progress, you may not register for the Level II exam until you have earned your degree, or obtained work experience that meets the program’s entrance requirements. At the time your degree is awarded, you may update your account education information to certify that your degree has been received.
§ Understand the professional conduct requirements (you will be asked to sign the Professional Conduct Statement and Candidate Responsibility Statement)
§ Be prepared to take the exams in English
Following is Eligibility criteria for FRM® Exam as mentioned on their website as on 06 Feb 2011:
Quite surprisingly GARP does not mention any educational prerequisite for FRM® exam. However, following two requirements are mentioned to become ‘Certified FRM® Holder’
§ A passing score on both Part I and Part II of the FRM Examination
§ A minimum of two years professional full-time work experience in the area of financial risk management or another related field including, but not limited to, trading, portfolio management, faculty academic, industry research, economics, auditing, risk consulting, and/or risk technology.
How much preparation time it takes to complete these exams?
However, if right guidance and coaching is taken every level can be cleared in first attempt. Please note Level I exam happens twice a yr i.e. June and December and Level II and III exams happen only once a year i.e. June cycle. Thus candidates can clear the exam in shortest duration of 1.5 year.
Quite a few organization give reasonably good recognition to candidates who have cleared at least one level of this exam and are enrolled in for further level
According to official figures for spring 2010 exam, 52.5% candidates passed FRM® Level 1 exam and 54% students passed FRM® Level 2 exam (source: http://www.garp.org/frm/overview/frm-facts/frm-statistics-and-charts.aspx). In its present form the exam is divided into 2 parts and both parts can be attempted twice every year i.e. May and November. So in a fast track mode, this exam can be cleared in 1 yr.
What study material is present?
Though both organizations provide their own notes, but very limited options are available in market outside the prescribed options.
CFA® Institute provides its notes free when you register for the course. You can save USD 40 if you opt for the eBook version of the notes.
Outside the official handbooks, which at lamp posts discussions, are often referred to be good but very lengthy and usually bulky enough to sink a ship are replaced by other popular options like Schweser, Stalla & 7City notes. Please refer to www.schweser.com, www.stalla.com & www.7city.com for more information. Few preparation institutes and online sites also provide their notes i.e. www.itsconcepts.com & www.analystnotes.com
Where can you go for preparation?
Though these exams are considered to be distance learning modules, but quite a few students want to be on fast track and take help of coaching institutes to increase their success rate, reduce the cost of clearing the exam, take crash course before the exam in cases where they’re not able to focus on the preparation earlier because of work, etc…
ItsCONCEPTS is a pioneer in this field. Based out of Mumbai, financial hub of India, we are very conveniently located in Dadar - central location to most of Mumbai.
Summary
Very clearly, these courses don’t overlap and they sit quite comfortably commanding an un-surmountable respect from Industry bodies and candidates within their circle of presence. Where CFA® is a course which touches roughly all aspects of Professional Finance Education; FRM® is a focused course in niche segment of Financial Risk Management. Both courses open-up good career opportunities in Financial Market. Candidates should understand their interest and commitment (years) before deciding which course to take.
Discussion Forum
We hope that we have provided some clarity on these courses and career paths these courses would open for you. This blog is one of few online threads available in this discussion. Please provide your comments on this blog or join this discussion on our Facebook Discussion: Link
About ItsCONCEPTS
Its CONCEPTS is a coaching institute that provides training for all levels of CFA®, FRM® and CPA®. As the name suggests, Its CONCEPTS strives to "build strong foundations" by developing understanding at a conceptual level. "It’s all in the CONCEPTS" is the belief here as the deeper one's foundation is, the greater the heights one can hope to achieve.
Its CONCEPTS was started by Nisha Sharma Mahajan who is MBA (Finance) and has completed all levels of FRM® and CPA®. She is a CFA® Level 3 candidate. She has 3 years of work experience with one of the top Investment Banks and one of the big 4 auditing firms. Her work profile comprised of working on Leveraged Finance, Financial Sponsors, Mergers & Acquisitions Special Purpose Entities and Federal Taxation among other things. She has more than 2 years of teaching experience on the professional front. She is the main faculty at Its CONCEPTS and is now full time involved in coaching.
Key benefits of joining us:
1. Focus on basics and fundamentals
2. Interactive classes to develop conceptual clarity
3. Highest number of Hrs per course that any institute provides
4. Experienced faculty who have worked in Investment Banking
5. Online Test modules
6. Class notes
7. Special attention to non-commerce students
8. Flexibility to choose from Daily and Weekend batches
9. Free revision sessions
10. Presence in centralized location (Dadar West) & Proximity to Railway Station
11. Well developed infrastructure - A/C Classroom – Located in silent location
12. Group discount for students joining in batches of 3 or more
13. Most competitive fee structure
14. Facility to pay in installments
As mentioned earlier, we are only based out of Mumbai, India
CFA vs FRM
[www.itsconcepts.com]
