PRM vs. FRM – why I chose PRM

As you might now, I am undergoing the CFA examination.
CFA gives you an incredible indepth transversal knowledge of the finance area and I am grateful for that. In the mean time, I’m quite a techie guy => looking for advanced quantitative stuff as well. I strongly believe an advanced quantitative education is a strong complement to CFA designation.

Being interested by growing area of risk management, I had a look at possible credible designation available on the market.
Naturally I stumbled upon FRM for Financial Risk Manager (http://www.garp.com/frmexam/ from GARP). After digging a little bit, I found that another designation existed with advanced quantitative content and quite recognized in the investment community too : PRM for Professional Risk Manager (http://www.prmia.org).

PRM vs. FRM

How to make a choice? Well that was the hard part! (for the name, I prefer FRM since it accounts for ‘financial’ focus of risk management in its name)

My first approach was quite straightforward. I went to a financial-jobs internet website (http://www.efinancialcareers.com) and I searched for jobs with first ‘frm’ as keyword and then ‘prm’ as keyword. Result of this test was cristal clear: 22 answers for FRM vs. 3 for PRM. => my choice went to FRM.
Full of doubts and uncertainties, I decided to give it another go on two other financial-jobs websites and here results were more mixed. FRM still had the hedge, but in fact lots of job offers contained FRM as an acronym for their own business units and not for the FRM certification. In fact, when clear reference to FRM certification was made, PRM was quoted too (almost always). => back to the beginning: which one to choose…?

Below are misc elements that helped me take a decision:
pro PRM:

  • supposedly a bit more quantitative than FRM (I’m looking for this quantitative aspect)
  • less costly (exam prices are lower, no annual membership fee – for now)
  • clearer self-study line (single handbook covering all exams vs. a handbook + core-readings for FRM with visibly only core-readings as important (=> why having a dedicated handbook if it does not exactly cover the exam content) & having an accumulated list of different readings (what core-readings consist of) does not look like a smooth & effective way to learn for me)
  • greater flexibility: 4 exams that you can pass in any order at any business day (with restriction though to pass them within 2 years) vs. 2 exams that you can pass only twice a year in specific locations
  • backed by top-tier one universities: Columbia University, Duke University, Bocconi School, HEC, Hong-Kong University, National University of Singapore, Trinity College… (full list: http://prmia.org/index.php?page=aboutus&option=universitypartners)

pro FRM:

  • still the hedge in job offer (though only slightly in the end)
  • work experience required (I find it important, you hardly can be a professional without relevant work experience)
  • older than PRM (1997 vs. 2002) => more recognized
  • 17k graduates to date (I did not manage to find the number of PRM graduates, I only found the number of members which is not representative) => huge pool of potential colleagues, who do know about the PRM program
  • article on wallstreetjournal, stating a huge increase in the number of applicants (+80% in 2009 with 23k candidates!!!!) (article: http://online.wsj.com/article/SB10001424052748703278604574624513398904666.html)

conclusion: the wsj article definitely identified FRM as the train to take for me. Its pool of participants is increasing at high speed leaving out competition (unfortunately I did not find similar stats for PRM, it’s too bad) => I wanted to go for FRM (despite all these advantages that PRM has! incl. free-membership)

not-for-profit

I was about to register for FRM exam when I read an article on the GARP scandal (http://www.riskglossary.com/link/garp_scandal.htm and http://www.riskglossary.com/papers/garp_letter.htm). Basically the short story is that at first, only GARP (and its FRM certification) existed. But at some point they started to make real-money out of it. So they decided to change the status of the company from a not-for-profit organization to a regular for-profit organization. Some people working at GARP felt betrayed and decided to create a real not-for-profit organization managing risk-management profesionnals: PRMIA and its PRM certification.

Well, it might look stupid, but this was decisive in making my choice. I mean cfa is a not-for-profit organization, all universities/high-schools I know are not-for-profit organization. Why? At some point, when you’re in the knowledge business, I find it not appropriate to have as goal profit-maximization. It is not the way it’s done in the other places => why should it be the case here? To me this is not ethically appropriate and GARP has not the best focus in mind.
It’s a bit the same awkwardness that existed when auditing firms where consulting firms to the same clients as well. At some point you have a conflict of interest. The thing is that I was upset with FRM getting that expensive: now it is made of two exams (=> twice the price!), you have expensive curriculums + additional expensive handbook and I’ve noticed that annual fees have been rising up quite sharply and steadily. It really made me feel that they wanted to skim the milk out of me. Now that I know they are simply a ‘profit-driven’ organization, I understand it and I’m simply not interested.

So my choice is to undertake PRM:

  • recognized to be as demanding as FRM by experts in the field
  • more quantitative that FRM
  • backed by top-tier universities (really important for me)
  • less expensive
  • more flexible
  • ethically grounded

Right now it might be a bit less reknowned than FRM outside the risk-management domain, but I do hope they will gain exposure (it looks like, they recently opened new offices in Asia) and I will try to support them and expand recognition of its program. I find that being more ethically sound make the whole affair less risky on the long-term, and guess what: it’s about risk-management!

