Introduction
The Aspirants looking out to make a career in Finance are often in a dilemma about which of the two courses is a better pathway for them. FRM is an abbreviation for Financial Risk Manager (FRM) which is offered by GARP (Global Association for Risk Professionals), USA, while MBA stands for Master’s in business administration which offers specialisation in various domains.
Parameters of Interest
While the two courses vary and there is not much overlap but making things more specific, we will be listing out the parameters that are relevant in this context.
The following are the list of the parameters and the relative differences discussed under each heading,
- Objective of the course.
- Time Factor.
- Career Prospects.
- Cost/Budget.
- Return on investment.
- Independence.
- Attaining criteria.
1. Objective
The objective of the FRM program is to provide the candidate with the correct guidance with ample resources and create an elite group of risk professionals that exhibits exceptional risk management skills while an MBA in finance is much broad and designed to impart corporate decision-making & Financial Management skills.
While the MBA in Finance is much broad and covers more financial aspects but in comparison to FRM it lacks an In-depth analysis of Risk Management and other Risk Quantification aspect.
2. Time Factor
Time is one of the most crucial factors when considering the pathway to make a career in Finance. While FRM requires a duration of around 1-2 years, a Full-time MBA has a duration of 2 years which is fixed generally. FRM requires a little lesser time duration when compared to MBA.
3. Career Prospects
FRM being specific to risk management is suitable specifically for risk management roles wherein the role is directly or indirectly related to risk management. The roles like Risk Analyst, Credit Risk Manager, and Operations Risk manager are most suitable for FRM.
MBA in Finance on the other hand is more diversified across domains and more suitable across corporate roles like Management Consultant, Accounts Manager, Corporate Banking, Investment Banking, etc.
4. Cost/Budget
The cost of taking up an MBA in finance is not fixed as it depends on the institution but on average the MBA in Finance from a top Institute will cost you nearly INR 15Lac-20Lac. On the other hand, completing both levels of FRM will cost nearly INR 1.25 Lac conditional that you clear both parts in the first attempt.
It’s quite evident that FRM is much budget friendly in relative to a full-time MBA in finance.
5. Return on Investment [ROI]
The ROI in the context of MBA in finance depends on the quality of the Institution, conditional if the MBA program is done from the best of colleges & taking into consideration the average salary per annum the ROI is close to 1 i.e., it will take 1 year to recover your MBA fee ignoring any other cost factor.
The ROI for FRM keeping in mind the average salary offered for freshers [not considering any other technical and core skills] and the cost of the exam is close to 4.5, i.e., FRM will break even 4.5 times faster than MBA.
[But this number does not give a full indication of future prospects and increments.]
6. Level of Independence
The Level of Independence means the “dependence and scope of the Learning program” over any other parameter, In this context, we should be aware that FRM is best when complimented with other designations or any mastered technical skill [R, Python], as today most companies want FRM with technical skills [ Risk Modelling or using Simulations] and this is now an inherent requirement for any risk related role. In this context, FRM is more suitable when complemented with other Certifications or niche skills.
MBA in Finance is more Independent compared to FRM as it is much broader and less into specific domains.
7. Attaining criteria
The “Dependence” factor is inherent in this pointer being discussed and can be interlinked with the above point as the FRM charter is only granted after “submitting 2 years of risk-related work experience” given both the exam levels are cleared.
In the case of an MBA in finance, there are no such criteria, post clearing all the examinations, the designation is attained.
Conclusion
Pursuing FRM or an MBA in Finance is a completely individualistic aspect, as it depends on what best can be achieved within a specified time frame and resources available to him, and the most important part is which one of these domains interests him the most, as FRM and MBA vary in most of the parameters. It cannot be said that any one of these is superior to another one, as both of them have different objectives and they both serve their objective quite well.
Frequently Asked Questions
1. What is the main objective of the FRM program compared to an MBA in Finance ?
The FRM program focuses on providing specialized guidance and resources in risk management, while an MBA in Finance offers a broader education in corporate decision-making and financial management skills.
2. How long does it take to complete an FRM versus an MBA in Finance ?
The FRM program typically takes 1-2 years to complete, whereas a full-time MBA in Finance usually requires a fixed duration of 2 years.
3. What are the career prospects for FRM compared to an MBA in Finance ?
FRM graduates are suited for specific risk management roles such as Risk Analyst and Credit Risk Manager. MBA in Finance graduates have a broader range of career opportunities, including roles in management consulting, corporate banking, and investment banking.
4. How much does it cost to pursue an FRM compared to an MBA in Finance ?
An MBA in Finance from a top institution costs around INR 15-20 Lac, while completing both levels of the FRM costs approximately INR 1.25 Lac, assuming both parts are cleared on the first attempt.
5. What is the return on investment (ROI) for an FRM versus an MBA in Finance ?
The ROI for an MBA in Finance depends on the institution and typically takes around 1 year to recover the costs based on the average salary. The ROI for an FRM is higher, breaking even 4.5 times faster than an MBA, based on average salaries for freshers.
6. How does the level of independence differ between FRM and MBA in Finance ?
The FRM is often best complemented with additional certifications or technical skills, making it less independent. An MBA in Finance is broader and more independent, suitable for a wide range of roles without needing additional certifications.
7. What are the attaining criteria for an FRM compared to an MBA in Finance ?
To obtain the FRM charter, candidates must clear both exam levels and submit proof of 2 years of risk-related work experience. In contrast, an MBA in Finance is awarded upon clearing all academic requirements without additional work experience criteria.
8. Which course is more budget-friendly, FRM or MBA in Finance ?
The FRM is more budget-friendly, costing significantly less than a full-time MBA in Finance from a top institution.
9. Can FRM and MBA in Finance be considered superior to one another ?
Neither FRM nor MBA in Finance can be considered superior; they serve different objectives. The best choice depends on individual career goals, time frame, resources, and personal interests in finance or risk management.
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