MBA or CFA: Which is more suitable for a financial career?

Financial advisers, stockbrokers and investment professionals from all walks of life are swimming in the sea of ​​names and certificates. Since each title has its own three- or four-letter abbreviation, these names are called the “letter soup” of the investment advice industry.

The two most difficult but financially rewarding titles are MBA, MBA, and CFA Chartered Financial Analyst. Potential financial advisors or anyone considering a career in finance or investment should consider the differences between them.

Should you invest time, resources and money in an MBA or CFA?

Key points

  • For financial professionals, the two most important certificates are the Master of Business Administration (MBA) and the Chartered Financial Analyst (CFA).
  • An MBA requires two years of full-time study in a course that costs at least $100,000. Students will study courses covering all aspects of the business world, as well as opportunities to focus on specific industries.
  • The CFA requires at least 19 months of self-study time and three exams; it is cheaper than an MBA — less than $5,000 — and it is more focused on investment analysis, portfolio strategy, and asset allocation.
  • The average starting salary for those with an MBA degree is approximately $89,000, And those who earn the CFA title may earn an average starting salary of $94,875.

MBA program

The MBA requires two years of full-time study, and the courses cover all aspects of running a business. Courses range from human resources to accounting, from marketing and sales to management operations, supply chain and technology. Students earning MBA degrees on specific topics—such as healthcare, communications, and information systems technology—depend on their area of ​​greatest interest. These degrees still emphasize broad knowledge of core business concepts.

MBA costs and rewards

Obtaining an MBA is usually expensive. Not only do students have to pay for two years of full-time postgraduate study, or the equivalent of a part-time job, but they also miss the potential income during that time. A two-year MBA program may end up costing $100,000, which does not include room and board, textbooks, and external expenses.

The debt of MBA graduates is as high as US$70,000 or more,These are only the latest data as of December 2020 (2017).

In addition, please consider the impact of any wages you gave up during school. Of course, financial assistance can reduce this burden to a certain extent, and some companies will bear part of the cost for employees seeking MBAs. However, your return on investment may make it worthwhile. Obtaining an MBA from a well-known school can make you more attractive to employers because it demonstrates motivation and professional ethics, not to mention a solid network. It provides a lifetime professional connection with many other Type A outstanding individuals with whom you have faced long-term and arduous challenges.

If you want to hold a management position in a large company or in a field such as marketing, consulting, finance or investment banking, you’d better consider at least an MBA degree. Healthcare is another area where middle and senior managers increasingly have MBAs to better respond to changes in insurance, government regulation, and patient record keeping standards.

MBA is more costly than CFA and requires full-time students, and people studying CFA can have a full-time job at the same time; but the trade-off is that after completion, MBA usually can increase your income potential more than CFA.

Court of Final Appeal

The CFA title was first introduced in 1962 and provides professional skills in investment analysis, portfolio strategy, and asset allocation to those who have passed three exams (called franchisees). It is not as general as an MBA, and it is very popular among investment professionals. According to the CFA Institute, regulatory agencies in more than 30 countries recognize the charter as an agent that meets certain licensing requirements, and the association is responsible for administering exams and issuing certificates.

Financially, it is cheaper to obtain a CFA title than an MBA because the program is based on self-study rather than class. The only fee required is the examination fee. These fees depend on the time you register in advance, but the standard fees for early, standard and late registration for each exam are 700 USD, 1,000 USD and 1,450 USD, plus a one-time registration fee of 450 USD.

CFA is hard and long

Although affordable, it takes a long time to obtain a CFA. The CFA exam is divided into three parts, each of which takes six hours. You must pass each section to continue to the next section. The first part I level is available in December and June, while the second and third parts are only available in June.

This means that if the candidate passes all parts in the first attempt, it will still take at least 19 months to take the CFA test. In fact, the CFA Institute stated that candidates spend an average of 300 hours of study time in each section, and it takes an average of four to five years to pass each section.The pass rate for each section hovers around 43% in a given year, which makes the CFA one of the toughest exams you may face.

In fact, the general consensus is that the CFA exam is more difficult to pass and requires more study than the CPA exam. The exam was no easy task. Forum commentators on the CPA information and review website, who are familiar with these two exams, usually see CFA as a greater challenge that requires more study time. However, they pointed out that because the CFA exam includes audit questions, people with an accounting background have an advantage in taking the exam.

Some very motivated people have obtained both MBA and CFA certificates, and provide them with training in the broad and more specific aspects of business, wealth, and portfolio management.

Who got the CFA?

According to Payscale’s survey, the national average salary of CFA is US$92,000.What kind of professionals might choose to obtain CFA? “The most traditional career path that is most relevant to the CFA charter is for research analysts and those who may continue to be portfolio managers,” Stephen Horan, PhD, CFA, CIPM, managing director and co-head is educated at CFA Academy. “However, the charter is a generalist investment certificate. It is increasingly becoming a useful resource for various professions, such as traders, brokers, academics, risk managers, regulators, and CEOs. These non-traditional roles are the biggest charter Holder category.” Some motivated people study MBA and CFA at the same time.

“The MBA and CFA courses are complementary in many ways,” Horan points out. “Traditional MBA courses are broader than CFA courses, covering topics such as management, marketing, and strategy, while CFA courses provide more in-depth investment management than typical MBA courses,” Horan added.

Most MBA courses teach financial principles, especially corporate finance, but do not delve into complex issues such as derivative securities, hedging strategies, portfolio management, and wealth planning. Horan said that the CFA program integrates applications in these areas.

Horan added that having both an MBA and CFA is especially valuable for portfolio and corporate management positions. Horan said that franchise holders are increasingly holding corporate finance positions, and these positions will naturally be held by MBAs. The average age of candidates for the CFA program is about 28 years old, however, young students today often enter the program in their final year or shortly thereafter. Some graduate schools teach CFA courses in their MBA courses, allowing students to obtain degrees and preparation for certification almost simultaneously.

Bottom line

Horan added that having both an MBA and CFA is especially valuable for portfolio and corporate management positions. Horan said that franchise holders are increasingly holding corporate finance positions, and these positions will naturally be held by MBAs. The average age of candidates for the CFA program is about 28 years old, however, young students today often enter the program in their final year or shortly thereafter.

Some graduate schools teach CFA courses in their MBA courses, allowing students to obtain degrees and preparation for certification almost simultaneously.

Finally, MBA and CFA are both valuable. However, CFA is widely sought after by professional investors working in fund managers and registered investment advisors, and many financial advisors get their first jobs as well as initial training and background in these companies.

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