Investment banks are hiring fewer MBAs through their associate programmes. The CFA, in theory, is a qualification for the buy-side. But as competition for junior investment banking job intensifies, which is more likely to get you a foot in the door?
The quick answer is that there are more associates working in front office investment banking who have completed at least one level of the CFA than there are MBAs. But only just.
We analysed the 17,772 resumes on the eFinancialCareers global CV database of associate level bankers working in IBD, trading or sales jobs in investment banking and cut the data according to whether their resumes mentioned a CFA or MBA. The results below are tight, but the CFA wins out with 18%.
Spending a small fortune on an MBA to secure an associate level investment banking job is not what once was. Associate programmes are shrinking, top MBAs are increasingly gravitating away from the financial sector anyway and those that do often have to manage difficult analysts who have more technical knowledge.
Longer term, MBAs still progress more rapidly and more often to the senior ranks in investment banking. However, the CFA is gaining more traction in the junior ranks.
“The CEO of an investment bank in London told me recently that they increasingly expect their associates to embark on the CFA programme, but they do it in a very British way,” says Nitin Mehta, CFA, managing director for EMEA at the CFA Institute. “It’s not mandatory, but those that don’t enroll are called into the CEO’s office and questioned on why they’re not serious about their finance career.”
The CFA partners with a number of universities including a number of MSc in Finance programmes, to offer the level one exams to students. This is one reason for the big increase in the number of university students taking the qualification – 24% of all CFA candidates are students, the largest proportion of any occupation.
“Competition for junior banking jobs has intensified since the financial crisis and banks expect their new recruits to be more technically proficient,” says Mehta. “Financial markets have become more complex and the body of knowledge expected of investment professionals has increased. It’s important to have a proper financial education.”