CFA Institute vs GARP

[albatros333]

Hi David,

I’m currently an FRM holder. I have checked CFA institute’s board of governors recently and saw that all of the board members have CFA designation. Then I’ve checked GARP’s Board of Trustees and Executive Committee, and found that non of them holds an FRM designation (or may be they have but it’s not included in the web page). If GARP’s Board believes that FRM designation is a gold standard in risk and promotes and markets it extensively, why non of the committee and board members have FRM designation? Actually it bothers me...

One possible answer may be that the people in GARP are already too qualified that they don't need an FRM designation...What ever the reason I would be happy if I see some of the directors earn the FRM designation that they promote extensively… Forexample the fact that you have an FRM designation gives credibility to bionic turtle...


Best regards

Arya

 

[David Harper CFA FRM]

Hi Arya,

Kudos to you for the research. Thank you for sharing this finding. I don't know the answer to your question; it seems highly unlikely that *none* could hold the FRM?

I just sent an email to my GARP contacts with a link to your query, because I would share your concern (if this is true) and frankly I never thought to look...I will post back with the reply/etc...perhaps some are not disclosed. But, as an FRM holder myself, i share your sentiment. I find this almost too hard to believe, I assume there must be an explanation.

Regarding, "One possible answer may be that the people in GARP are already too qualified that they don’t need an FRM designation."
I personally would not accept this answer ... too easy ... I am too old and grumpy to fall for this line. As they say in software, you should eat your own dogfood

Can I ask you a question? In thinking about BT's next growth phase, I am thinking about expanding into greater "certification shopping assistance." It is sort of related to your point in the sense that, I realized most candidates (and myself) have a hard time figuring out:

* what a certification will do for them; e.g., will it *really* help with career prospects?
* if school or certification, where should precious time be invested? e.g., PRM, FRM, CERA?
* pre-exam assistance; e.g., reviews of certifications, samples, etc
* and then recent technologies would allow us to filter jobs with the designation in particular

In short, I think maybe there is opportunity to bring greater accountability to the certification business. When you think about the huge cost and *massive* amount of time spent sitting for an exam, it's amazing to me that some folks leap into the exam without sufficient due diligence. If this is a good idea, it important to get real-life experience of FRM holders like yourself ...please let me know what you think? ... in the meantime, when i hear back from GARP about your query (our query!), I will post up, thanks! David

 

[David Harper CFA FRM]

Arya,

I just got the following response from my GARP contact (i.e., it appears we can assume your research is *correct* ... I am a little bit shocked):

"While the CFA has been in existence for more than 50 years, and many of their board members and employees have their CFA charter, however they probably did so almost 25 years ago, as a young professional. Therefore, to compare the CFA to GARP’s FRM board members is hard to quantify, as we are only 10 years young. Give us another 25 years, and you will find many of our board members with the FRM designation too."

David

 

[albatros333]

Dear David, thanks for the prompt response. I have passed FRM in 2008. Although I wasn’t a paid member I extensively used bionic turtle’s free parts along with schweser. And I still follow bionic turtle to catch up with current issues in risk (especially David is reading blog). Thanks for your awesome service…

I’ve had already sent email to GARP’s Jeffrey KUTLER (editor in chief)regarding this issue, but he didn’t bother to send me a reply. I did this research because I put huge amount of time to get FRM designation and I want it to be truly regarded as a gold standard in risk. [/color]I’m a bank supervisor in Turkey, and I believe the more respected the FRM, the higher value it will bring to me. And since your business focus is now on FRM, it will also benefit your business to expand.

However I should mention that, I’m disappointed to hear that none of the members have the designation. The exam may be relatively new compared to CFA, but it’s not an excuse (for example If you didn’t have FRM designation, bionicturtle.com services wouldn’t be that convincing) . GARP knows that risk business is expanding and markets it and makes huge money…I at least expect some of the member to get that certificate. Candidates should ask to GARP guys “Ok sir, you as a board member say that FRM is a gold standard but you don’t have that designation, so why should I have it?” Again at least some GARP members also should get FRM certificate.(I agree in 25 years time some of the members may have it!)

These people are risk professionals and academicians, they write articles that are read by thousands, do presentations among hundreds of people. Consider, GARP’s Dr. Rene Stulz and Harvard professor Peter Tufano. They are well known academician and currently serve in Board of trustees of GARP. These guys are just some of the few that are active in risk management business. If these guys have had an FRM in front of their names, can you imagine the marketing potential it would bring to GARP, and value to our FRM designation and your business. I believe GARP should not underestimate the psychological effect it would have on potential candidates. People will read Dr Stulz’s paper or follow his presentation and see FRM in his name and at least subconsciously accept FRM certificate=Quality+Must be Owned. You know, we always see such things in our every day life. A pop star wears a creepy hat, people see it and this good immediately becomes fashion, millions follow this fashion, people make money. It’s that simple. GARP and bionic turtle makes money with FRM. I get respect b/c I have an FRM designation. So GARP should work hard to make FRM a high fashion good among risk practitioners.

