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,

1. Objective of the course. 
2. Time Factor.
3. Career Prospects. 
4. Cost/Budget.
5. Return on investment. 
6. Independence. 
7. 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.