MBA Vs CFA: Which Is Better For A Career in Finance?

Interested in a career in finance but confused between a regular MBA course and a Chartered Financial Analyst (CFA) program? Here are some of the things you should consider before you decide on the right course for you.

The choice between a CFA and an MBA largely depends on your aims. An MBA course covers a wide range of general management topics including finance, accounting, human resources, operations, strategy and marketing.

CFA is for those focused on a career in Finance, and helps sharpen analytical skills essential for the posts of Financial analysts, Portfolio analysts and Investment analysts.

The most traditional career paths for which the CFA charter has been most relevant are for research analysts and those who might go on to be portfolio managers. Increasingly, the appeal of the course has been expanding and it is a useful resource for a wide range of careers, such as traders, brokers, academics, risk managers, regulators and chief executives. Lets list down some of the key differences between the courses:

1. Mode of Study

Most top MBA programs are full time one-year or two-year courses. Thus, students will have to take a break from work to attend these courses.

The CFA is structured in three levels that could be completed even while employed in a regular job.

2. Eligibility 

Most good MBA programs require students to have at least 2-3 years of experience. They are also expected to showcase their skills, achievements and past experience to come up with a solid application to improve their chances of being accepted by the business school.

The CFA Level I can be attempted even while the candidates are in the final year of graduation. However, level II requires graduation degree.

3. Self-study Vs. classroom lectures

Business schools have elaborate programs that involve classroom lectures, case study method, simulations, learning through team-work, real-world business projects as well as experiential learning.

The CFA is purely self-study based. Candidates need to be focussed and have a regular study-time within the day’s work schedule.

4. Gaining admission  

Speaking about level of difficulty, Business school application could be a long drawn out and tedious process. It begins with the GMAT (or GRE) preparation; multiple attempts at GMAT if the candidate fails to obtain a decent score. Then the right business school that suits career goals has to be shortlisted. The MBA essays, which would vary for each school, would also have to be worked on.

If finance is the focus, a CFA would be able to offer candidates better opportunities in finance related areas like corporate finance, investment banking, portfolio management, hedge funds or equity research.

The work does not get over even at this point. There are the recommendations to complete and the interviews that follow. Each of this stage needs a lot of time and energy.

The CFA program does not require enrollment in any institute. Candidates could appear for it once the preparation is over . Level I is held twice a year – in June and December.

However, level II and level III are held only once – in June. On an average, the preparation time for each of these levels is around 300 hours, so a lot of dedication and disciplined self- study is needed, especially for those who balance a regular job as well as study.

The exam success rates are quite low – for the June 2015 exam, it was 42% for level I, 46% for level II and 53% for level III. So candidates need to be prepared to repeat it in case of a failed attempt.

On an average, it may take upto four years to complete all the three levels. Even after clearing the three levels, four years of qualified work experience is needed to earn the CFA certification.

5. Tuition Costs

The cost of tuition for a two year program from a good business school would be in the range of $100,000 – $120,000. To this is to be added the cost of living (house rent, travel, food, etc.) as well as the opportunity cost, the forgone income during the two years when the student is not be working.

The CFA is more pocket-friendly. It involves a one-time enrollment fee of $450 and $860 exam registration fee for each of the levels. The exam registration fee also includes the e-book with the entire curriculum and also the mock tests for which the candidate pays an additional $150 plus shipping for the print version.

Those planning to enroll in some form of coaching for CFA preparation, will also have to consider the additional expense that would come your way.

6. Career Prospects

An MBA from an international location would give internship opportunities in and around. The student will also be able to take advantage of the location to look out for jobs in the industry of his or her choice.

After earning an MBA, they could choose to continue working in the same field as before or change careers. An MBA would greatly widen career choices as well as social network and provide a chance to interact with students or alumni coming from across the world.

If finance is the focus, a CFA would be able to offer candidates better opportunities in finance related areas like corporate finance, investment banking, portfolio management, hedge funds or equity research.

7. Salary

The CFA salary in the US for the mid-level positions like financial analyst, investment analyst, research analyst is in the range of $45,000 to $100,000 or higher depending on your academic background, designation, past experience, job location and several other factors.

For senior positions like that of a senior financial analyst or a portfolio manager, the salary would be higher in the range of $60,000 to $115,000.

The Bottom Line

In the end, both the MBA and CFA are valuable. The CFA, however, is widely coveted as the degree of choice by professional investors who work at money managers and registered investment advisors, the types of firms that many financial advisors get their first jobs and initial training and background.