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CFA vs MBA

An article on our US site has created a furore over the relative merits of a CFA over an MBA. Here’s the potted version.

According to the US commentators/ranters, here are the positives for both qualifications.

The plus points of an MBA

· An MBA is still exclusive: it works in its favour that the CFA designation has been devalued now that more and more people are taking it (including, allegedly, one child’s violin teacher).

· The best i-banking and asset management jobs still go to graduates of the top 10 MBA schools.

· An MBA offers contacts and networking; a CFA offers all the networking opportunities of an after-work home study course.

· An MBA from a top 10 school is infinitely better than a CFA, but a CFA has the prestige of an MBA from a top 20 school.

· A good MBA is a bonus for career changers; a CFA is best for someone already in the industry.

· An MBA gives you a prestigious brand name to market yourself with.

The plus points of a CFA

· A CFA is more difficult than an MBA; it’s also more relevant and more comprehensive.

· A CFA teaches hard skills and tests you on them; by comparison, an MBA teaches soft skills.

· A CFA is an excellent route into asset management.

· A CFA is already mandatory for most senior equity analysts and is increasingly required for fixed income analysts.

· Each of the three CFA exams requires 250 hours of study in your own time. That shows true commitment.

· MBA courses offer an introduction to financial theory. A CFA provides the tools to develop creative solutions to complex financial problems – and a growing number of top MBA schools are including it in their curriculum.

Conclusion

It helps to have both – MBA for strategy and networking and CFA for financial analysis – but even then you won’t be assured of career success (particularly if you plan to use the combination to get a leg-up out of the back office).

Comments (45)

Comments
  1. Both courses are complementary.

    An MBA gives you solid qualitative decision-making skills. The CFA gives you hardcore quantitative financial training.

    Both qualifications have weaknesses.

    The MBA does not dive deep enough into finance and budgeting. The CFA lacks a strategic element of the bigger picture beyond the finance department.

    Don’t forget, there are credible alternatives to the MBA and CFA. They include MSc Management and MSc Finance.

    Always be sure to pick the most prestigious university brand you can afford. While MBA content, in my view, is broadly the same across most colleges in the developed world, the overwhelming perception among top-tier employers is that they want employees from top-tier academic institutions, regardless of what you study.

    MBA & CFA Grad Reply
     
  2. Both are indeed complementary…CFA first and then a good MBA.

  3. come on guys, MBA is a rip-off!!! do you ever look at the costs side of the equation?

  4. Both of them are the right complement to achieve the success

  5. i think the cfa qualification is a far better qualification than an mba. i see the mba as a rip-off

    mitchell adeose Reply
     
  6. Both of them are second rate, unless the MBA is mainly quant based.

    Get a good undergrad and post graduate science/maths-based in a highly quantitative applicable degree from good universities with cutting edge staff who have undertaken and published good papers. Then go through a good training programme or professional vocational course that explicitly includes accounting, law and tax which would assist in applying that which you learnt in university . After that….experience, communication and that rare quality, common sense.

  7. MBA = jack of all trades, master of none.
    CFA = narrow focus & extortion (annual membership fees)

  8. I’d rather have a live than be studying all the time!! If you’re good enough at your job, you don’t need PG degrees or other quals (certain sectors aside)

  9. The article/arguments above seem to overlook the basic fact that an MBA is by nature a more flexible experience, and so the value of it is to a large degree what the individual makes of it.

    It is not exceedingly difficult to earn the degree (i.e., “pass the courses”), but at the same time the top programmes are designed with the knowledge that it will never be possible for a student to complete everything that they are assigned. The student must make choices as to where they want to devote their time (both academically and socially) and thus what they learn and get out of it. If you think the only way to value an MBA (or similar) is the “average reported immediate uptick in salary less the sticker price and lost wages” then it probably wouldn’t be a net positive value to your life.

