What is the ‘best’ way to prepare for FRM exam?

This question appears a lot on forums and there are a number of takes on it. Here is ‘one possible’ path that you might want to take to prepare for FRM Exam. Although I appeared for this exam back in 2005 when it was still an integrated single exam, it helped me then. I have redesigned certain aspects of this approach after having started to train candidates for FRM.

Pay emphasis on concepts

I’ll put this as the most important. And, you’ll have to be smart in picking your sources for this. Irrespective of your academic background and work experience, the best way to master core topics (say, options, option pricing, option strategies, fixed income hedging, probability and statistics, var methods, var mapping, portfolio risk etc) is from GARP core readings. There is no shortcut to these topics and they need to be given their due respect. For other readings that cover organizational setup, roles, responsibilities, regulatory recommendations and research, one can stick to summarized versions available in notes from preparation providers.

Pace yourself

There is a lot to cover in each level (70 odd readings in each) and many people give themselves around 3 to 4 months for this. So, it makes perfect sense to both be very regular (follow a week-wise plan, try and do 4-5 readings each week) and pace yourself (by all means, you should be done with all the readings leaving 3 weeks for revision and doing GARP sample papers and a couple of mocks). Here are sample study plans both for Part 1 and Part 2. If you find procrastination as your biggest foe, then try and find a study partner or join a preparation class.

Apply what your learn

Put in other words, see concepts in action by attempting questions. Some good sources are the FRM handbook (contains actual FRM questions, although till 2010 only), GARP sample papers and wherever available, end of reading exercises. Certain formulas are best illustrated and registered after you have applied them to simple questions, so do not ignore this step.

Encode your learning

Since the curriculum is huge, you will have retention issues for sure, so you should encode learning in your handwriting and your vocabulary into your very own version of a ‘cheat sheet’. Preparation providers provide a sample at the back of their notes. This can be taken as a starting point, but it’s best to have your own version of it. Think of it as your set of 5 sheets of paper that you can read on the way to the exam centre. A good version of it will take time (and effort) to make and hence it’s best done alongside your preparation.

Get the context

When preparing for a specialized certification like the FRM, a candidate can face a couple of problems. Firstly, for somebody who is not already in a risk related career and is taking the FRM to prepare for one, it can get very difficult to put every prescribed reading in it’s right context. An altogether different level of learning and appreciation is possible if the candidate knows the “whys” behind each part of the curriculum apart from the “whats” and the “hows”. So, try and take a step back and read up stuff that can help you build a context (this can get as much fun as watching a documentary or listening to an audiobook related to bank failures and the financial crisis, but this is not to be done at the expense of your preparation time). Secondly, a vast curriculum with readings that are cherry picked from different sources can easily make you feel lost and off-track due to their lack of inter-connectedness. As far as possible, try and retain a big picture view of what you’re learning. Take each reading as a means of fitting a piece into an overall big picture.

Go beyond the certification

I kept this one for the last, and this point also partly answers the question that appears a lot on discussion forums “Why should I give the FRM and how will it help me?”. Try and enjoy the process of preparing for the exam since, if not anything else, it does offer you a structured exposure to a vast, interesting and ever evolving body of knowledge. Try and aim for learning that sticks, learning that you can directly apply in your workplace (if you’re already in a risk related role) and learning that can help you ace or sway an interview totally in your favor.

So how would you prepare for FRM?

There isn’t a one size fits all approach and you can design a preparation strategy that fits your learning style the most. You can stick to studying on your own if you have the right background and skill sets to tackle the curriculum and if you find no problems whatsoever in staying regular in your efforts. Since a career in risk and hence a designation like the FRM attracts people from a wide variety of academic backgrounds and work experiences, there is also merit in studying with like minded peers and gaining from their perspectives. If you’re considering enrolling for a FRM preparation course, then finRGB offers an online course, both for FRM Exam Part I and for FRM Exam Part II. You can check the outlines of the course on our course pages. To express interest in any of the courses, you can contact us on any of the options detailed here. Course related updates (start dates, schedules) will be also be put up on finRGB’s Facebook page.