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CPA Vs. FRM: Which One Is Better?


January 26 2020 - There are nearly 665,000 Certified Public Accountants (or CPAs) working throughout the United States and a little over 650,000 Financial Risk Managers (or FRMs).

Are you considering hiring either of these professionals to work with your company? Are you unsure of where to put your money to see the greatest returns and get the most help?

Explained below are some of the key differences between a CPA vs. FRM, as well as some tips to help you find the best financial professional for your business.

What Is a CPA?

A CPA is a type of financial advisor. They have passed the very intense and difficult CPA exam and have met specific work experience and educational requirements.

CPAs must have a minimum of a bachelor's degree before they can sit for the CPA exam. They must also have completed anywhere from six months to two years of work under the supervision of a licensed CPA.

A CPA has extensive knowledge of finance and knows how to help a business manage its money in a responsible way. They can also provide business advice, tax advice, and help with various business decisions.

What Is an FRM?

An FRM is a professional who has received accreditation from the Global Association of Risk Professionals (or GARP). They specialize in assessing risk for a variety of companies, especially banks, insurance agencies, accounting firms, asset management firms, and regulatory agencies.

To become an FRM, an individual must pass a two-part exam. They must also complete two years of work experience in the field of financial risk management.

In addition to assessing risk, FRMs, also help businesses to develop strategies to counteract the potential effects of these risks. Many FRMs specialize in a specific field, such as credit risk or market risk.

CPA Vs. FRM: Which Should You Choose?

Both CPAs and FRMs have a lot to offer businesses. Their skillsets differ quite a bit, though, and it's not always easy to tell which one will offer more benefits to your company.

If your company needs general financial advice and help with things like filing taxes, a CPA will probably be a good fit. They can come in especially handy during the following situations:

  • When you're just starting to get your business off the ground
  • During tax season
  • When you're considering taking out a small business loan
  • When personal life events may affect your business structure
  • When you're getting ready to merge, sell, acquire, or close

An FRM can also be a useful ally in certain situations. If you work in a business that often requires an FRM's help, such as account, insurance, or asset management, it might be a good idea to have one on retainer. They can also help in the following instances:

  • You're having operational issues within your company
  • You know that you've violated certain industry regulations and need to get back on track
  • The market has been very volatile or has shifted for the worse
  • The economy has shifted
  • New laws are in effect that will have an impact on your business

In these cases, an FRM can provide invaluable advice and help you figure out the best way to proceed to protect your business.

Tips for Hiring a CPA

If your situation seems to call for a CPA, there are some key factors to keep in mind when you begin your search. Here are some things to consider when you begin hiring:

Know What Your Company Needs

Start by getting clear on what your company needs.

What kind of financial advice are you looking for? Are you interested in retaining a CPA's services long-term, or do you just need their help for a short while?

This will help you narrow down your options and find someone whose services you can afford.

Consider Their Qualifications

Always ask about a CPA's qualifications before hiring them. Find out where they went to school, when they took their licensing exam, and how long they've been working as a CPA. You may want to verify with your state licensing board, too, to ensure their license is legitimate and up to date.

Ask for References

Don't be afraid to ask for references, either. This can help you figure out if a CPA is the real deal and someone worth hiring. If they're hesitant about putting you in contact with past clients (or if those clients don't have anything positive to say), that a big red flag.

Tips for Hiring an FRM

As with a CPA, there are also specific FRM requirements you ought to make sure candidates for the risk management position are able to meet. The following guidelines are especially important to keep in mind:

Ask About Their Education

FRMs don't require as much education as CPAs. They should still have completed the minimum requirements to get their license, though. If that doesn't seem to be the case, or if they're vague about when they became licensed in the first place, proceed with caution.

Find Out About Past Experience

Always ask about an FRM's experience too. Find out how long they've been working and what kind of businesses they've worked with prior to seeking a job with you. What kind of experience do they have that makes them a good fit for your company?

Assess Their Temperament

Consider their temperament, too. It's not a good idea to work with an FRM who seems to have a volatile temper or might encourage you to make rash decisions. Look for someone with whom you get along well and who will always take your concerns into account before making any recommendations.

Get Your Finances in Order Today

Now that you have a better understanding of the differences between a CPA vs. FRM, which one do you think is a good fit for your business? Do you need to hire both?

Regardless of your current situation, the tips outlined above will make it easier for you to bring on the best person for the job.

Check out some of our other hiring-related articles today if you need additional help choosing a financial professional to help you keep your company afloat.

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