UK
It’s the kind of thing that every CFA student who’s spent a few thousand on their qualification loves to hear, and that every MBA student who’s spent many tens of thousands on their qualification would rather ignore. Fortunately, it applies only to portfolio managers.
Conducted by various US academics, and accessible here, a new study suggests that when it comes to portfolio performance there’s no discernible difference between someone with a CFA and someone with an MBA.
Interestingly, the study also suggests that portfolio managers with MBAs tend to be more risk- taking than their CFA-endowed peers. If CFAs are able to achieve similar results whilst being slow and steady, the implication therefore appears to be that they are better.
The study’s authors offer the following theory as to why this is –
… business schools are teaching MBA’s to create risk. The reason for this is not immediately obvious, but a compelling possibility is that managers, knowing the distribution of year end bonuses is asymmetrical, intentionally increase tracking error to improve the odds of a big bonus. With the high standard CFA’s attribute to ethical behaviour, perhaps they are less likely to take that path..
It’s also very possible that MBAs want to earn a big bonus in order to pay back those expensive fees, so maybe banks/portfolio managers should increase sign-ons if they don’t want them taking excessive risks.
Or it could simply be that MBAs who go into financial services are mostly men and that men are more at home with being edgy. The Wall Street Journal cites a study which found that 36% of female MBAs choose high-risk financial careers such as investment banking or trading, compared with 57% of the men.
I love MBAs…having witnessed their ‘participation’ on the finance courses at one of the worlds best Business Schools it would be fair to say that when it comes to finance they really aren’t the brightest and more often than not they avoid all finance beyond the mandatory courses and those at the very basic level.
Considering the state of the world’s finances, I do not think there has ever been too many bright people on any finance courses let alone the MBA students.
…you have obviously never sat in on any finance courses have you JackL? You might want to hold your opinions until you know what you are talking about. So instead of discussing items which you have no qualification in, You might want to go back to the menial tasks for which you are qualified….such as emailing CVs and fetching the coffee.
yes, MBA is a product which u can buy, e.g. u spent 300 pounds to get a new suit to make u LOOK smarter, but it doesnt mean u r really smart. But CFA, u have to work well to get it… so I personally think CFA chartered knows finance better than those MBAs
The important phrase in the article: “it applies only to portfolio managers.”
It’s hardly surprising that a niche qualification for this career works better than a general qualification.
itit all boils down a to a few things: for MBA you pay to build up your network and not much finance knowledge, for CFA you have to study like crazy, pay less and no networking.
depends what you look for. bottom line is that CFA curriculum covers far more material than any MBA course you can think of. think people should stop whinging about both as they have different purposes.
When it comes to employment – you would always hire an MBA for his contacts/experience but you may prefer a CFA for more knowledge. in my experience a CFA with good network/experience is better than an MBA.
(i am not a headhunter, never will be:))
CFA is overrated. The course teaches you a bit of everything but allows you to be an expert at nothing. But I supposed when it comes to finance one can still argue that a CFA would have a broad view.
This is such a “strawman” argument, instead of comparing penis size’s about which is the best qualification maybe you should take a look at all the mathematicians, engineers, economists, Phd’s, etc and they have contributed to the mess we are in.
Like a wiseman once said “Academia intelligence offers virtually no preparation for the turmoil life’s vicissitudes bring”.
CFA, out of work, is it helping .. . . . .no .. . . . .should I do an MBA?. . . . . . .
Hmmmm I think I would prefer to have two years off work, getting to meet new people, having fun with the opportunity to study/work abroad than write off three years of my life studying a CFA.
Anyway they are just qualifications that enable you to get the opportunity to perform in your desired position, they are no guarantee you will be any good.
I have both an MBA from the Rotman School of Business at the University of Toronto, and have held the CFA charter since 1987. Strangely enough, the excellent finance courses I took for my MBA, along with the economics and accounting I took before that degree, were excellent preparation for CFA study. The CFA has definitely been more important and valuable in my carreer in investment research and portfolio management. Both programs need some improvements in scope and breadth. The MBA is very lacking in how to manage or deal with people: bosses, peers, coworkers, clients, the wider public, or really thinking about everything than can affect business or capital investment decisions. The CFA is a little too wedded to formulae, and weak in capital invesment and project analysis, business valuation, modelling and spreadsheet work, and in mortgages and mortgage and loan-related securities behaviour and valuation.
Ian.. out of all the comments your’s is the best, yes I agree with you completely am studying for level 1 and failed 3 times(albeit I been improving constantly)I have this feeling CFA syllabus is bit 2 much (i mean for example as a portfolio manager you dont have to learn depth of FSA )anyways nice to see your comment it is sensible
What about LIFA
the MBA course is of versatile in nature but CFA is of concerned to the Finance of course both depend on the man how much depth and experience in nature. It all depends onthe calibre
nobody points out the fact that neither the MBA nor CFA teach you how to be a succesful investor