Early-career finance professionals strengthen their resumes through certifications and licenses. Financial analysts who want to understand the world of finance further, complete the Chartered Financial Analyst® (CFA®) process offered by the CFA Institute. The Global Association of Risk Professionals (GARP) issues the Financial Risk Manager® (FRM®) designation to applicants in the financial risk field. These designations can be invaluable for professionals interested in promotions and global job opportunities.
The CFA® and FRM® designations focus more on test completion and professional experience than educational background. A master’s degree in finance, however, provides invaluable knowledge that can improve the chances of passing the CFA® and FRM® exams. Suffolk University’s online finance master’s degree offers concentrations in corporate finance, risk management, and investments that overlap with certification exams. Students around the world access the benefits of a finance master’s in Boston via online courses.
Benefits of CFA® and FRM® designations
The exam processes for the CFA and the FRM can take years to complete. Before moving from finance degrees to lengthy exams, it is worthwhile to understand the benefits of these designations.CFA®
Kaplan Schweser offers several reasons for why the CFA® designation is important for analysts. Financial analysts benefit more from this designation plus work experience than from MBAs when applying to jobs with HSBC, Citigroup, and other global employers. The CFA® designation is known throughout the world, allowing designees to transition easily into business environments in different countries. Professionals who complete this designation only spend up to $12,000 in exams and study materials to improve salaries and open new possibilities.FRM®
Kaplan Schweser also explains how the FRM® designation can improve the careers of risk managers. Major players in the finance industry look for designees due to their high-level knowledge of risk management. The relatively small number of FRM® designees in the world means a built-in network that pools knowledge of industry trends and developments. This designation is also difficult enough to obtain that hiring managers place resumes with FRM® toward the top of the pile. An online finance master’s degree from an accredited university like Suffolk University plus one of these designations can make a big difference.Achieving the CFA® designation
The CFA Institute maintains a rigorous process for completing its signature designation. Applicants must sign up for the institute’s CFA® Program prior to registering for the three-part exam. In order to participate in the program, an applicant must:
- Have completed bachelor’s degrees
- Live in a country that participates in CFA® designation
- Be able to complete exams in English
- Hold a current passport
- Confirm their commitment to the program’s Professional Conduct Statement
After registering for the program, the next step for an applicant is to complete three exam levels. The Level I exam is available each June and December, while Level II and Level III exams are only available in June. The Level I exam features 240 multiple choice questions spread across morning and afternoon sessions. On the Level II exam, applicants complete 21 questions that each consist of a case study followed by multiple-choice questions. The Level III exam blends up to 12 essay questions and 11 case studies to test the applicants' knowledge and writing skills.
Applicants must complete each level before proceeding to the next, which can take three years if all exams are passed. The CFA Institute requires applicants to demonstrate at least four years of investment management experience, which can be completed at any point in the process. After completing all of these steps, professionals apply for memberships with the CFA Institute to receive their designations.
Earning the FRM® designation
GARP’s process for completing the FRM® designation involves fewer steps than the CFA. A two-step exam process can be completed at global test locations in May and November. GARP uses an online portal to promote study plans, test prep materials, and exam processes. Test takers need to sign the organization’s Code of Conduct and Candidate Statement prior to completing Exam I.
Exam I consists of 100 multiple-choice questions that evaluate knowledge of risk concepts and mechanisms. The time limit for Exam I is four hours, and each session is completed in the morning. Exam II uses 80 multiple-choice questions to test the applicant’s ability to apply risk concepts to real-world situations. GARP allows test takers to complete both exams on the same day, though the Exam I result dictates whether Exam II is graded.
GARP requires FRM® designees to show at least two years of financial industry experience prior to designation. Professionals who achieve the designation are encouraged to complete at least 20 hours of professional development per year to stay current on risk management trends. The organization does not have an educational requirement to complete exams. An online finance master’s degree from an institution like Suffolk University strengthens knowledge of finance industry concepts tested by the CFA Institute and GARP.
Success rates for CFA® and FRM® designations
Successful completion of the CFA® and FRM® designations are far from certain due to rigorous exams. For June 2019, the CFA Institute listed a Level I passage rate of 41%, a Level II passage rate of 44%, and a Level III passage rate of 56%. December 2018 participants successfully completed Level I at a 45% rate. The test has grown more difficult since the first cohort in 1964 when 84% of participants successfully completed their exams.
GARP published an Exam I success rate of 42% and an Exam II success rate of 60% for the May 2019 cohort. From 2013 to 2019, Exam I rates ranged from 41% to 46%, while Exam II rates fluctuated from 50% to 60%. The challenges of completing these designations make them valuable resources for business professionals.
Applicants seeking each designation need strong research and writing skills along with exceptional business acumen. A master’s degree is not mandatory for these distinctions, but it provides the grounding necessary for exam success. The online finance master’s program from Suffolk University combines rigorous academic standards with schedule flexibility for professionals seeking designations. As academic partners of both the CFA Institute and GARP, we offer a select number of scholarships available for students that can help reduce or eliminate the exam fees. For those who are in the Boston area, we conveniently host the FRM testing right on campus.