    However, every person’s financial worth is to a large degree based on a combination of drive and ability, where ability is natural and learned. It’s really a question of “do you have a lot of things/skills to learn in order to get where you want to go” and “is an MBA or [any other route for that matter] the most efficient way to learn them”.

    It’s a highly individual decision requiring honest reflection.

  10. particularly if you plan to use the combination to get a leg-up out of the back office ??? so with a HBS, INSEAD, IMD, LBS MBA you can still be in the back office ???? I dont think so ?

  11. MBA and CFA= waste of time and money.Guarantee to nothing. Somebody makes good money with these products…and not on a 12 hour work
    schedule

    MAximus Decius Meridius Reply
     
  12. I have never heard of somebody failing an MBA, but seen lots of people failing or having hard times repeating CFA exams.This is basically a function of how much you pay to enter the two.TO a certain extent, you pay and get the MBA, while for the CFA it’s not so easy.

  13. read the Anonymous,Asset Mgmt above? then go back and read it again. rarely get to see a thoughtful and honest approach to a hot topic

  14. Obviously, none of them is gonna make you BSD right away; the point is the finance knowledge you “certify” by the CFA and the people & glamour you need to climb the ladder by the MBA

    Im working on my CFA and planning on a top MBA down the road; I realize a MBA wont teach you anything more than a Business BA but its a must to pass the “ok” as “baptism” towards the C-level…

  15. Some very valid comments. Both have great value if you put them to work.

    Working for an international company, in my research, I found that US MBA’s vary from school to school and well as the different focuses. I recently met several MBAs from top schools in the US and found them very insular (or I should say US local) in their thinking.

    But their world was Wall street, so that is fine. For me,at this stage where I am in upper management, the CFA is an internationally recognized certification and you are graded against canditates from around the world. Also, for someone who has that designation, the employer knows exactly what the knowledge base is. And I know the employer knows the exact knowledge base.

  16. I’ve had neither. I learnt the tricks of the trade from the market and became Master of the Universe!

    permanent tourist Reply
     
  17. any tips on getting out of back office?
    i’m taking my IMC & moving from asset mgt to banking.thanks

  18. These qualifications are good as an entry into an investment bank/ other employer. Thereafter it’s commitment, application to problem on hand and luck!

    Shailendra Marathe Reply
     
  19. Both are valid qualifications but for quantitative positions PhD’s are the best.

  20. My personal opinion, since now there are universities that offer MBA programs with specialization in different field like accounting, finance, marketing, operation … etc. and that a universities that offer new type of specialization, which is “Investment Banking” (i.e. MBA with specialization in Investment Banking) taking courses in Private Equity, Fixed Income, Capital & Money Markets, Debt Market, Foreign Currencies Market, Mutual and Hedge Funds .. etc. and so I suppose that if a person can obtain such degree (MBA-I Banking) from a top class university and does his dissertation in merger and acquisition (M&A), that would probably be that best-ever passport and ticket into the new banking & financial industry.

  21. Any tips on progressing from back office to middle/front office. Have an MSc Fin Mgt and studying towards IMC

  22. As said above: It is a rip-off, useful for some people to make good money. CFA is a well-oiled marketing machine. Have you ever heard of any other qualification, where you have to pay membership fees just to be able to state that you passed the exam???? Ridiculous! Steady income stream with no expense whatsoever. Wonder who thought of that great business concept!
    And: The reason why some (not all!!!) executives hire only from the top schools, is because they do not have the guts and the judgement to follow their own instincts. Would you want to work for such a boss??

  23. Qualifying as an actuary is superior to CFA or MBA.

  24. Neither is necessary to progress to the highest levels in a career in finance. The best institutions should provide better and more relevant training than either qualification can provide.

  25. CFA is a very specialized designation, meant for working professionals already experienced in the fields of corporate finance, asset management and securities analysis and valuation, whereas an MBA from a world-class, top-tier business school is a passport to enter large MNC’s.

