As we’ve covered the MBA subject by looking at CFA Program business schools, a natural follow up question would be: CFA vs MBA, which should I go for?
Like most comparisons, the answer is – it depends.
Firstly, it’s not straightforward to compare a CFA charter and an MBA – they’re fundamentally different creatures addressing different disciplines.
At the same time, we recognize 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 have evaluated both qualifications based on the benefits gained from a career perspective, and the costs involved, to come up with a 9-point framework for you to assess which is better for your individual case.
- #1. CFA charter: great for finance
- #2. MBA: more widely recognized outside of finance (but that is changing)
- #3. The CFA Program is more time-efficient
- #4. But you can expect to earn an MBA sooner than a CFA charter
- #5. CFA charter costs (a lot) less
- #6. CFA vs MBA expected salary increase
- #7. CFA exam & MBA success rates are about equal
- #8. Both have great alumni networks
- #9. CFA vs MBA: Who says you have to choose?
#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 recognized 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 12-18 months, assuming consecutive passes.
That said, 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. With the more frequent computer-based testing schedule for CFA program from 2021, this may change in future years.
Another point to remember is that the CFA charter will also require 4,000 hours relevant work experience in at least 3 years.
#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 $2,600 to $8,000 in total with consecutive passes, but can go up to $15,000 if you spend like crazy every exam, and fail several times.
Yet, 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 vs MBA expected salary increase
From our extensive CFA salary research data, even after removing the work experience factor, there is a very clear increase in average pay as candidates progress through the CFA Program.
On average, submissions that indicated they passed CFA Level 3 or are CFA charterholders earned 53% more than those who had yet to pass CFA Level 1 exams.
According to Financial Times’ latest top 100 global MBA rankings, the median post-MBA salary for top 100 MBAs is $133,401, with a range of salary increase from 47%-190% after MBA.
This should be useful input to analyze which qualification would add more value to your career objectives.
#7. 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.
#8. 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.
#9. CFA vs MBA: 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 an 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: