FRM- A complete detailed Career Guide for freshers

FRM Full form stands for Financial risk manager, a popular professional certification in the risk management industry. It’s awarded by a Global association of risk professionals, popularly known as GARP, which boasts close to 263,000 members worldwide as on 2020

Allen Aravindan,CFA

Risk management careers are often masked with difficult to understand nuances, confusing roles & more so lack the suggestion of picking the right qualficiation.

If you too have questions like:

Should I do CFA or FRM?,

How is the CFA and frm combination?,

what will be the salary FRM in Canada, India?

should I use bionic turtle FRM Questions bank

Then this post is for you!

Key Takeaways

1: FRM is the world’s most popular qualification in risk management

2:FRM doesn’t have any eligibility for registering and writing the exam but FRM part 2 needs to be completed withing 4 years of part 1 exam

3: FRM scholarship is availble for academic partners listed in the GARP website

4: FRM Pass rates are higher than CFA exam, 46% for part 1 and 63% for Part 2.

5:FRM demands atleast 240 hrs of reading, practicing and performing to clear the exam.

6: FRM candidates on an averager earn C$80,000 In canada

7: FRM Candidates on average earn INR 6 Lacs in Inida

Table of Contents

FRM(GARP) Overview

Here is some data which I thought, could throw some light on how exactly FRM has gained some linear popularity.

Prof
Qualification
Est YearMemb
*Lac
CAGR
FRM19962.6531%
CFA19471.7517%
CAIA20020.1221%
CMT19730.0920%
Comparison of various finance qualfications

Fun Fact

The FRM Qualification was ideated in a pub over a drink by the two friends Marc Lore & Lev Borodovsky, both risk mangament professionals.

The discussion between these two risk managers on the need for a form recognition or community of risk management, led to the birth of FRM with just 250 members.

Today FRM is one of the most popular qualifications spread across 190 countries & Marc Lore is a billionare business man.

So never underestimate the power of an idea discussed in a pub!

Anyways, moving now to the eligibility!

Who is Eligibile For FRM?

The interesting thing about FRM, is that unlike CFA level 1 doesn’t have any pre-eligibility requirements. Which means, if you are a under-graduate you can qualify to write the exam. However the eligibility is for recieving the FRM membership, which would require you to prove

  • 2 Years of relevent work expereince
  • Clear the two exams FRM Part 1 and Part 2

This is strictly an optional requirements, which is that FRM members are required to complete CPD(Continued professional development)programs conducted by GARP every two years.

Which means that you need to keep studying and answering some basic questions but I haven’t personally attended these in CFA program either.

How to get the FRM Scholarship

Well! GARP(FRM) provdes two kinds of scholarship:

1: Students Scholarship: this scholarship is offered in the academic partner program, which means that your institution or college needs to be in the partner list to avail this. Every year the academic partner(university) can nominate 6 candidates & One faculty for the scholarship

2:University: More or less the requirement is same, the university needs to be accredited to GARP.

Unlike the CFA program, which also has direct scholarship availble.

My two cents here! Unless your company or university appears on the list, don’t bother wasting too much time here!

What is the FRM Cost & Exams

Its funny how all the professional qualifications have the same names for the various ways, that we can pay them!

Let me combine the training and exam cost together to give you the easy summary:

FRM
Part
1
EarlyINRLateINR
May 2295071.25K115086K
Aug 22100075K120090K
Nov 22100075K120090K
FRM PART 1 EXAM COST

Just a heads up here! The november 2022 exam cost is not yet published, however the august 2022 exam cost did see a jump of $50. Hence I assumed that, the next exam cost would be hiked similarly.

FRM
Part
2
EarlyINRLateINR
May 2255041K75056K
Nov 2255041K75056K
FRM PART 2 EXAM COST

The part 2 exam cost is lower than Part 1, because the enrollement fee $ 400 is only paid once during part 1 registration.

FRM Part 1: 100 questions MCQ Based

FRM Part 2: 80 multiple choice based questions

The duration of both the exam are for 4 Hrs in total.

What about the training costs?

Budget for around 80 thousand INR, for both the levels. Which means the total cost of pursuing FRM, considering you clear in one go would be :

1: Minimum: 1.92 Lacs INR ( If registerd early)

2: Maximum:2.20 Lacs INR( if registered late)

So its not that extreme, is it? I meant the difference of realising to register early or late.

You can pay for these exams through:

1:Credit card

2: Cheque:( In case of indian citizens, you can use the wire transfer method)

However remember that wire transfer carries additional cost of $50, which is close to INR 4000.

