CFA® Program vs MBA: 8 Points to Consider

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By Christine

As we’ve covered the MBA subject by looking at CFA Program b-schools, a natural follow up would be the classic question: CFA Program or MBA?

A very, very popular question among potential candidates compares the CFA charter to an MBA – which would be better? Like most comparisons, the answer is – it depends.

Firstly, it’s a very tricky thing to compare a CFA charter and an MBA – they’re fundamentally different creatures addressing different disciplines. However, at the same time there is a real need to evaluate these two qualifications side-by-side these days, as many up-and-comers looking to reinforce their CVs look to these two qualifications and are not clear about what each can offer to them and their careers. 

In trying to address this scenario, I will therefore critique both qualifications based on the benefits gained from a career perspective, and the costs involved. Always remember – the better qualification depends on your individual case. Read these points carefully and consider your own case before deciding which to pick (if at all).

#1. CFA charter: great for finance

The CFA charter is the qualification if you’re looking to build a successful careers in asset management, private wealth management, equity research or in ratings advisories in financial institutions. In these sectors an MBA will simply not be as valuable as a CFA charter. A CFA charter will also be an asset in all other financial services, as well as additional recognition even outside of financial services especially in Asia and Middle East & Africa.

#2. MBA: more widely recognised outside of finance (but that is changing)

However, the MBA has the CFA charter beat in most industries outside finance. Acquiring advance financial analytical skills does not have the same pizazz as an MBA in non financial industries (say, advertising or manufacturing). If you’re unsure of what industry you’re planning on spending the rest of your career in, an MBA might be a good consideration.

However, the CFA charter can be very useful outside of finance, and sometimes more so. To find out how, read Zee’s experience in utilising his CFA charter outside of finance.

#3. The CFA Program is more time-efficient

The CFA charter holds an edge over an MBA in terms of time needed for preparation – although the CFA program demands an approximate minimum 300 hours worth of study per level, you can schedule these as you see fit. As the CFA program is a distance-learning program, many candidates find it perfectly possible to squeeze in study preparation with a full-time position – hence you can continue accumulating work experience (not to mention continue earning) while studying for your qualification. The MBA on the other hand, will require a typical 2 year full-time commitment, which can be a significant opportunity cost and impact your work experience.

#4. But you can expect to earn an MBA sooner than a CFA charter

Hang on a second. Doesn’t this point directly contradict point 3? Not necessarily. The shortest time period you can hope to complete your CFA exams is 18 months. And that is only if you start in December for your Level I and pass all your exams on your first try (which happens to a tiny fraction of the candidates, we’re talking single-digit percentages). 

The average time for a CFA exam candidate to completion is 4 years, which is 2 years longer than the average 2 years for an MBA. Another point to remember is that the CFA charter will also require 4 years of work experience.

#5. CFA charter costs (a lot) less

The monetary cost for qualifying for the CFA exams depends on how many exams you need to get there and how much you spend on prep materials. Typically this adds up to about $2,500 to $8,500, but can go up to $15,000 if e.g. you spend like crazy every exam, and fail several times. 

This still pales in comparison to an MBA’s weighty $200,000 cost over the full term. Adding the opportunity cost of not working for a typical 2-year MBA makes the CFA program much, much more cost efficient however you slice it.

#6. CFA exam & MBA success rates are about equal

​Some arguments on the CFA Program vs MBA thread sometimes point to the CFA exam pass rates. About 40% of CFA exam candidates pass each year, compounding to a very low total pass rate across 3 levels. Comparing this to 95% pass rates at Harvard, surely that’s one point for the b-school folks? 

Not necessarily – that argument assumes you already have been accepted to a top-tier school like Harvard. If you factor in acceptance rates into a mid/top tier school, the chances of an average person acquiring a CFA charter and graduating with a mid/top-tier MBA are about the same.

#7. Both have great alumni networks

Both the CFA Institute and typical business schools maintain thriving global networks that will be further enhance your career. However just like the studying process, I feel that to benefit from the CFA Institute network from a career perspective, a CFA charterholder has to be more driven and proactive compared to an MBA graduate. It’s not a matter of alumni participation or events, it’s just that MBA events tend to be tuned towards a networking & business angle whereas CFA charterholder events can take on a more academic tone.

