CFA or MBA? Is CFA better than MBA? | BankingPrep

It is such a popular question among business students and professionals who desire to climb up in the career ladder. There are numerous personal variables that could upend the answer, some of which are: 

CFA or MBA

  • your career path, 
  • your current schedule, 
  • your aimed salary…

These are such personal variables that we cannot decide whether you should head to a B-school, or go for a CFA course.

And therefore, in this article, rather than pinpointing the winner between CFA and MBA, we list out self-assessed questions for you to answer, with the end-goal of you determining which qualification is more suitable for yourself.

But first, let’s take a look at the definition of these qualifications, one that nobody told you before:

1. CFA vs MBA – The Untold Definitions 

1.1 CFA – A Stamp of Approval

The CFA is like a stamp of approval within Investment/Financial industry. Approved! – You have sufficient knowledge building blocks to thrive in this Investment industry. You stand out from other Investment professionals, your salary is raised, you reach out to a great network of CFA Charterholders… 

Here’s what a CFA designation ‘whispers’ about its Charterholder:

MBA“This is a highly analytical, quantitative person who has strong discipline and self-motivation (required to study for this CFA strenuous exams). His grounding base of knowledge is sufficient for Investment-focused roles.”

Nice! So every Financial professionals should have this prestigious Charter?

NOT QUITE!

1.2 CFA – Not the One for All

Despite being the most recognized qualification among Financial professionals, CFA is actually NOT required from every role in the industry. 

Let’s make it clear from the start: CFA might not be the right one for you, UNLESS you are sure about your career path within these Investment divisions:

  • Portfolio management, 
  • Asset management, 
  • Wealth management,
  • Equity Research, 
  • And other financial roles relating directly to investing decisions.

This conclusion is based on the proportion of Job roles of CFA Charter-holders below:

However, the fact that you’ve probably seen yourself listed on this group is not necessarily equivalent to you taking the CFA exam right away. Let’s check on the MBA and the questions below, too, to ensure yourself 100%.

1.3 MBA – An Open Door

Every year, top Business schools welcome the most competitive future Business leaders from around the world, producing a batch of management talents coveted by a wide array of employers across industries. That is how the MBA degree has been polished year by year – too shining a professional medal that thousands of competitors aspire every year, with the hope to enhance their career.

CFA or MBA

Wharton, Harvard, Stanford, Oxford, Yale… – owning an MBA degree at these prestigious B-schools, and your professional path would likely be upended. You will be equipped with a solid grounding of Business and Management fundamentals, plus the skills to be an effective leader. One more thing unique to these B-schools is the support and learning opportunities from a robust alumni network. 

With that said, in terms of technical skills, MBA at its core is “A mile wide, and a foot deep”, especially when compared to CFA. If you are a Financial analyst considering the two qualifications, you might want to read on to the self-assessed questions below to make up your mind.

Here comes the main part – the self-assessed questions. Have your own answer in mind before reading on:

2. CFA vs MBA – “How Do You Picture Yourself Afterwards?”

2.1 The Answers that Scream “CFA”:

 

CFA or MBA

 

“I want to move up within the Investment/Asset management track.”

Once you’ve got into Asset management firms, a CFA is crucial for your career progression. 

Traditional Asset management firms rely heavily on marketing and branding, they need signals proving their team is analytically strong. That way, investors and wealth advisers can have trust in these firms; they appeal more equity and debt, making more revenue. 

If you expect to move up the hierarchy with higher pay in these Asset management firms, CFA is almost necessary. My advice: if you have decided this is the path you want, start preparing for the exam as early as possible, suggestively on top of your entry-level jobs at these Investment companies.

However, among the Investment/Asset Management track, the Hedge fund managers have quite a different perspective on the CFA, even vocally negative towards the designation. They look for young hungry analysts that are laser focused on the firm and clients, rather than spending 3 years on exams which otherwise could be spent on stock research…

“I want to break into the Investment/Asset management track.”
  • If you are fresh graduates looking for an Investment job, register for CFA Level 1 is a no-brainer! Show your attempt to take the exam on your resume, because:
  1. It shows your dedication and commitment with this Financial industry
  2. The company you’re applying might fund for your CFA study and registration fees later on
  • If you have been working in other industries and interested in switching to Investment, you have to prove to the employer your grounding base of Financial knowledge and your future commitment, both of which would be perfectly demonstrated with a CFA Charter. 

With that said, let me remind you: A CFA HELPS you get the job, not “GUARANTEES”. Even more important than this 3-letter qualification are: 

– your relevant experience, 

– your networking skills, 

– and your interview performance, in total. 

CFA proves your sufficient knowledge, but your experience and networking get you into the interview, and your performance would ultimately make their call.

2.2 The Answers that Scream “MBA”:

“I want to move up within, or switch into other Financial roles (not Investment-focused roles)”

The CFA is coveted by a vast number of Financial analysts, making up the myth of its necessity within virtually all Financial divisions. THIS IS NOT TRUE. It’s only for Investment-focused roles that directly manage money. 