    People with CFA designation tend to end up as CIO’s or CEO’s of investment firms, whereas people with MBA from a top-tier school may end up as CEO’s of global companies. Which career path do you prefer may help you to decide which one to take. As for me, I find both MBA and CFA complimentary for my type of work. Some may even pursue FRM, PRMA, CAIA, or Cert. FAME on top of their general management focused MBA.

    <br<
    Every bit helps in this hyper-competitive world we live in now.

  26. MBA is a very good opportunity for an individual which welcomes to the arena of Corporate and Investment banking… It certainly secures a leading edge over your tiers provided its been done only from top ranking b schools… On the contrary CFA is Narrowed down to a professional charter… g luck

  27. MBA is a mere door opener, which may or may not provide you with the analytical framework or mindset to assess certain situations, but has as a general benefit a huge network.

    CFA or the knowledge of the content better to say is what you need to thrive in certain fields in finance.

    In the end both are a piece of paper with some ink added (and fair enough a nice financial burden). If you are an outgoing smart individual who connects with the right people and can think quick and straight, both of them are useless or a superfluous confirmation of what you already know.

    On a sidenote, MBA can be great fun though, while CFA is for the lonesome riders amongst us.

  28. For a starter in the financial industry seeking for a rewarding future i think MBA is better.However, if the opportunity comes, CFA will be an added advantage to consolidate the financial skills acquired in MBA.

  29. The CFA relies on learning a lot of things by heart to be able to answer multiple choice questionnaire…Nice but you will have forgotten everything 6 month later. I work in asset management, have a CFA, an MBA and a Msc Engineering, I got my job because of the quant skills of the Msc Engineering and the MBA… I do not think an investment bank will hire you for the CFA, but Harvard or INSEAD will get yo the job!

  30. MBA is a mere door opener, which may or may not provide you with the analytical framework or mindset to assess certain situations, but has as a general benefit a huge network.

    CFA or the knowledge of the content better to say is what you need to thrive in certain fields in finance.

    In the end both are a piece of paper with some ink added (and fair enough a nice financial burden). If you are an outgoing smart individual who connects with the right people and can think quick and straight, both of them are useless or a superfluous confirmation of what you already know.

    On a sidenote, MBA can be great fun though, while CFA is for the lonesome riders amongst us.

  31. the CFA charter is specifically meant for individuals looking to advance their skills as financial analysts, portfolio managers and in other careers associated with money management/asset management/analysis….and in that its the absolute best. there’s no comparison between an MBA and the CFA charter because they are very different in their scope and focus. please dont cheapen either by making silly comparisons

  32. Couldn’t agree more. I don’t have a degree from a famous business school and this was an issue in 2 job interviews with top tier banks, as I “just” studied at an “ordinary” foreign university. I work with a lot of people from Oxford and LBS and can just highlight that they are better, but only at presenting themselves, hard skills are often mediocre. I am going to attend the CFA level III exam this June and again, the CFA is no rocket science whatsoever too. It is only tough because you have to do it during your work. I was offered both jobs but could just laugh about the interviewers’ concerns. I want to have the CFA designation because you have to have one of both qualifications, but does it really help. The CFA doesn’t include any judgement, it is more like training a monkey and the MBA is rather bla, bla, bla. I think both qualifications are overestimated and as many of you know: Overconfidence results in bad decision making …

  33. before you start, better don’t use the designation “CFA” as a noune

  34. CFA designation is far cheaper as an intial cost, and is far more difficult to pass (40% lvl1, 50% lvl2, 60% lvl3). It therefore effectively sorts the wheat fom the chaff. MBAs do not have this kind of filtering mechanism since if you have to pay such an exorbitant fee up-front, you expect to have something to show for it at the end.

