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MBA or CFA

How to decide what is right for you?


If you are asking this question, you are already on the right track. You are clearly making the best investment anyone can ever make: IN YOURSELF.

Both are excellent choices for advancing your knowledge and professional career. Beyond that, they don't have much in common. I was staring in front of me for long seconds when the first aspiring MBA / CFA Candidate asked me for advice on which one to pursue. A question I was asked several times since then. As I was listening, I uncovered that the challenge to make the right decision is rooted in two issues:

  1. Don't fully understand the costs and benefits

  2. Don't have a clear path forward

Although you are encouraged to research what each program entails and offers, there are some essential learnings that you will only get from people who have been there, done that. If you are in a fortunate position when you have the resources to do both, by all means, go for it. These two tracks greatly complement each other and will contribute to your professional advancements without a doubt. However, if you need to decide between them keep reading.

The seven most important elements that will help you decide what is right for you

1. Cost

MBA programs - especially top schools - are going to cost you an arm and leg. Add to it the opportunity cost of foregone income while you are a full-time student for two years. In comparison, you can expect to spend ~$2,400 ($450 enrollment + 3x$650 early bird exam fee including e-books) on the three CFA exams. I did quite well without any fancy (and expensive) classroom training, mock exam and optional add-ons. One more thing to consider: while you will have to give up a good deal of things to complete the CFA Program - including weekends, sleep, peace of mind - your job won’t be one of them. Regardless of what you choose, take advantage of scholarships and employer tuition reimbursement programs: I received full scholarship including books and living cost for the MBA, while the CFA Access scholarship and later, my former employer's generous support covered all my cost for the CFA Program. One last thing to consider, if you qualify to become a member of the CFA Institute, you'll need to budget for the annual membership dues (currently $275/year) - plus any additional fee for being a member of a local Society (fees vary greatly: for example, New York: $250, Chicago: $175, Dallas: $100).


2. Duration

Full-time MBA programs usually last anywhere between 1 and 2 years while the CFA program can be completed in 2-3 years due to the set exam schedule. Level I exams are administered twice per year in January and June, and Level II and Level III exams only take place once a year, in June. I heard that the CFA Institute might embrace a more frequent exam schedule so stay tuned. You'll also need to show 4 years of qualifying work experience to become a CFA charterholder. Long story short, neither track is for people in hurry. Think about them as an opportunity to show commitment and strengthen your persistence.


3. Effort

In all honesty, completing the CFA program felt like a larger accomplishment. In 2018, pass rate for the CFA exams were as follows: 43% for Level I, 45% for Level II and 56% for Level III. Imagine that the day of the last exam comes and you turn around to see the hopeful / stressful faces of people who fought hard and already won two battles. It is insane that almost half of you still won't make it to the finish line that year. My CFA journey was paved with strong emotions. My heart was racing at random times as we got closer to the exam day. I regularly woke up from nightmares after the exam but before finding out the results (yes, for 2 months). Not to mention the emotional roller coaster my unfortunate family members were exposed to. Pro tip: I was born in July. Exam in June. Results at the end of July/August. Guess what has been my birthday wish for those three years in a row.

Being admitted to a great MBA Program might come close but completing it certainly doesn't compare to passing the three CFA exams. I was constantly looking for the most challenging courses and learning tracks in the MBA program, signed up and completed two concentrations but still did not feel that I was academically stretched to my limits. In all fairness, I already had a Bachelors and Masters in business which may have played a role.


4. Knowledge

The CFA curriculum provides highly specialized knowledge. You will learn to evaluate and apply financial, economic and statistical data to make investment management decisions directly or help others make them. Although you may opt for a specialization as part of your MBA programs (I completed two: Finance and Strategy), you will graduate with a broad and general but rather basic knowledge of business: marketing, strategy, sales, operations, supply chain, finance, accounting etc. However, the MBA program will give you a foundation in leadership and contribute to the improvement of other soft skills, such as communication, critical thinking, problem solving and being a team player.


5. Recognition & Prestige

MBA as a degree program is widely recognized and respected, both internationally and here, in the US. On the other hand, the CFA Program is less known for the general public and even for the majority of business professionals outside of finance. From my experience, the eyes of finance people light up with respect when talking about the CFA Program while other professionals and business leaders move on quickly with no impression of familiarity on their faces. Although the CFA Program is said to be the Golden Standard in finance and quoted the most prestigious exam in the media, it is often criticized for not creating sufficient level of brand awareness outside of the finance industry.

Finally, you need to consider how recruiters perceive them in a simplistic way:

  • CFA (assuming they heard about it): analytical and focused on the finance industry

  • MBA: problem solver and business generalist, can take you to any industry


6. Network Impact

This might be the most critical dimension for young professionals looking for a strong start in their careers. MBA programs offer you more opportunities to build and grow your network. Prominent universities usually have a strong alumni network and enable you to create and foster lifelong bonds with high achievers and super talented former and fellow students. Nothing can compete with relationships we form while growing up or going to school together. In my opinion, the CFA Institute provides limited opportunities compared to a business school. There are CFA Societies in every major city and you have to pay your dues to the CFA Institute and the local CFA Society to become a member. Annually. These CFA Societies organize events which are open to members and non-members (usually for additional fee in either case). Interactions during these events are limited to a few people at a time and highly focused, occasionally even uptight.


7. Pay

Salary increases post-MBA are widely published. In fact, this might be the most important of all metrics top schools highlight in their marketing materials to students. I encourage you to do your own calculation and customize the expected return based on your unique background and future plans. Statistics are only that.

By contrast, the impact of the CFA Program on your wallet is less known and harder to obtain unless you have some close friends who can attest for it by sharing facts and figures. The best resource I found is the annual compensation survey results released by the several local CFA Societies (link at the end of this article). Payoff from completing the CFA Program and working in a relevant position are rumored to be higher than from an MBA program but at the same time, there are numerous variables - experience, background, position etc. - in the equation which make it challenging to compare changes in compensation post-MBA or after becoming a CFA charterholder.

Summary

Summary: MBA or CFA?

In summary, if time and money are not your main concern, you will find yourself thinking about your future career path. If you are determined to become a financial advisor or an investment banker you will greatly benefit from the CFA Program and it might even be a requirement so why not get started now? However, if you are unsure about your calling and are drawn to more general path like management consulting, MBA will give you better prospects for employment and might as well put you on the leadership track.


It's been three years since I graduated from a prestigious MBA program and one year since I passed the final CFA exam (Level III). Both of them are amongst the best decisions of my life, not only because of the advantages they continue to provide but also because of the way they shape me as a person. To me, it wasn't an 'either or' but a 'yes and'. I don't gamble but when it comes to my growth and career, I am all in.


Got questions? I'd love to connect. You can find me here, on LinkedIn or on Medium.


Links:

CFA Society Chicago 2018 Compensation Survey: https://www.cfachicago.org/wp-content/uploads/2018/12/2018-CFA-Report_Extended_CHI.pdf

CFA Society San Francisco 2018 Compensation Survey

https://cdn.ymaws.com/cfa-sf.org/resource/resmgr/docs/2018_cfa_report_extended_sf.pdf

Compensation surveys from other Societies are also available online, try searching for them if interested.

CFA Exam passing rate 1963 -2018: https://www.cfainstitute.org/-/media/documents/support/programs/cfa/cfa-exam-results-since-1963.ashx

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Copyright © 2019 Palma Bordan. All Rights Reserved.

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You'll find me in Manhattan, New York and also travel around the world as much as I possibly can.

Send me a message if you would like to discuss opportunities to elevate your success​​​ and how to achieve what truly matters to YOU in life.