Now regarding some of your questions;
Well David, you are a smart guy. You should expand your business and include forexample PRM in to curriculum since FRM and PRM are closely related and there are lots of overlapping subjects. This may increase your business potential.

•what a certification will do for them; e.g., will it *really* help with career prospects?
Certifications don’t do miracles, but they show your commitment to learning. I didn’t become a risk expert by just passing FRM exam. One don’t become financial Einstein by just passing CFA. These exams just cover hundreds of subject and by nature they are generally intermediate. So as an FRM holder I have had a good introduction to wide array of risk subjects but it didn’t make me expert in market or op risk. I have to focus on certain subjects to become an expert. As a result getting a certification is a good starting point that shows your commitment to learning and it differentiates yourself among your peers.

•if school or certification, where should precious time be invested? e.g., PRM, FRM, CERA?
I my self did both because competition intensifies. I got masters degree in financial economics. Then I wanted to focus on one key area of finance and got FRM. Regarding which certificate to pursue, definitely FRM for me…Not because it’s much better than PRM (they both cover awesome information to some extent), just because I believed that extensive marketing by GARP might lead FRM to become a gold standard in risk. So I may be wrong but among similar certificates mainly marketing efforts will determine which certificate is gold or silver!
As a result an important thing is that “How do people perceive your certificate?” Of course if Richard Apostolik and others insist on not getting an FRM designation, we may delay the process FRM to become Gold standard

I want to see some FRM holders in GARP!

Arya Iskender, FRM

 

[David Harper CFA FRM]

Hi Arya,

I agree wholeheartedly that at least some of GARP's board members and executives should hold an FRM designation. Not for the marketing purpose, but to reflect a "stake in the quality of the product" and a commitment to the designation. Similar to the expectation that Board members of publicly held companies should hold stock in their company. (put another way, I am more disappointed that some of them have not *wanted* to get the designation). Like I said, I did not realize this before you researched and it was confirmed, and I am disappointed there is no such current "skin in the game." I don't think it can be successfully spun ... 25 years?...how about, instead, it's not too late for some of them to register for Nov 2009 (if you know what I mean)?

But, then again, I shouldn't really be surprised ... if you work long enough, you eventually understand that mission statements and marketing statements are means to an end; and that (most) businesses exist to make money. (I am not against that, but the profit motive need not be to the exclusion of other priorities-yes?) Some certifications (I am not referencing any particular certification) extract too many margin dollars that should be reinvested into the product itself. I am very hopeful though, that the internet will enable greater transparency and accountability. Every day that passes, thankfully, power shifts to the informed customer.

Thank you for your other detailed feedback, it is very good to process! I hear you on the PRM: I am a big fan of PRM, the folks I know at PRMIA have good values and I have the highest regard for Carol Alexander who I think represents real leadership vis a vis the educational mission.

David

 

[jwagner88]

Hi @David Harper CFA FRM

I received an email from GARP regarding the nominees for the Board of Trustees. I competed my FRM in 2019 (and am extremely grateful for the resources and material on BT that helped me through it!) and am currently a GARP member.

As above, I find it extremely disheartening and disappointing that none of the Board of Trustees seem to have completed the FRM program. It has been over 10 years since the thread above and it looks like nothing has changed in that regard. I wrote to Richard Apostolik in a previous year regarding this, but did not receive a response.

Further to above, the lack of diversity on the Board is quite jarring: of 16 members, there is one woman. The GARP Board of Trustees Governance and Nomination Committee has slated seven senior risk professionals for election to the Board this year. All are male.

Have you had any interactions or communication with GARP on either of the above in the past decade? I have looked around, but have not found anything addressing these issues. Given the distance of the Trustees from the FRM (i.e., the lack of familiarity having never undertaken the designation themselves) and the lack of diversity - it makes me question the long-term value of the FRM and whether an organisation like GARP is able to keep current and add value.

Apologies if I should be directing these concerns elsewhere. Again, I really appreciate BT and credit it with helping me obtain the FRM.

Kindest regards,
Jessica

 

[Nicole Seaman]

Hi @David Harper CFA FRM

I received an email from GARP regarding the nominees for the Board of Trustees. I competed my FRM in 2019 (and am extremely grateful for the resources and material on BT that helped me through it!) and am currently a GARP member.

As above, I find it extremely disheartening and disappointing that none of the Board of Trustees seem to have completed the FRM program. It has been over 10 years since the thread above and it looks like nothing has changed in that regard. I wrote to Richard Apostolik in a previous year regarding this, but did not receive a response.

Further to above, the lack of diversity on the Board is quite jarring: of 16 members, there is one woman. The GARP Board of Trustees Governance and Nomination Committee has slated seven senior risk professionals for election to the Board this year. All are male.

Have you had any interactions or communication with GARP on either of the above in the past decade? I have looked around, but have not found anything addressing these issues. Given the distance of the Trustees from the FRM (i.e., the lack of familiarity having never undertaken the designation themselves) and the lack of diversity - it makes me question the long-term value of the FRM and whether an organisation like GARP is able to keep current and add value.