I hope you will choose PRM too.

sources

38 Comments: Trackback URL | Comments RSS

  1. Tim Says:

    Thanks for the review. Same happened to me after I read about GARP and For-Profit thing. I wish u good luck on ur exams! Tim
  2. remy Says:

    I'm glad you made the same choice. Good luck to you too! Remy
  3. Lisa Says:

    I'm currently agonising over making the same choice - that's a really helpful summary - thanks!
  4. hamid Says:

    Thanks for sharing your views! I was facing the same dilemma, now it made my choice easier.
  5. Ashwini Says:

    Hi I am in India. Which one would be better for me. Any opportunoties. Most banks ask the question what is PRM when being inetrviewed. Help pls.
  6. Jatin Says:

    Congrats for making that choice. I myself is a PRM and vouch for its suitability for risk management positions. @Ashwini- India is opening upto Risk Management skillset benchmarking slowly. Earlier most of the people (in public sector banks) only knew about DTIRM (IIBF) and also ICAI used to run risk management course. Believe me, (I remained in risk management stream in Public sector for 8+ years) if some organisation knows FRM, it knows PRM too. Lately I have seen specialist officers recuitment in risk management department for IDBI asking for FRM/PRM as desirable qualification. All the best.
  7. Bint Says:

    Hi - thanks for this. Having a massive dilema about which to take, has defo help'd make my decision
  8. Sam Says:

    Thanks for this info.. made my decision just now ! :)
  9. Chan Jit Loon Says:

    Dear All, I am a PRM and I chose PRM awarded by PRMIA simply because it is recognised by the world's best universities such as University of London, University of Reading, National University of Singapore, New York University, Macquarie University etc. If the PRM is recognised by these leading Universities, the high quality of the PRM is assured. Additionally, as our friend, "CFA", have pointed out in his well researched opinion, there are many other advantages such as flexibility, being more quantitative, more reasonably priced etc. The PRM really improved my financial and risk management knowledge significantly. Good luck to all of you.
  10. Phoenix Says:

    This is a great summary thanks. It seems however that now membership is also a requirement for PRM. Quoting prmia (http://prmia.org/index.php?page=exam&option=trainingAtAGlance) Candidates are required to pass four exams to be awarded the PRM designation. You can choose to take the complete PRM exam in one sitting or in four separate modules, which can be taken in any order over a period of up to two years. The only pre-requisite is membership in PRMIA. This takes the cost up by $125 annually. Is it still worth going for PRM?
  11. remy Says:

    I'm not so sure about this because you can still subscribe for "free membership" (but you won't get any discount on books or exams, so it's still interesting to be a sustaining member the year you decide to g0)
  12. Raja Says:

    Remy, Did u finish all of your PRM exams? How much time required to for each exam. I passed CFA level1 and preparing for level 2 for this June
  13. remy Says:

    Hi Raja, I've passed 3 out of 4 prm exams and I've scheduled the last exam (exam III) by the end of next week. Preparation for PRM and CFA is different. It's easier to take PRM as you can take exams individually (thus focusing on each exam one after the other) vs. all-at-once for CFA. More or less, one month per exam should be sufficient, note that if you can study full time, it may be even faster. Regarding exam IV, one or two weeks may be enough. Good luck with CFA
  14. azhar Says:

    Hi dear. Does any one have PRM examine III handbook soft copy. Thanks: Azhar
  15. remy Says:

    unfortunately no. Cheers
  16. Ahmad Says:

    wooh this must have took alot of time to research,, thanks for the insight and wish you good luck on your PRM exams
  17. Kiran Says:

    Hi, I am Kiran Yeruva, i am a Physics guy, i have completed MS degree. I am looking for career in risk management. If i complete PRM can i get job based on it or do i need more back ground in Finance? Thanks, Kiran
  18. remy Says:

    No idea! I don't have any crystal ball and PRM is not that reknowned yet. I would say it's better to have it than have nothing. Good luck
  19. CFA, FRM, PRM Says:

    Generally, PRM is choosen because it is easier than the FRM. FRM is much more quantitatively oriented (at least back when I took it). Although, the PRM still has a long way to go before it reaches the level that the FRM has, which in turn has a long way to go to reach the level that the CFA has. Good luck, whichever option ya'll choose.
  20. William J McKibbin Says:

    Useful blog article, thanks -- I would add the following to your analysis -- "financial" risk management is only a segment of the risk management career space -- in fact, operational risk management offers many additional opportunities to apply risk analysis skills -- operational risk analysis situations include many quality control roles in manufacturing, transportation, shipping, food processing, mining, oil and gas, and others -- while the Financial Risk Manager (FRM) will find abundant opportunties in financial roles, the Professional Risk Manager (PRM) is prepared to apply risk analysis to both financial and operational risk situations -- for these reasons, many will prefer to pursue the PRM over the FRM -- thank you for the opportunity to contribute to the discussion...
  21. AD Says:

