Top Masters in Finance qualifications can be a pretty expensive business. MIT Sloan estimates that its 18 month Masters in Finance qualification will set you back around $158k once you've paid fees and living costs. At London Business School, you're looking at £40k in fees alone. Why not, therefore, just follow the CFA exam course, which will cost you a few thousand dollars at very most?
That all depends what you want from the course. "A Masters in Finance and the CFA exams are both very interesting qualifications," says Christian Dummett of London Business School's careers team. "But they're also very different - the CFA exams are about distance learning, a Masters in Finance is much more practical and experiential. Our students have the support of our careers centre and practitioners in the classroom. They build a network. When you pass a CFA exam, all you really have is a piece of paper."
A Masters qualification will help you get a job, a CFA I pass will signal your commitment
If you don't already work in finance, Dummett says the CFA exams are good for signalling your interest in the sector but they won't open doors to getting hired in the same way as a Masters qualification from a top school.
"Recruiters will tell you that a CFA I pass is a nice to have, but it's not essential," Dummett says. "It gives you a slight edge and demonstrates your motivation and rigour, but is no replacement for a Masters."
Students who've taken the different qualifications agree: "If you're trying to land a first finance job, a top brand Masters in Finance is going to be much better than a CFA pass," says one analyst who's passed CFA level I. "A CFA is only useful once you're already in the game."
A Masters qualification will teach you much more about quantitative methods
Although it varies from Masters course to Masters course, there's a definite overlap between what you'll learn on a Masters in Finance course and a CFA course. "My friends who've done both tell me that most of what you'll study in the CFA Level I is covered in a Masters in Finance course," says one Masters student who's starting a job in IBD next year. "They say the same goes for CFA Level II, although the CFA material is more applied and less theoretical."
An equity salesman who has a MSc in Finance from Imperial College and a CFA II pass, says the Imperial Masters was more focused and quantitative than the CFA exams: "Under the Masters, I was trained in using Excel and statistics packages for analysis. The CFA program is broader and more focused on investments than statistics."
Passing the CFA exams is really good if you want to go into asset management, but even then it's not mandatory in advance
CFA qualifications were traditionally taken by people in the asset management industry. For this reason, the CFA qualifications are especially helpful if you want to become a fund manager or researcher in an asset management firm.
"I started the CFA program because I'm interested in investment," says the ex-Imperial equity salesman. "It's really a course for the investment management industry."
At the ICMA Centre in Reading UK, associate dean professor Adrian Bell, says they've incorporated the CFA Level I syllabus into their MSc in investment management. "Students study the syllabus of our Masters and they study for CFA Level I at the same time," says Bell, "Students who are going into investment management see the benefit in having both qualifications."
At the London Business School, Dummett says asset management recruiters are interested in hiring Masters students who also have a CFA Level I pass, but that it's not mandatory: "Around 50% of our students who go into asset management have passed the CFA Level I. The other 50% haven't."
Students are increasingly taking CFA I and a Masters qualification in an attempt to differentiate themselves
The ICMA Centre isn't the only college offering the CFA Level I qualification alongside its Masters course. As of September 2015, the CFA Institute had 152 'Program Partners' at colleges and universities around the world, all of which incorporated the CFA I program into their courses. Unsurprisingly. therefore, students now account for 25% of all CFA exam candidates globally.
At the ICMA Centre, Bell says he's under pressure to offer CFA tuition to students on his other courses in international securities, capital markets and corporate finance. "For the first time this year, I've had a lot of students who aren't on the investment management course coming and asking if they can study the CFA too.
"They can see that the CFA is a very highly regarded professional qualification and they want to combine it with the rigour of an academic degree," says Bell. "They think they need both. They want that edge."
But if you can afford it, a top Masters may still be best
Faced with the choice between a top Masters in finance qualification or a CFA, most of the people we spoke to in the industry said a Masters qualification is preferable. "How many people have a Masters in Finance from the London Business School compared to a CFA Level I pass?" asked one M&A analyst. - "The CFA Level I is becoming compulsory, so pretty much everyone has it, whereas my strong academic credentials have been a big differentiator."
Figures from the eFinancialCareers CV database confirm the rarity value of a Masters in Finance over a CFA qualification. In the past year, more than three times as many juniors (with one to three years' experience) with CFA qualifications have uploaded their CVs as juniors with Masters qualifications. An even smaller proportion have both.
However, different qualifications are appropriate to different sectors. Based upon our own data, the table below shows the key sectors in which junior bankers with a CFA pass, a Masters in Finance, and both qualifications work. A Masters in Finance qualification alone looks best if you want to work in risk management, investment banking (IBD) or corporate banking. 11% of Masters qualified juniors are working in investment banking, compared to 9.9% of CFAs.
For big sectors like asset management and research, it might be helpful to have both a CFA pass and a Masters. 18.8% of junior candidates with both exams are working in asset management, compared to 13% of those with just a masters and 16% of those with just a CFA.