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CFA or MBA: Which is right for you?

A lot of people are wondering whether they should seek a CFA in place of the more traditional MBA. In large part, the answer depends on your focus.

The Chartered Financial Analyst (CFA) designation has been enjoying a heightened profile and increased popularity in light of surging private equity activity. So far In 2007 - the program's 44th year - 140,000 people from 156 countries have registered to sit for the three exams that determine, in part, whether one is permitted to tag those three letters at the end of their signature.

A lot of people are wondering whether they should seek a CFA in place of the more traditional MBA. Which will get them ahead? Which will make them more marketable? Which will attract a bigger compensation package?

Whether you should seek a CFA, an MBA, or both has everything to do you're your professional goals, says Joshua Wimberley, a client partner in recruiter Korn/Ferry's financial officers practice. Simply put, if your goals include anything but asset management, a CFA isn't for you.

Focus on Asset Management

"The CFA is of huge importance in the asset management industry," Wimberley explains. "An MBA is more for investment banking or business in general. It's the standard educational background on Wall Street. If you want to go into investment banking, there is no need for a CFA. It's really comparing apples and oranges."

In short, the CFA gives you the technical skills to succeed in investment management, while an MBA prepares you for a broad range of challenges in the business world. Even for those dedicated to investment management, the big-picture business know-how an MBA affords can propel your career and earnings.

Even executives with the CFA Institute encourage an MBA for those seeking their designation. Bob Johnson, managing director of the CFAI's education division, says the MBA and CFA are "complimentary, not competitive" designations. "I do realize people have a limited amount of time and need to prioritize what educational opportunities they avail themselves of," says Johnson. "For a young person who is preparing for a career in investment management, both educational opportunities are something they should consider."

'The Ideal Career Path'

Johnson lays out what he considers an ideal career path for a recent college grad committed to asset management: Enter the CFA program while working full-time. With the work experience and the CFA designation, enter a MBA program - also while working. "Think about it," he says. "You are 28, 29 years old with both a CFA and an MBA and six years of work experience." In addition, he notes, "most employers in the investment management business will subsidize the cost of a CFA program and an MBA."

Meanwhile, Korn/Ferry's Wimberley believes a junior-level asset management professional with a CFA alone should succeed. "If you're talented and a high performer and all you want to do is asset management, I would say get an CFA," he says, adding that the treasurers of many Fortune 1,000 companies, CFOs and controllers have Level 3 CFAs only.

To those who suggest the CFA is replacing the MBA, Dave Wilson, president and CEO of the Graduate Management Admission Council, says: "Not a chance." The CFA charter produces "first-class analysts," he says, but an MBA covers the fundamentals of business relevant to every type of organization, from entrepreneurial start-ups, to multinational corporations, not-for-profits, and government agencies. "An MBA prepares someone to work within an organization as it relates to margins, strategy, mission, marketing and human resource issues," he says. "That will always make the MBA a relevant degree."

The Costs

When it comes to the nitty-gritty, there are big differences in each designation. For one thing, the price difference is significant: CFA enrollment and exam fees are $2,200, compared to the more than $100,000 an MBA from a top school can cost. It takes a minimum of three years of coursework - at least 250 hours of self-guided study - before one can sit for the six-hour CFA exam. A typical MBA program, attended full-time, takes two years.

The CFAI limits the number of charters they grant yearly - in 2005 and 2006, 5,752 and 10,045 charters were awarded, respectively. (In 2005, 80,000 people sat for the CFA. In 2006, 91,000 people sat.) Today, the institute has nearly 78,000 members worldwide, with the numbers of registered applicants ballooning in India, China and Hong Kong.

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AUTHOREmma Johnson Insider Comment
  • Sm
    Smith
    28 May 2013

    Hey Guys..i am currently Doing my Chartered Accountancy(CA) course and am planning to make my career in finance...what should i Opt for..CFA or MBA??? what would help me along with my CA degree...Suggestions are welcomed...

  • Qu
    QueweyQ
    18 May 2012

    I too have been told that the CFA and MBA go hand in hand but the CFA is essential for asset management. However, I find it hard to believe that it only takes at least 250 hours of studying and 3 three tries. I know people older than me for whom it has taken much longer and a few more tries.

  • fi
    financialanalyst1
    10 May 2012

    I see this question all over the internet. While CFA versus MBA seems to be the most popular, it is followed closely by CFA versus virtually every other financial or business designation (CFP, CAIA, CPA, etcetera). I think sometimes candidates are so caught up with the question of which designation to pursue that they forget to actually study for any of them.

    For details click on the link
    http://www.finquiz.com/blog...

  • Th
    Thabelo Mmege
    11 March 2011

    Im a student registered for a BSc ACTUARIAL SCIENCE degree, but Id like to go the CFA route and not the fully fledged ACTUARY route. Can somebody please give me more insight as to whether what courses I need to take in the duration of my degree in order to be granted access into the CFA program.

  • PS
    PSH
    27 January 2011

    have done MBA(finance) and am currently working with one of the leading private banks in India. I have a dream to work as an investment banker. How would you recommend CFA programme can help me out?

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