Few things in life are insanely nerve-wracking as deciding which career path you want to take. Sometimes, people opt to take a class on a subject hoping to fall in love with it and consider it a career, only to fail miserably. If you are a graduate who wants to shift to private equity, asset management or investment banking, you might be torn between CFA vs. MBA.
These two courses: master of business administration (MBA) and Chartered Financial Analyst (CFA) aren’t mutually exclusive, and at times it is recommended to take both. Furthermore, the two courses are neither perfect substitute for each other, though they are crucial qualifications that guarantee to certain extent a pay rise or career advancement. However, it is worth taking a few minutes to analyze the two courses. Before we do this, it is recommended to learn about the overview of the CFA Program.
A Brief Overview
Before the introduction of CFA, investment companies and other Wall Street firms spent a lot of time and resources training their employees. This is because most of them lacked the practical skills necessary to carry out their roles effectively, resulting in the advent of the CFA Charter to solve this problem.
An MBA on the other hand is considered relevant to individuals who wish to change careers to a business field or land a managerial role. It is also recommended for those who want a salary raise. The coursework covers every aspect of a business as you will later learn on below.
The MBA discusses all aspects of a business such as marketing, finance and procurement, while the CFA discusses “deep-finance” topics such as portfolio and equity analysis. Once a person studies for a CFA, he will certainly find his skills more relevant to finance and investments firms.
However, you need to understand that you are required to have some work experience before you enroll for a CFA Charter. While some business schools recruit some experienced students for their MBA programs, not all of them do.
Your Future Career
If your ambition is to work in Wall Street firms, it is advisable to enrol for a CFA program. All things held equal, having a CFA guarantees you progress in the field both in compensation and career advancement. Conversely, a MBA will expose you to several business fields, including finance. In retrospect, a MBA can qualify you to work in various industries, but if you want to be an analyst or work at a hedge fund, then the CFA is the right course for you.
Costs, as with other preferences in life, will determine which course fits your budget. Let’s assume that you will need an average of four examination sittings to complete the three levels of CFA, the cost of registration and examination fees will total around $2000. Let’s not forget that you will still need to look for study materials, which cost money, meaning it the average cost of hacking this insanely tough test will cost you $5,000.
Now, let’s analyze the cost of the MBA program. If you want to study for it on part-time basis in a state college, the cost of the program will cost you about $20,000. This figure can rise astronomically to $100,000 or even beyond that if you enrol in a prestigious Ivy League university such as Stanford. So the matter is clear here; it will cost you a lot more if you opt to study for the MBA as opposed to the CFA.
Mode of Study
The learning format of the two programs is totally different. CFA is basically a self-study program, meaning that you will study at your own pace or adjust it to fit with your work schedule. Moreover, you are not required to attend classes, though it is recommended if you want to finish it soon (the failure rate isn’t that good to look at).
Unless you enrol for classes, there are no continuous assessment tests, homework or even examinations to help you track your progress. In fact, CFA is just one final exam per level where you are tested for everything you have learnt in that particular level regardless of whether you attended classes or studied on your own.
On the other hand, MBA programs are always structured and lecture-based. You are supposed to attend at least the minimum number of lectures stipulated by the business school’s administration before sitting for any exam. Moreover, there are assignments and quizzes to be done, which will count a lot in determining your final grade. This structure also helps you gauge whether you have mastered the study material covered in a particular stage of the course and speed up to catch up with the rest of the class if you have been slacking.
Generally, MBA is mostly lecture-based while the format of learning for taking the CFA program is text-based which makes it possible to study and work simultaneously. This means that in a CFA program, a student gains theoretical knowledge and practical experience at the same time.
Time to Complete
As you will learn through this MBA admission process, most college programs allow you to complete it within two years, though it can be longer if you opt to study part-time. However, for the CFA Program, the CFA Institute has set a minimum of 300 hours of study before undertaking one of its tests. If things go according to plan, which means you manage to pass all your sittings, the shortest time you can take to complete the program is one and half years. However, most people fail at least once or twice bringing the average time to complete the program to between two and half to three years.
Should you do both?
Most people, provided costs and other commitments can allow, would love to have both qualifications. But is this the right thing to do? I would say partly yes, and partly no. It depends on what you want. If you want to earn more money, do the CFA or the MBA or both. If you work in investment management and want to scale the corporate ladder, finish your CFA. However, if you want to enter into the field of investment management but have no experience and don’t want to start out as a junior analyst, do the MBA first then the CFA.
Educational institutions have recently come up with an ingenious structure where they offer CFA courses in their MBA programs. The blend of the two most sought after programs is deemed to offer improved returns (ROI), both salary and career-wise, when compared to each program individually. This definitely solves the headache of deciding between CFA and MBA.
If you have done some deep soul-searching and know that you have superb analytical skills; and want to work with hedge funds, bulge bracket bank or a private equity firm, it is advisable to enroll in a CFA program. You also need to have the grit to withstand the gruelling lonely journey that studying for a CFA entails. However, if you are yet decided on which industry you want to specialize in, go for an MBA. All in all, conduct a thorough self-check before you choose the program that best suits you.