CFA or MBA, or both? - Guest comment

It's the classic question - CFA or MBA?

Unfortunately, there's no easy answer. It’s a very tricky thing to compare a CFA charter and an MBA - they’re fundamentally different creatures addressing different disciplines. When you study an MBA at an elite school, you will benefit from networking and the brand name of that institution. When you study a CFA, you will benefit from knowledge and achieve the ‘brand value’ of the CFA accreditation on your CV a very affordable price.

If you're trying to choose between the two qualifications, here are some things to consider when making your decision.

1. The CFA is great for finance

The CFA is the qualification if you’re looking to build a successful careers in asset management, private wealth management, equity research or in a ratings agency. 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. An MBA will be more widely recognised outside of finance

If you want to work outside finance, are unsure of your future, or want to diversify into a different sector, the MBA is the qualification for you.

3. The CFA is more time-efficient 

The CFA program is a distance learning programme which demands an approximate minimum 300 hours worth of study per level. You can schedule these as you see fit and many candidates find it perfectly possible to squeeze in study preparation with a full-time position. 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

The shortest time period you can hope to complete your CFA exams is 18 months. And that is only if you start in December for your Level I and pass all your exams on your first try (which happens to a tiny fraction of candidates - we're talking single digit percentages here).

The average time for a CFA candidate to completion is 4 years, which is 2 years longer than the average 2 years for an MBA. Another point to remember is that the CFA charter will also require 4 years of work experience.

5. And the CFA charter costs less

The monetary cost for qualifying for the CFA depends on how many exams you need to get there and how much you spend on prep materials. Typically this adds up to about $2,500 to $8,500, but can go up to $15,000 if you spend a fortune every exam, and fail several times.

This still pales in comparison to an MBA’s weighty $200k cost over the full term. Adding the opportunity cost of not working for a typical 2-year MBA makes the CFA qualification much, much more cost efficient however you slice it.

6. CFA & MBA success rates are about equal

Some arguments on the CFA vs MBA thread sometimes point to the CFA pass rates. About 40% of CFA 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.

But who says you have to choose between the CFA and MBA?

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. The CFA and MBA are not necessarily an either-or situation. There can be merit in having both qualifications on your CV – especially if you want to work in core roles for the CFA such as asset or wealth management.

So, assuming you do want to do both, what is the ideal order in which to study them? A lot of people will pursue an MBA first and start studying the CFA in their second year with the intention of completing it when they have a job. Alternatively, some people try passing all three levels of the CFA during the early years of a career, and then hammer it home with an MBA.

The route you take will depend upon your particular circumstances.

Option 1 - CFA first

If you are currently in a good role, or have a job lined up, then we would strongly advise you to take advantage of the experience you can gain and work on your CFA first.

CFA studies are much more time and cost efficient than an MBA. An MBA will also be more effective (i.e. you learn more from it) if you've had a few years experience in a professional setting.

Option 2 - MBA first

On the other hand, if you’re struggling to land a suitable role, and you've been accepted to a good business school, it’s more efficient to study for your MBA and to start studying for the CFA as the MBA course draws to an end.  Be warned though - it is tough as nails to try and do both at the same time. CFA is enough pain as it is.

If you're not in a role at the moment, and still undecided, then the best option is to try and get work experience first (i.e. Option 1). In the end, nothing beats good working experience, so it makes sense to try to get a role first. If it doesn't work out you can then explore options on the MBA side.

A version of this article first appeared on the blog 300 hours.