If Investment Banking, Private Equity, Hedge Fund, or other Wall Street jobs are what you are keeping an eye on, then an MBA might suit you better than a CFA.

e.g. Let’s say you currently work as a consultant with the intention to switch into Investment Banking or Hedge Fund, but not wanting to start over again from an entry level. That’s when an MBA degree at top B-schools would help you score the point from the Resume round.

Rather than the deeply technical financial requirements of Investment-focused jobs, other Wall Street divisions are more diversified in expectations for employees: Analytical mindset, strong leadership, spread-out areas of knowledge, and most importantly, a solid network. An MBA helps you just that!
MBA would also help you climb faster on the career ladder within these industries, without spending years on the traditional path.

“I want to switch to a non-financial industry.”

This seems too apparent to choose between CFA and MBA. The powerful MBA has always been a to-go option for career-switchers.

3. CFA vs MBA – “What is Your Working Style and How Much are You Willing to Commit?”

3.1 The Answer that Screams “CFA”:

“I’m a lone woof, I’m ready for intensive study hours.”

When it comes to CFA, there’s a legendary number: 300 – 300 hours of intensive exam preparation that eat up all your time besides your full-time job. 

You must be prepared for at least 1.5 years of pressured unbalanced work-study lifestyle, before deciding to embark on this challenging journey. 

You must picture yourself working with data and clients all day long, then get home, have a quick dinner, and sit tight to cram CFA materials until midnight. 

All the difficulties aside, if you are highly self-disciplined and motivated by tons of books, the CFA preparation process is fun in a particular way. 

You work hard, you get paid off. 

You don’t have to compete or prove yourself to any other along the way. 

You work hard, you pass the exam.

Other’s performances are not affecting yours anyway.

3.2 The Answer that Screams “MBA”:

“I want classroom interaction, and a more chill-out program.”

An MBA is the closest thing to going back to undergrad, but with highly-potential future leaders. Therefore, besides all the Business aspects the program covers, you’ll also get to build a quality network and absorb from great mindsets from all over the world. 

The course of work is not as intensive in terms of depth and study duration as for CFA. MBA students still have much time to socially interact, do leisure and community activities, take internships, and network their way to future interviews.

As much as you like classroom interaction, it’s a teamwork environment so your grades will depend a lot on group work performance and you will be assessed against your peers. Be prepared for that!

4. CFA vs MBA – A Look into ROI

4.1 CFA

Glancing through the costs it takes to become a CFA Charter-holder, it seems to be a bargain: A fairly low price, compared with its educational values as well as the weight the designation carries itself. 

Cost

Detail

Value

CFA Program Enrollment Fee

A one-time fee to enter the series of CFA exams

$450

CFA Exam Registration Fee

A fee charged on every exam you take, also covering eBook of the complete curriculum & mock tests

$650 – $1,380

CFA Institute Member Fees

Annual CFA membership fee once you passed 3 exams and your application is approved

$275

Study material costs

Test-prep materials from outside sources

$1,000

Opportunity cost

  • Work-life balance
  • Other approaches to move up: focus on current job, networking with experts…
  • Trials on different career tracks & roles

List of costs incurred

Doing a quick math and we’ll see the maximum costs incurred is roughly $6000, but with invaluable opportunity costs coming along.

In return, you will receive a highly-recognized qualification likely to boost your career status and salary. Here’s the average salary of CFA Charter-holders, for you to determine if it’s a worth-it investment:

Title

Income

Financial Analyst (corporate)

$80,930

Portfolio Manager (fixed income)

$253,250

Chief Investment Officer

$316,600

Portfolio Manager (equities)

$344,500

CFA yearly salary by job titles

4.2 MBA

MBA tuition fee is noticeably higher than the total cost of CFA, at averagely $120,000 for a 2-year program. That is yet to include room-and-board costs – the total could be as much as $100,000 a year, and it is increasing over time!

Not yet to mention the opportunity costs of the 2-year career pause, it’s a big number that drives applicants dizzy already. 

However, thousands of applicants still head to every top B-schools each year, hoping for a leap in career position and financial rewards afterwards would fairly compensate. 

CFA or MBA

Highest salary and bonus of MBA graduates 2019 (Source: USNews)

5. CFA vs MBA – A Conclusion

All in all, some basic factors we recommend you to consider when deciding for whether CFA or MBA are 1. Your career expectations, 2. Your commitment, 3. Your budget.

  • If you’re into quantitative and Investment-related jobs – those like Asset management and Portfolio management for example – CFA is a to-go Charter for you, stating that you’re a qualified professional in the field of Investment. Mindful the 300 rigorous study hours, and approximately $5000 – $6000 you have to spend to get this approval stamp.

CFA vs MBA

  • If you want to acquire a wider area of knowledge, with more rounded sets of skills to support your position at other Wall Street jobs, go for an MBA. However, be noted that only MBA degrees from top 20-30 Business schools can guarantee you a position at tier-1 financial giants. Other than that, you’d probably land your job at tier-1.5 – tier-2 firms, such as in Boutique banks or small Investment firms. Averagely $200,000 of total fee, added up with the opportunity cost for 2 years off from work, would be a major factor for you to consider, in return for quality networks, and the school’s prestige that likely to get you up the career ladder.

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