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.

Fun Facts You Didn’t Know about the CFA Exam

Zenobia Sethna

The Chartered Financial Analyst (CFA) exam is one of the most prestigious and yet gruelling exams you can give to. Around 20% of those who registers for a CFA exam don’t take it seriously and just don’t turn up on exam day. At least 40% of those who do turn up fail. In June 2015, a meagre 42% of candidates passed CFA Level I. Pretty serious stuff.

Here are some fun facts that you may not be aware of:

1. About 1 in 20 candidates will miss the start of the exam, despite already being in the test center.

On exam day, the doors to the exam hall close 30 minutes before the actual exam starts. This is to ensure all candidates are settled in, calculators and belongings are verified, and all candidates are set to open the test booklet at the preset time.

Though many candidates, despite already being at the exam center, will either miscalculate or are not aware of the closing time. Thus, they end up waiting to be let into the exam hall, which will only happen after the first 30 minutes have passed. So be sure to arrive early and be seated on time.

2. Calculators weren’t allowed up until 1975

Up to 1975, a standard calculator was not allowed in the CFA exams. Candidates originally had to make do with a slide rule. Then you could carry a (15 pound!) electric calculator, which unfortunately needed to be plugged into a wall outlet, so many candidates didn't bother. Count yourself lucky that you have the convenience of a calculator for your exams!

3. You used to be able to smoke during the exam

The exam getting your nerves worked up? Back in the early 70s, candidates could even smoke inside the exam hall! John Privat, CFA, recently gave a humourous exam anecdote when he said
"He was totally agitated and proceeded to chain smoke for five minutes before he even opened the blue book." Doesn't get more Mad Men than this!

4. You couldn't go to the bathroom during the exam in earlier days

Many years ago, candidates weren't allowed to use the bathroom during the exam. Pretty strange, but there you go. The Institute only yielded and changed its rules when a pregnant candidate was ready to call their bluff during one memorable year. Our advice: Go to your heart’s content before the exam. Even if they allow you to take a bathroom break during the exam, you lose precious time from the allotted 3 hour duration.

 5. The most common problem on exam day? Forgotten passports? Nah.

Moving on to more recent times. On interviewing numerous proctors in countless exam centers, we find that the most common problem for candidates is a forgotten calculator. We're not sure what is the reason (I would have thought forgetting your passport would be more common), but make sure you don't make that mistake! Make sure you bring two.

6. CFA results are always announced on Tuesdays
CFA results are always announced on a Tuesday. Here’s the rationale from the CFA Institute: Tuesday is an ideal day for their contact center and client services - It gives sufficient time to answer to weekend queries and get themselves prepared for the heavy flow of communication accompanying a results release.

So there you have it. If you know any more, do let us know. If you are one of the candidates studying for this year’s CFA exam, study hard and all the best! 

Tips for taking CFA level 1 Exam

Our earlier post concerned tips on how to study for the CFAlevel 1 Exam. Today we want to share with you a few tips for taking the exam. Preparing for the exam begins weeks in advance.

So you’ve put your 300 -400 hours in, you’ve gone through the Imarticus CFA program 3000 questions sample bank and have covered every topic in detail. Here’s what you do now.

Take care of your health: With a month to go, start making sure you take care of your health.  You haven’t come this far to fall ill on your big day. Try not to come into contact with anyone having the flu and make sure you don’t get a stomach bug. Ladies, here’s where we talk about your period; no, it’s nothing to be ashamed of and it's a very big reality. If you think your period will fall around the CFA dates, please talk to your gynecologist to help mitigate symptoms. 

Read the CFA Rules: To ensure you don’t disqualify yourself by doing something stupid, please read the CFA rules on the website which outline what you can take into the room. Here are the program policies https://www.cfainstitute.org/programs/cfaprogram/exams/Pages/policies.aspx

Master your calculator: Calculators are NOT available at the test center. Batteries for the calculator are NOT available at the test center. Only two calculators are authorized - Texas Instruments BA II Plus (including BA II Plus Professional)

Hewlett Packard 12C (including the HP 12C Platinum, 12C Platinum 25th anniversary edition, 12C 30th anniversary edition, and HP 12C Prestige). https://www.cfainstitute.org/about/governance/policies/Pages/calculator_policy.aspx Take extra batteries and a small screwdriver.

Do a mock test: Test yourself under exam conditions. This means no material other than a calculator and a pencil in hand and the stamina to withstand two three hour tests in one day.  When you enroll in the Imarticus Chartered Financial Analyst program, we conduct a mock exam for you under real exam conditions, which is key to your success in the actual exam because it familiarizes you with the pressure of the test itself.

Map your logistics: Make your way to the test site and back at least once before the actual test so you know how much time it’s going to take to get there. Are you driving? If so, where will you park? Are you taking a taxi? Then how much in advance do you need to book it? There are two sessions. If you miss the morning session, you cannot take the afternoon one. If you are late by 30 minutes, you cannot enter the exam hall. Exam day schedule: https://www.cfainstitute.org/programs/cfaprogram/exams/Pages/cfa_exam_day_experience.aspx

Pack everything two days in advance: You need to take your passport, calculator, batteries if needed, screwdriver to change batteries, pencils, erasers, required medications, exam ticket, photo ID and ear plugs. Earplugs are very important if you prefer to work in silence. Ask your test center if you are allowed to take noise cancellation headphones. Also pack a lunch for your two –hour break. Don’t forget the Key Stroke card that came with your calculator; it has useful information that can ensure you get certain points.

Sleep: We suggest sleeping a minimum of 8 hours a night a week before your test to ensure there is no sleep deficit built up that can harm your chances.

Talk to your CFA Charter Holder Mentor: The Imarticus CFA program is the only program where a dedicated CFA Charter Holder mentors you through the entire duration of the program. Make sure you have a session with them before the test to clear any doubts you might have about the exam itself.

Exam Day: Wake up early and work on a few programs. Much like you wouldn’t go cold into a race, you don’t go in cold for an exam. But work on easy problems and concepts you know.

Take the exam: Don’t talk to anyone about the exam before it or during the break. Start with the easy questions. Always given an answer even if you think it's the wrong one. Don’t panic, you can take it again in 6 months time.

What To Expect On The CFA Level I Exam

Becoming a chartered financial analyst requires the passing of three grueling exams covering an array of topics. To ace the exams, it helps to have a study plan and stick closely to a study schedule.

The Level I exam is a six-hour test. It’s broken into two, three-hour sessions, each with 120 multiple-choice questions, for a total of 240.

The Level I exam focuses on basic knowledge and comprehension of the tools and concepts used in investment valuation and portfolio management. There are 10 topics grouped into four areas: ethical and professional standards, investment tools, asset classes, and portfolio management and wealth planning.

The ethical and professional standards portion contains 15% of the test, or 36 of its questions. The CFA Institute takes this section very seriously. It frequently uses the score on this section to determine whether a candidate passes the exam if her scores on the other three sections are borderline.

Investment tools account for half of the test’s questions, and topics include corporate finance, economics, financial reporting and analysis, and quantitative methods. Reporting and analysis questions are the most abundant, and familiarity with statistical and economic concepts is helpful.

Asset classes are 30% of the test, and topics include alternative investments, derivatives, equity investments and fixed income.

Portfolio management and wealth planning make up the final 5%. This topic is covered extensively on the Level II and III exams, which focus on applying a candidate’s knowledge to portfolio management.

Source: investopedia.com