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The age-old question facing thousands of commerce undergrads annually, enforced with the extremely competitive employment environment that is the financial markets, the need for an edge is almost now essential rather than extracurricular. This article hopes to provide a unique overview of the two progression possibilities with the ultimate outcome of helping you make a more informed decision.
Many are aware of the approximate 300 self-study hours required to complete each of the three levels of the CFA, totalling an average of 4 years of disciplined commitment to earn the covert three letter acronym at the end of your name. The CFA will cost you on average $3,000, an MBA from a top tier institution will set you back $160,000 excluding the opportunity cost of earning any income during the two year period, which is not experienced by a CFA candidate. However, an average of 50% fail their CFA assessment at each level with 1 in 5 registering for the 3 stage journey ever completing. Yet despite these daunting prospects, Lancaster University Management School’s very own Dean of postgraduate studies and Finance professor Mark Shackleton believes there will come a time when the CFA will eclipse the renowned MBA.
Technical versus Strategists:
The CFA puts a lot of emphasis on learning a range of technical subjects such as quantitative methods, economics and financial analysis. This will serve as an essential ‘toolkit’ that will demonstrate to a potential employer you possess industry know-how thus a candidate being a great investment from a development point of view.
However, MBA’s are a more holistic as employers also value soft skills, commercial awareness in addition to core technical knowledge. MBA graduates are believed to be able to see the ‘Big Picture’ about growth prospects of a company, possess sector expertise, softer or broader management skills and the ability to build relationships with various stakeholders. Investment Banks continuously ask for these over technical ability.
To put it bluntly, there is no career a CFA can get you that an MBA cannot get. For example, a lot of Portfolio Management jobs (by far the most common career route of CFA holders) will ask for either of the two disciplines. Here’s why, MBA students can learn much of the CFA material in their elective options during the two year programme. In contrasts, there are many career opportunities open to MBA graduates that a CFA holder cannot obtain. A CFA route is far more focused into one particular industry (Portfolio Management), which leaves the possibilities of Investment Banking (excluding equity research), Management Consulting or even recent tech industry possibilities a greater uphill climb to get into as the majority of MBA candidates are looked upon as better qualified. An MBA is a traditional route into Investment Banking, especially in the U.S., but lacks the technical training that may leave new recruits lagging behind their peers at an organisation. The CFA, meanwhile, gives a great technical framework but may lack in the management focused credentials needed for senior ranking positions in order to navigate through the financial services industry.
Summary of Advice:
Before embarking into any of the two highly demanding possibilities, a candidate must have a strong awareness of their career aspirations. If it happens to be Portfolio Management or Investment Research, you’ll be leaning towards the CFA. But go in with your eyes wide open: the CFA is incredibly time consuming and harder with core day to day requirements to attend to. If you are not looking into those roles and want to be better equipped to take on the broader financial market landscape, then an MBA may be for you. There is tremendous value in the two year MBA such as networking possibilities from the strong relations between MBA institutions and corporate employers that may be limited to a CFA candidate depending on their geographic location. Lastly, don’t commit to any if your outlook is limited to a ‘means to an end’ or ‘external/personal validation’, Employment assessors will see through you. You will only be as good as the commitment you put in, no three letters will give you that validation.