CFA vs MBA: What’s your best option?

While a Master of Business Administration (MBA) and a Chartered Financial Analyst designation (CFA) are both highly sought-after professional degrees, experts say the type of advanced credentials you opt for should really be based on what you hope they will help you achieve.

“Don’t just pursue singular credential additions – really think about where you want to leave a footprint, where you want to make a difference, and then what are the educational, professional or academic (paths) that help lead into that,” said Peter Simon, who leads the North American’s Financial Services practice at executive recruiting and leadership consulting firm Spencer Stuart.

“I do think there’s a little bit of doing an honest self-assessment of what intrigues you in the business world, reverse-engineering what (path) the most successful people in that industry… have taken, or (what) new paths are evolving.”

While certain professions will demand a specific degree, such as a Certified Public Accountant (CPA) or Certified Financial Planner (CFP), the way up the corporate ladder in others isn’t as obvious.

A CFA is more of a technical professional credential aimed at doing very detailed company analysis. It’s useful for those wishing to work, for instance, as Portfolio Managers or Investment Bankers. An MBA, meanwhile, is meant to provide a broad-based technical grounding in leadership and management. It’s less about a specific designation, and more about your career path.

“For many MBA programs you get these very accomplished, deep-skilled students applying to the program to broaden their opportunities,” said Professor Brian Golden, Vice Dean of MBA Programs at the University of Toronto’s Rotman School of Management.

“Ultimately, (a company’s) leader is responsible for mastering, to some extent, the full set of disciplines that informs (his or her) perspective, and whether you started off in finance or accounting or marketing, typically that won’t be enough; that’s too narrow perspective to run the full enterprise.”

While an MBA takes two years to complete (at a cost of anywhere between $60,000 and $100,000) and is a challenging, advanced degree, the CFA exam is notoriously difficult to pass.

Each of the CFA’s three levels cost between $1,000 and $1,700 and require around 300 study hours. These have pass rates around 40 to 50 per cent each. The percentage of people who make it through all three levels is only 15 per cent.

But according to Chris Wiese, who is the head of Exam Development for CFA Institute, that’s part of its appeal.

“A lot of employers value the perceived rigour of the program almost as much as they value the particular content that we’re teaching,” Wiese said.

“What we hear is: ‘Not only did they learn something, but I know they’re the kind of person that can handle that situation, that they’re self-directed, that they can put them through a process that’s hard’.”

What makes passing the CFA exam so hard, he said, is the pure breadth of information candidates have to learn: Level 1 is 3,000 pages of study content, targeted at a post-graduate level, with people doing it on their own.

“It’s become something valuable to those that have gone through it, and it’s very valuable to the market place,” Wiese said.

Simon agrees that a CFA designation is “a symbol of commitment and investment in self, and of course there’s some good underlying technical skills that are required.”

“It speaks to a standard of professional care when they get into the work world (so) the mere act of getting and achieving the CFA speaks to something – as does the MBA.”

One challenge facing MBA programs is that they are not all created equal.

“If you’ve been accepted into a top business school, you can expect a positive ROI (return on investment), but the reality is the world produces well over 100,000 MBA graduates a year, and they’re not all doing better because of those letters behind their name,” said Golden.

“If you’re not able to get into a top program, frequently, the benefit won’t be there to you. Quality matters.”

His advice to anyone evaluating an MBA program is to choose a school that is a leading ideas generator so that you’re “learning what will be in the textbooks in the next three years,” as well as one that has an incoming class of at least 200 students every year.

“You’re developing a network that’s going to serve you well for your career and you want that network to be both significant in size but also diverse,” Golden said.

Size and scale will also give you more opportunity to have flexibility, both when it comes to your schedule and because it can help you work in areas that go beyond the typical Wall Street or Bay Street jobs but also in growth areas such as sustainability, non-profit, health care or design.

“At the end of the day, unless there’s a specific, professional requirement, I would just say pursue the path that doesn’t feel like work, or (there’s) sincere interest and motivation,” Simon said.

“It speaks to the value that you get from the journey and not just the destination.”

3 months ago