  35. Other professional organisations do charge for membership e.g. Accounting and law so the CFA is not that different. Most larger employers will pay the membership fees

  36. Any tips on moving from back office to middle/front office?

  37. You can’t ‘buy’ an MBA – you need a top GMAT to get into the top schools and even then there is competition, eg 15% acceptance at Harvard.

    CFA restricts you to a life in investment management/hedge funds/eq research whereas MBA allows those fed up of crunching numbers in an office full of blokes to move into industry (you can take strategy, marketing options etc) –

    Initially we all did/tried CFA as thats what analysts did in my division but after realising the limitations, many left for B-school with a view to moving to industry. Only an MBA allows access to these employers and provides you with the alum network and skills you need to make this move if your degree was something like History/English – no way a CFA charter holder with that background could rock up in industry if he/she wanted to change industries.

    For those staying in finance, CFA is more value-added, while the MBA provides a ‘get-out’ clause and opens your eyes to wider opportunities than just staying in the same job and moving from one bank to another.

  38. Is it useful to have the CFA in order to work in M&A or LBO?

  39. Ach… You’re all full of it with your BAMs and FACs!!! what’s wrong with good old cocktail qualifications…

    Sitting on my yacht near in the Caribbean Reply
     
  40. MBA will teach you strategy and economics – both are socio-disciplines. Both are inherently related to understanding of how society works, how people think and perceive reality and how they make decisions.
    MBA teaches you life through interaction with others. It teaches you to perform in social environment and connect with people, present your thinking, negotiate, influence, coach, lead. It allows you to see who you are, what your strength are as a person and how you work best with other (different than you) people.

    For an equity analyst who works primarily with numbers, information and facts a lot of these skills will probably be redundant.

    But, if you realise that your success in an organisation and life depends on the skills and knowledge listed above you might consider MBA to be more appropriate.

    In my opinion, MBA gives you confidence above all – if you are successful in (1) knowledge, (2) skills, (3) networking and bulding relationships.

    Hopefully MBA reinforces your values and teaches you ethics – if conditions (1), (2) and (3) are fulfilled and you are secure as an individual – eliminating arrogance.

  41. Over-rated by whom? the market dictates what is relevant or not, hum the CFA is certainly far tougher as regards its expectations from the interested individual. Curriculum of both programs could be termed excellent but the b-schools seem not to have a way of ascertaining commitmment, tried both you don’t have to take my word, the CFA has a way of making you see the big picture although strategy is not in its curriculum

  42. For those of us who werent born “leaders” –
    An MBA develops leadership skills and helps individuals become visionaries; key criterion to success. The CFA specifically supplements investment analysis skills – nothing beyond that. Depending on what one wants to achieve?

  43. CFA and MBA are very much complimentary.

    I love how quants and hedgies belittle both degrees… guys you are great at working seemingly complex simulations (is Black Scholes that complex?) but let’s face it you normally are off beat when selecting assumptions. Usually just picking recent volatilities. That is what a good MBA is for; developing criteria (CFA helps you understand the business). Try a great book “Black Swans” if you learn to pick volatities changing risk conditions in the coming storm you might actually not lose your job and end up as math teachers.

    Best,

  44. It appears that the whole issue is another much ado about nothing:

    1. How do you compare an orange with an apple? My kindergarden kid say that ‘a” is for apple and “o” is for orange, and so M is for MBA and C is for CFA.

    2. There are variations even within the MBAs. A top 20 MBA’s entrance requirements and internal exams differ from a top 500 MBA.

    3. As pointed out by some that it ultimately depends upon one’s aspiration and ability.

    So, let this be the LAST COMMENT and get back to make your millions. However, my crystal ball is getting less cloudy and signals a crash around the corner, and market crash does not care whether it is a MBA or CFA.

  45. cfa is the way to go. its cheaper and you do it at your own pace. mba’s is suited only for those dudes who want to lead. cfa is for us, quants, the people who actually sit down and make the money,without having to go out and make a show of things on tv.

    tinashe mangwiro Reply
     

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