If you find yourself navigating the finance industry or aspiring to do so and have contemplated the value of an MBA (Master of Business Administration), the next logical question might be: Chartered Financial Analyst (CFA®) CFA vs MBA – which holds more weight for me? Much like any comparison, the answer isn’t a straightforward one. Comparing a CFA Program to an MBA is akin to assessing different species addressing distinct realms.
Nevertheless, recognizing the prevalent need to juxtapose these qualifications, especially as aspiring professionals seek to fortify their resumes, this exploration becomes imperative. To tackle this conundrum, we’ve dissected both qualifications, weighing the career benefits and costs involved.
Let’s start with the MBA
To be eligible for the MBA, candidates must have attained an undergraduate degree from an accredited university. Your degree doesn’t necessarily need to be in business; non-business majors can (and do) enroll in MBA programs.
Admission Criteria
Prospective MBA candidates must hold an undergraduate degree from an accredited university, which need not necessarily be in business. MBA programs commonly welcome non-business majors, expanding the pool of eligible applicants.
Curricular Journey
The MBA journey spans two years of immersive post-graduate education, navigating students through a comprehensive business-centric curriculum. Some institutions offer condensed, intensive MBA programs, varying in duration from 11 to 18 months. Course offerings cover the spectrum of business management, including finance, operations, change management, supply chain logistics, organizational behavior, and marketing. Specialization options, such as entrepreneurship, marketing, finance, or management, allow students to tailor their focus.
Financial Investment
Undeniably one of the more substantial investments, the MBA comes with a hefty price tag, averaging $100,000 and beyond for tuition, coupled with living expenses. This financial commitment often results in candidates accruing significant student loan debt. Yet, avenues such as financial aid, scholarships, and employer reimbursement programs can mitigate these costs, making an MBA more accessible.
Return on Investment
While the financial commitment is substantial, the MBA yields a noteworthy return on investment. Holding an MBA from a prestigious business school enhances your employability, showcasing dedication to professional development and expertise in your chosen field. Many financial institutions value MBAs for managerial and executive roles due to the holistic nature of MBA curriculums. According to US News data, graduates from top-ranked business schools command impressive overall compensation, with reported salary and bonuses averaging around $170,000 for new hires.
So How Does The CFA Program Compare?
Requirements
To be eligible for the CFA Charter, candidates must:
- Have a bachelor’s degree (or be in the final year of obtaining one)
- Have at least 48 months (or four years) of relevant work experience
- Pass all three levels of the CFA exam
- Submit two to three letters of reference from sponsors
Like with the MBA, your undergraduate degree doesn’t have to be in finance. However, unlike the MBA, attaining the CFA Charter isn’t a formal academic program. Instead, it requires you to study independently and pass three rigorous exams in sequential order over a period that lasts up to four years on average. According to the CFA Institute, candidates must study an average of 300 hours for each exam level.
Curriculum
Each CFA exam level tests a candidate’s knowledge of Ethics, Equity Analysis, Corporate Finance, Fixed Income, Derivatives, Alternative Investments, Portfolio Management, Financial Statement Analysis, Economics, and Quantitative Methods. Each exam progressively broadens the scope of how topics are tested as follows:
- Level 1: Knowledge and Comprehension
- Level 2: Application and Analysis
- Level 3: Synthesis and Evaluation
With pass rates for the first two levels below 40% and the 10-year weighted average pass rate for Level 1 less than 40%, the CFA exam is one of the most rigorous exams you will ever take, even more than the CPA exam, which is challenging in its own right.
Costs
Compared to the MBA, the CFA Charter is so much more affordable. The only costs are the exam registration fees and any third-party provider a candidate chooses to assist with the Exam preparation. The curriculum is self-contained; the CFA Charter Institute provides all the materials that are needed for each topic.
The total cost of all three CFA exams ranges from $2,600-$8,000, assuming three consecutive passes with no travel and accommodation costs. There’s also a one-time enrollment fee of $350, which candidates pay when they sign up for Level 1.
The approximate cost breakdown by exam level is as follows:
- Level 1: $1,250 – $3,050
- Level 2: $750 – $2,550
- Level 3: $750 – $2,550
Note: Beginning with the 2024 exam cycle, the prices to register for each individual exam will increase from $900 to $940 for early registration and from $1,200 to $1,250 for standard registration.
Return on Investment
Like the MBA, the CFA Charter is grueling in its own right and also delivers a significant return on investment once obtained. Charterholders earn significantly more than their non-chartered peers, depending on educational background, years of work experience, the city where they live, the size and type of company they work for, and their career path.
For the same reasons as the MBA, the CFA Charter Designation opens doors to career advancement and is widely recognized as the highest distinction in the investment management industry. Also, employers tend to consider Charterholders for management positions due to the following advantages they have over their non-charterholder colleagues:
- A robust ethical foundation
- Earned prestige and recognition of expertise
- Increased ability to make complex investment decisions
- An exclusive global network of Charterholders
The Verdict
Everyone has different goals in life, depending on their unique personalities and circumstances. For the highly ambitious, obtaining both the MBA and CFA Charter are within the realm of possibility and would definitely even further distinguish them from their peers. However, for most finance professionals, attaining only one of these prestigious credentials is feasible. That’s when choosing the right one for you matters.
In broad strokes, the MBA and CFA Programs bestow a competitive edge in the workplace, propelling career advancement and salary growth. While the specific figures may vary across sources, the consensus remains that both credentials translate into a substantial salary increase. Therefore, for most candidates, the decision boils down to the particular career trajectories they envision post-credential acquisition.
Ultimately, the decision rests on your individual goals and circumstances:
For those seeking to elevate their career within the realm of finance or solidify their financial credentials, the CFA Charter stands as the optimal choice.
Conversely, if your aim is to advance your career beyond the confines of finance or transition across industries, an MBA might emerge as the more favorable option.