So my suggestion is to arrange to pay someone who has a credit card.

How difficult is it?

Truth be told, the exam itself is easier than CFA but the preperation is a little trickier than CFA!

Did that make sense to you?

What I mean to say is, that CFA exams are very crystal clear on their curriculum and there is very little confusion as to what to study.

The FRM exams, have the reputation of being a little notorous here, which is why its tricky. Having said that, the pass rates in my humble opinion are high!

Compare this to CFA, there is a blood bath going on recently. Infact I have covered the CFA pass rate problem in a different post, do care to check it out in case it interests you.

You can check the entire historical pass rates for the FRM exam here, won’t be that insightfull but still in case you want to settle

How to prepare for FRM?

The dreaded discussion is here! How to prepare for this exam?

Just like any other exam, let me structure the preperation on the following foundations

1: Hours spent with the content:

Risk management in the real world, is unlike pressing a button! Each step taken can have mutiple effects on the overall system. Hence the preperation for FRM has to be done in a practical manner and thats possible only with practice.

But hey! Before that I would like bring to your attention on what needs to be studied first!

FRM Part 1Weightage
Foundations of Risk Management20%
Quantitative Analysis20%
Financial Markets30%
Valuaton & Risk Models30%

A very clean coverage, i would say. The exam is clearly over weighted towards financial markets and valuation-risk models.

And why not? How can we expect to manage risk, when we don’t understand markts and risk models itself.

On the other hand we can see the foundation to risk management and quantitative methods are tools to understand risk.

Now that you know what is expected of a young buddying risk manager, lets leap into the preperation benchmarks

How much time to give in total? 240 Hrs at the minimums, thats the time you need to read the content, but I would recommend dedicate atleast 40% more Hrs than that. Why would i say that?

Well playing safe! Who knows how GARP, calculated that 240 hrs. May be it’s just a tired exective, who pressed average on a ill drafter survey form taken from tired candidates.

Anways 40% mark up to the recommended 240 Hrs, would be 336 Hrs. Peanuts! You should count yourselves lucky, CFA requires minimum 350 hrs. So get on with it!

2: Practice:

This is the fun part! I said fun not easy. Out of the total of 336 hrs, you should spend atleast 40% of it for practice. Which means 134 hrs of practice!

Hence in a given day, if you spend 2 hrs in total preparing for the exam then consider spending 45 mins practicing. So only reading is a big no here!

Even if your entire reading is not completed, still open the end of chapter section and get your hands dirty!

3: Peforming:

Whats this? This is real exam simulation my friend! You need to consider spending atleast 20% of your time, performing.

My suggestion here is, dont wait till the end to perform. As you complete one entire section, give a sample mock on it. Trust me! This will go a long way in building your confidence, as well as endurance.

3: Mental and social preperation

Battles are not won alone! You need the team with you to help you sail through this. So you need to set yourself in the correct mindset, before even sitting in the chair and bending your neck to study.

So talk to your boss, your wife, your children, basically any stakeholders in your life. This way when the things become difficult with the preperation itself, you atleast don’t have to worry about the things unrelated to the exam.

4: The Correct reference Material

I know a lot of you, would want me to say bionic turtle or kaplan but I won’t. GARP provides its own reading material, which is validated and relevant, then why take the risk of reffering a derived material?

Please feel free to read the study guide, published by GARP


Salary of FRM in Canda

I will shoot point blank here! Salaries are higher in quant roles, than on credit roles. However quant roles need more skills compared to the credit.

  • An entry level risk analyst would earn C$62966
  • An entry level Quant risk analyst would earn C$77998
  • An entry level Credit risk analyst would earn C$42000

Salary of FRM in India

The trend is somewhat similar here, in terms of the niche!

  • An entry level risk analyst would earn INR 6.19 Lacs
  • An entry level Quant risk analyst would earn INR 8 Lacs
  • An entry level Credit risk analyst would earn iINR 5 Lacs

Is CFA FRM a good Combination?

The combination trap in India! lol. I always find it amusing, how easily we combine things just like an aroma filled curry!

To tell you the truth and nothing but the truth, so help me god!

It Doesn’t make any sense at all to me nor the industry! If you notice,FRM is a risk management and CFA is an asset managent qualification.

I am preety sure that an equity research analyst, will never in his career be expected to model risk and at the same time a risk manager will not be expected to research equities.

So in my humble opinion, this combination is humbug!

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ALLEN ARAVINDAN,CFA

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