    Agreed FRM is more popular being older and PRM emphasizes on ethics. On a second note, is there anything wrong in going for both if one has the mental stamina and resources? As a matter of fact, one of the best adjunct professors during my graduate program in Financial Engineering (who also has an MFE) has both in addition to the CFA charter, and I guess such persons will be highly sought after in the industry.
  22. MMA Says:

    Thanks for sharing. I am ACCA and had some exposure to quantitative methods during my study. Now I am considering for career change into risk management. So I went for CISI. To my disappointment, CISI only cover general framework, principles, policies and standards rather than quantitative aspects. So I had to look for another qualification that cover tools, techniques and method of risk management. I face the dilemma of PRM Vs FRM. After going through the syllabus of both qualifications, I found that PRM has more quantitative stuff and describe the mode of studies more clearly. But I am still can't decide which one to choose because most people still consider FRM as more prestigious than PRM. :(
  23. C Thomas Says:

    many people agree with you!
  24. ABC Says:

    Hey !! thanks for the above info...can anybody provide some info on the associate PRM ?
  25. Abe Says:

    Thx a lot for sharing your experience and research. I'm going for the PRM!! :)
  26. Cedric L. Says:

    Hey..William J. M. made a great point !... I am going for the PRM... just paid the $50 buck membership fees for full time students...what's wrong with supporting a not for profit ?...lol Thanks for the great article.
  27. Matt Says:

    GARP converted back to not-for profit soon after the scandal. Their bylaws say not-for-profit explicitly. http://www.garp.org/garp/bylaws.aspx
  28. Migx Says:

    i face the same issue i took the CFA exams it was tough 3 years and if PRM is cheaper & easier i think i will go for it i dont want to go through the same tough preparation i did for CFA especially level 2 was a nightmare i want to increase my knowledge in risk management banking wise how ever the question remains is PRM helpful in terms of Practicality or its just theories that are difficult to implement in your every day work i was in operational risk currently i am in Market risk
  29. Adrian Says:

    Hey, great article! I am currently studying for PRM Exam II, but I remember having the same difficulty in deciding if PRM or FRM is better for me. I finally went for PRM and until know I don't regret my decision, and after reading your blog post I realized I could't make a better decision. For me the main reason in choosing PRM was that it has a heavy academical backing behind the certification, especially prof. Carol Alexander from the ICMA Centre (Henley Business School,UK) who is a renowned quantitative finance academic.
  30. Mohamed Says:

    Much Thanks for putting in the time to do this research. As you can see most of us are struggling with this decision (PRM vs FRM). I really don't want to take 2 Risk Certification to cover my basis. It's waste of money & time. I've struggling with this decision for a year now. I just sat for CFA Level 2 & I intend to do CAIA and both of which will exempt me for 2 exams in PRM, given I succeed in these CFA or CAIA. However, I didn't want to side track myself because of cost saving and skipping exam; I wanted to be sure that PRM is at least an equal Quality to FRM. Nonetheless, GARP do offer the ERP, which I also find of possible interest. Again, Thank you
  31. Rambus Says:

    Thank you for your research. For myself (a CFA Charterholder), the choice was easier since I get exemption on Exams 1 & 2 of PRM. Also, where I live, the PRM has decent recognition, particularly with National University of Singapore providing training programs for the PRM exams (costs a bomb though, see here http://www.rmi.nus.edu.sg/training/PRMindex2012.php) Having said that, I do know CFA Charterholders who opt for FRM here in South-East Asia.
  32. Ross Jhon Says:

    Hey, I also choose PRM, its picking up faster.. spoke to a couple of senior people in the risk consulting industry and they said they actually prefer PRM.. it has a much more comprehensive handbook... Already given exam 1 & 2 just studied from the handboook and mock tests on eduleap.in .. anyone has any additionally resources? exam 3 looking tough!! :(
  33. Luke Says:

    The PRM is charging 50usd for a contributing membership, and 200usd for a sustaining membership now! Looks like FRM is better now?
  34. remy Says:

    yep! looks like there is a convergence on building cash machines
  35. Fairoz Says:

    But that there is still a free Afiliate membership. Also the syllabus is all contained in 1 handbook right so easier to study for?
  36. Anu Says:

    Hi, I am working as as Software Project Manager(BE Computers) in banking domain in bangalore. I am not an expert but have a good understanding of capital markets. Can somebody advise if doing PRM would boost my career. I am looking to change job. I have done other certifications such as PMP,Six Sigma but seems like I am already in that salary band. Please advise.
  37. rowan Says:

    what are the average salary packages for PRM & FRM. Which one of them is easy to complete?
  38. Farrukh Sheikh Says:

    Hi, my math skills are rather limited. What is best source for learning PRM math skills? Although Bionic Turtle is for FRM, will it work for PRM also? Any commends on Kesdee?

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