Apologies if I should be directing these concerns elsewhere. Again, I really appreciate BT and credit it with helping me obtain the FRM.

Kindest regards,
Jessica

Hello @jwagner88

I'm happy to hear that BT was so helpful to you in passing the exam David will be able to respond specifically to your comments, but I want to point out a very detailed memo that David sent to the FRM Committee and GARP's Board of Trustees in 2019. I think you would be interested in reading it because it really points out many issues with the FRM exam and GARP itself. https://forum.bionicturtle.com/thre...-committee-and-garps-board-of-trustees.22758/

 

[jwagner88]

Hello @jwagner88

I'm happy to hear that BT was so helpful to you in passing the exam David will be able to respond specifically to your comments, but I want to point out a very detailed memo that David sent to the FRM Committee and GARP's Board of Trustees in 2019. I think you would be interested in reading it because it really points out many issues with the FRM exam and GARP itself. https://forum.bionicturtle.com/thre...-committee-and-garps-board-of-trustees.22758/

Thank you! I had read the exam question validity piece previously, but hadn't made it to the last section covering other items like Board composition.

 

[jwagner88]

Hello @jwagner88

I'm happy to hear that BT was so helpful to you in passing the exam David will be able to respond specifically to your comments, but I want to point out a very detailed memo that David sent to the FRM Committee and GARP's Board of Trustees in 2019. I think you would be interested in reading it because it really points out many issues with the FRM exam and GARP itself. https://forum.bionicturtle.com/thre...-committee-and-garps-board-of-trustees.22758/

Hi @Nicole Seaman and @David Harper CFA FRM (and anyone else interested in this topic!), I have emailed Richard Apostolik with the following. I will update BT if I receive a response.

**

Hi Richard,

I am writing to express my concerns regarding the composition of the GARP Board of Trustees.

Having obtained my FRM designation in early 2020, I have been looking at the impressive resumes of the nominees but finding myself overwhelmingly disappointed as a whole. I have looked at forums online and found that others have raised the same concerns as far back as 2009.

My primary concerns are the following:

1. There is no indication that ANY of the GARP Board of Trustees have earned their FRM certification.
A key value-add of GARP is its professional certification programs: "GARP sets the global standard in professional certification with the Financial Risk Manager (FRM®) and Energy Risk Professional (ERP®) certifications. These programs are rigorous and very well respected across the globe. By demonstrating expertise and commitment to better risk management practices, Certified FRMs and ERPs stand apart in their respective organizations." How can the leaders of GARP achieve this goal or demonstrate to the world that they believe in the value of an FRM if its key decision makers are not willing to complete the designation?

2. There is an exceptional lack of diversity on the Board.
The lack of diversity on the Board is quite jarring: of 16 members there is one woman and very few people of colour. The GARP Board of Trustees Governance and Nomination Committee has slated seven senior risk professionals for election to the Board this year. All are male.

As a designation holder that invested a lot of time and money into obtaining my FRM, it makes me question whether my designation will hold its value in the industry if none of the senior individuals working in that industry and running GARP actually hold the designation. Furthermore, how will the FRM grow its reputation as a "rigorous and very well respected" program if there is no indication that GARP: (i) employs people with an FRM (the entire FRM product team should be certified but I cannot find any indication of this); and (ii) is able to assemble a Board that is representative of the members of GARP and that can provide a diversity of perspectives (across a range of social diversity factors including gender, race, age, profession, etc.).

I would appreciate a response to the above. Hopefully I have overlooked a large chunk of stakeholders that have their FRM and are closely involved with the program.

***

 

[David Harper CFA FRM]

Hi @jwagner88 Thank you for sharing your email. Both of your concerns are valid (who could argue with either?). I do continue to be disappointed--over a decade later--that [apparently none of] the Trustees continue to be uninterested in "eating their own dog food." It is sort of astonishing to me, actually, that no Trustee has ever held an FRM. Personally, just for myself, I could not imagine assuming a Board role (or even working at the organization) without pursuing the credential. But then again, I tend to a sincere person who needs to believe in what I am doing.

Now, we do study Boards (of Directors) in the FRM so we do know that it would be totally unreasonable to expect every Board/Trustee member to hold the designation; e.g., Boards are also "diverse" in competencies, an expert in strategy typically won't be an expert in finance. However, it equally reasonable to expect at least some members of GARP's Board to either hold the designation or be in the process. Yet none seem to be even in the process?! At the same time--again all of this is merely my personal opinion--as I wrote in my memo, I think it's more important than GARP's own key staff members hold the designation (or at least be in the process).

In my 2018 Memo, I did suggest they implement selected threshold requirements for certain staff (or Board members) to at least begin the process of seeking the designation. I have not been focused on ethnic/gender diversity, but your observation is troubling there, too. All Boards should be engaged in addressing diversity, if for no other reason that neglect of diversity is a bona fide "risk factor." Ironically, it is surely the case that there exist many "diverse" candidates who also hold the designation (appointments that would surely kill "two birds with one stone" as they say?).

We support these concerns. Let's hold the profession, as we hold ourselves, to higher standards. Thank you for sharing.