#8. Who says you have to choose? 

At the end of the day, there are many people who end up obtaining both a CFA charter and an MBA. If you’re hell-bent on making your CV the best damn piece of paper the world has ever seen, by all means take both – it’s in no way a either-or situation.

In the end, it’s all about your personal goals and situation. If you’re looking for a qualification to enhance your career in finance or establish your finance credentials, the CFA Program is the way to go. If you’re looking for a qualification to boost your career outside of finance, or looking to move across industries, an MBA might be a better bet.

Have you chosen one or the other? Or both? Share your thoughts in the comments below, or check out our other MBA-focused articles:

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5 thoughts on “CFA® Program vs MBA: 8 Points to Consider”

  1. Can I vote neither? You’re probably better off doing Computer Science or some new trendy field if you’re a high school graduate today. If you did a BA in Liberal Arts at some tiny state school, I don’t know, depends how bad you want to break into finance. Now they have these coding academies the days of even needing a Bachelors degree has come to an end at some big firms. Other firms will always price the fancy schools and the fancy letters, but if you just want money, the ROI for a BSc. in Computer Science assuming you can get hired at say Google fresh out of school has to be pretty high.

    Reply
    • You’re not wrong. I think it depends on areas of specialization – not everyone is CS-inclined, whereas in most situations you can arguably boost your career with an MBA, and also arguably everyone should be financially literate, although not necessarily to CFA-level. If you’re looking at a non-engineer role at Google (and even within engineer ranks), those guys prize CFAs and MBAs too! 🙂

      Reply
  2. Hi, I am from Pakistan. I am almost done with my CA (similar to CPA but much more rigorous) and I am appearing in CFA L3 in June 2019. I have 3.5 years big four audit experience. I had to work in audit to satisfy the CA work experience requirement. Now, once I get the CA, hopefully in 6 months, and pass L3, I am planning to join some asset management firm. I should be able to get into some roles here based on this CA/CFA but someone told me that MBA from top business school would help a lot if I want to work in developed markets. I am sure I need an MBA, because so far I have studied via distance learning and I believe MBA will add a lot in terms of soft skills let alone the networking and branding opportunities. But I think an MBA from a school other than any of the top-15 schools would not be a good idea keeping in view my career level and the investment needed. I am also looking for schools with global outlook. Can you suggest a few schools that fit me well? My second question relates to timing of my MBA. Right now I am taking a 6 months break after audit (and working on a small start-up) together with focusing on exam preparation. Once I am done with this, I’ll try to find a research role and once I get it, I’ll apply straight away to 4 or so schools. Since the process takes a year or so, I hope to have accumulated at least 1 year of relevant experience. Do you think audit is a little relevant too to research role (especially the financial analysis part)? I read somewhere that big schools don’t like people with audit backgrounds. Is it true? There is a long story behind switching from audit to finance and I hope that would make a good essay 🙂 Any critical input is welcome. Thanks

    Reply
    • Hi Obaid The first question to ask is: since your end goal is a job in developed markets, is getting an MBA really an answer, or should you just start applying to jobs you want? An MBA takes 2 years to complete – in that time, if you’ve completed a series of internships or other roles, you’d be much more hireable than any fresh MBA. Given that you’ve already gotten a CA and CFA at that time, you should think carefully about whether going for another qualification is the right thing if getting a job is your main concern. We talk about this more here: http://www.300hours.com/1/post/2018/06/the-cfa-charter-not-a-golden-ticket-to-jobs.html I’m not familiar with the pros and cons of audit backgrounds, but having hired quite a few people myself, here are some important points: 1. Your CV gets you the interview, and for your CV to do that, it needs to stand out. Having a lot of qualifications helps in standing out, but so does having done something unusual. Having started your own company, sporting achievements – anything goes. I decided to interview someone for a finance role once because the CV was so unusual – a plastic surgeon who decided to switch careers. 2. Your own charisma and self-confidence during the interview gets you the job. No other way, unfortunately, so if you’re not the assertive, speak-up types, you’ll need to learn to be one. No amount of qualifications will compensate for that in hunting for jobs. Hope this helps. Good luck and I hope to see you around again soon!

      Reply

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