CFA or MBA: Which Is Better for Me?
When you’re looking to advance in the financial sector, the top two paths to consider are the Chartered Financial Analyst (CFA) and the Master of Business Administration (MBA). But which is more suitable for you?
The CFA certification is the premiere global designation for investment management professionals. The MBA is the gold standard of degrees for those who want to progress in their business careers. No one program works for every professional, but if you're considering a CFA vs. MBA, it helps to compare the two.
What Is the Difference Between a CFA and an MBA?
An MBA degree program is a class-based course of study, and MBA candidates study topics like data analysis, accounting, strategy, leadership and marketing. They often choose to specialize in areas like finance, entrepreneurship, marketing or health care, but this isn't a requirement for every program. Specializing can help you if you’re interested in a career in a particular industry.
In comparison, the CFA credential requires a mix of exams and work experience to become a charterholder. Individuals pursuing this credential study topics like corporate finance, portfolio management and equity investments. Three six-hour CFA exams—Levels I, II and III—must be passed in sequential order. The exams cover a range of areas, including:
- Ethics and professional standards
- Investment tools
- Asset classes
- Portfolio management and wealth planning
All three CFA exams are offered each June, with the Level I exam offered again each December. Because of these set exam dates, even the most successful CFA candidate takes at least 19 months to complete the credential.
Exams aren’t the end of the CFA journey. To become a charterholder, candidates must have four years of qualified work experience, as well as two to three reference letters, and they are required to join the CFA Institute. Only then can they be considered a CFA.
Both the CFA and MBA designations take dedication and commitment. Another factor when you are considering a CFA vs. MBA is the potential cost, both upfront and hidden.
The CFA credential has a substantially lower upfront cost than an MBA. CFA candidates are only responsible for exam fees, not tuition or other coursework expenses. CFA exam costs depend on how far in advance you submit your registration. Early, standard and late registration costs for each CFA program test are $650, $950 and $1,380, respectively. According to the CFA Institute, there is also a $450 one-time program enrollment fee required at the time of Level I exam registration.
A top-ranked MBA, on the other hand, can easily run upward of $100,000 in tuition—and that’s in addition to books, living expenses, and room and board.
Upfront costs like tuition or exam fees aren’t the only things to consider when deciding on a CFA vs. MBA. The indirect costs for both choices can be substantial, taking into consideration things like stress and work-life balance costs that can come with extensive self-study for three difficult credentialing exams while likely working a full-time job.
Additionally, CFA study is self-paced and self-directed; there are lost opportunity costs that might come with missing out on the extensive networking of a typical MBA program.
Cost is only one aspect of a professional decision. In the question of CFA vs. MBA, it’s crucial to dig a little deeper. Let’s take a look at what happens after you obtain the credential.
Traditionally, the CFA designation has been most relevant for research analysts and portfolio managers. The CFA Institute, though, touts it as a generalist investment credential. Financial roles like traders, brokers and regulators make up the largest category of CFA charterholders, according to Investopedia.
Popular MBA specializations vary. However, an MBA—even one that focuses in finance or another industry—brings with it a broad base of knowledge in core business concepts. This means MBA degree-holders have the flexibility to work in nearly any industry should their interests or career goals change.
A CFA credential shows that you can dive deep into financial analysis, but an MBA is also a valued qualification in the financial sector. In the end, the numbers tell the story: Credential data from eFinancialCareers indicates 14 percent of managing directors in finance have an MBA (versus 10 percent with a CFA).
The continued growth outlook for both credentials is positive. A Poets & Quants article on the 2017 Corporate Recruiters Survey Report shows 86 percent of companies planned to hire MBA graduates, compared to 79 percent the previous year. Similarly, Bureau of Labor Statistics job data predicts a growth of 11 percent between 2016 and 2026 for financial analysts, key holders of the CFA designation.
Cost vs. Potential
The CFA Institute indicates a CFA charter will cost a minimum of $2,400. This pales in comparison to the cost of an MBA, which can be more than $100,000 for a two-year program.
However, there’s a stark difference in compensation after obtaining the credential. CFA salary data from PayScale shows the average salary for a CFA in the U.S. is currently around $84,000. In 2017, the total median compensation (including base salary, sign-on bonus and other guaranteed compensation) for MBA graduates from elite schools was $149,871, according to MBA salary data from Poets & Quants.
Then there are time costs to consider: Most MBA programs take two years, at which point degree-holders have the credential in hand. Conversely, WallStreetMojo reports that fewer than one in five candidates completes the CFA program within five years of getting started.
Conclusion: Which Is a Better Option for You?
Let’s return to the initial question: CFA vs. MBA: Which is better? Comparatively, the MBA grad gains certified broad business knowledge, while a CFA credential-holder dives deep into investment analysis and management.
If your goal is to work in business, managing not just projects but also people, then an MBA is a good match. With its broad base of coursework, you’ll learn how to lead a team, manage operations in an organization, make strategic, data-driven decisions and examine the core principles necessary to succeed in specific industries. Moreover, the generalist nature of an MBA gives you the flexibility to move between industries as the need or interest arises.
For those working in investment management specifically, the deep knowledge of the CFA credential will set you up for success. Learning about equity investments, derivatives, fixed income and portfolio management will leave you well-suited to take the lead in the financial sector.
Whichever path you choose, you’ll come away with a better understanding of financial and investment advice and a globally recognized credential.
Citation for this content: MBA@UNC, UNC Kenan-Flagler’s online MBA program.