CFA Or FRM, Which Financial Certification Is Better?

All of the finance aspirants, looking to get certified on the international front, there seems to be one debate which is the most common occurrence. This deals with the two pristine financial certifications, the CFA or Chartered Financial Analyst and the FRM or Financial Risk Manager. Both of these certifications are internationally recognised and offer the chance to have a sterling career in the world of finance. This is exactly where a lot of candidates are faced with the big dilemma of, which certification should they go for and which one would be the most profitable for them.

While it is true that both of these certifications, open up a world of enriching possibilities for the candidate; it is also true that both of these are highly competitive, expensive and tough to crack. Thus it becomes very important for an aspirant to choose the most suitable certification, lest it all go to a waste or they reconsider their career choice, down the road after a few years. To someone who is thoroughly aware of both of these certification, would notice a world of difference between them. But someone who is an amateur could end up making the wrong choice. Hence a clear distinction between the two is necessary so as to make it easier to choose.

Here we explore both the certifications in great detail and highlight their differences.

CFA Program: Careers, Qualifications and Eligibility Criteria

The inception of the Chartered Analyst Program took place in 1963. Originally intended for equity analysts working in the field of Investment Banking; today it is compared to the MBA program. It has become one of the go-to certifications, which a professional opts for when looking to target some specific positions in the fields of investment andbanking. The various roles offered under this program range from, Portfolio Managers, Fund Managers, Risk Managers, Financial Advisors, Private Bankers, Consultant, Research Analysts, Accountants, Relationship Managers, Hedge Fund Research and many others. When it comes to the eligibility criteria, a candidate needs to have a bachelor’s degree and around four years of professional work experience.

FRMCertification: Careers, Qualifications and Eligibility Criteria

This certification was originally intended for those candidates, who wanted to pursue the profession of risk managers in financial institutions. Modern times were infused with rapid changes and high competition, which resulted in the need for professionals, who were able to manage risk, money and investment efficiently. Thus as a result of this, the certification came to be recognised as an important designation. The various career prospects and roles here include Chief Risk Officer, Senior Risk Analyst, Head of Operational Risk, and Investment Risk Management. Unlike CFA, here no educational or professional qualifications are required for a candidate to get qualified for the FRM certificate.

Some Major Distinctions

While the CFA program deals with concepts like, financial analysis, ethics, and asset valuation and so on; the FRM certification mainly covers risk, valuation at risk, models of risk, credit risk and so on. Basically topics which revolve around the concept of risk. Some common concepts, where both these certifications overlap include, credit, derivatives, hedge funds, risk/return metrics and so on.

Imarticus Learning is an education institute offering courses for certification in both CFA and FRM. It is recognised by the Global Association for risk management as well as by the CFA institutes and proves to be an instrumental set up for those looking for a career in finance and investment banking.

How Does Corporate Finance Differ From Investment Banking

Corporate Finance and Investment Banking, both form very essential divisions of any firm, dealing in the field of Finance. According to Investopedia, the most basic difference between these two is, that Corporate Finance deals with the management of a company’s finances, whereas Investment Banking deals with the financial growth of the company. Regardless of their differences, it has been seen that these two fields make for great, promising careers for finance aspirants. A professional working in either of these fields, has to deal with similar kind of challenges and prospects. Corporate Finance, is like a blanket term, used to refer to all things finance, including every vertical that deals with financial activities. In a very broad sense, Investment Banking can also be called a type of corporate finance, which makes their differentiation slightly difficult. While corporate finance can be used more like a general term, Investment Banking is a more of a niche concept.

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The field of corporate finance, is concerned with all the day-to-day financial activities of a firm. The main objectives herein are, to take decisions regarding investments, raising capital, maximizing the value of the company, distributing the resources throughout, issuing of securities, analyzing and identifying areas, where it would be necessary to raise capital. Investment Banking, by and large deals with the process of making a firm grow. This is done mainly through, the process of mergers and acquisitions, issuing of securities and various other functions, through which the capital can be raised. Investment Bankers are the professionals, who carry out these activities for a firm and are hired for their specialized knowledge and approach. Investment Bankers are known for their abilities to steer a company out of financial turmoil on to calm waters, this why in spite of being a sub-field, Investment Banking is still considered to be a separate field.

The education requirement for Corporate Finance is a background in either economics, business, or any other finance related field. A degree in accounting makes for a lot in this field due to the nature of the job. As this field covers a lot of job profiles, the skills required here are, good analytical abilities, thorough knowledge about corporate theory, financial analysis, strong communications skills and familiarity with other related concepts of finance. Investment Banking requires a more specific set of skills, but a base in finance, investments and other areas is expected. A lot of Investment Bankers complete their MBA degrees and a few other certification courses, which gives them expert knowledge about the field of Investments. Lately a lot of companies have begun looking for candidates with exceptional resumes, which is the reason for the increasing number of people doing certification courses.

There are eminent institutes like, Imarticus Learning, which offer certification programs specializing in both of these field. Their courses are available both in the classroom as well as online format and can be done by professionals who already have a job. While both of these fields are equally challenging and rewarding, Investment Banking has become a front-runner choice for a career in finance; while on the other hand, Corporate Finance offers a variety in terms of career roles. Differences apart, both the fields have great perks and opportunities to offer.