CFA Or MBA?
If you are considering furthering your advancement opportunities via education in accounting and finance, the most popular options are the MBA and CFA. But which should you opt for? Each has its advantages, but deciding between an MBA and a CFA can be difficult so let’s clear up some of the confusion.
The major difference between the two is that the MBA is a more generalized course of study for accounting and finance, whereas the CFA is a very niche option for those who need more technical skills for more sophisticated financial analysis. The advantage for MBAs is that they have a greater variety of opportunities open to them beyond finance, in virtually any place where management skills are valuable. The CFA’s more specific scope makes more sense for those who need highly technical skills in order to conduct analyses of today’s complex financial systems.
A major difference is the cost between an MBA and a CFA. An MBA program is generally two years long (longer if part-time) and can cost more than HK$400,000. In contrast, each level of the CFA costs between HK$7750 and HK$11,625, and to earn all three levels would total no more than HK$35,000. There are prep courses for the CFA, but including them in the overall costs is unlikely to set you as far back financially as an MBA.
Another factor to consider is the time it takes to pass the course and exams. CFA exams are given twice a year, in June and December, so at a bare minimum, it takes one and a half years to complete the CFA and only 43% of the people who took the CFA exam in December 2013 passed. Given the high failure rate, most CFA students take two and half to three years to complete the degree. While some top MBA programs are difficult to get into, once a student is accepted, they generally expect to finish their program in the allotted time. Most CFA candidates continue to work full-time while studying, whereas many MBA candidates take time off from working to pursue their degree full-time.
In terms of networking, the MBA is seen as having the advantage. An MBA can open doors to many different industries beyond accounting and finance, and the alumni pool is more extensive. Moreover, students have a chance to build stronger relationships with their classmates over time, whereas CFA candidates generally study on their own. However, the CFA Institute has a job board service and frequently holds events where CFA candidates and members can network.
As far as job prospects, both certifications are valuable, but generally speaking, if you are interested in working in a wider variety of industries, the MBA is the way to go. If you want to do very analytical work such as investment analysis, asset allocation, and portfolio strategy, then the CFA may be a better fit. Compensation can also vary for each degree/certification holder. According to research by PayScale, CFA holders made approximately 23% more than MBA degree holders. However, those who had both an MBA and a CFA made nearly 18% more than the CFA holders.
Increasingly, business schools have begun partnering with the CFA Institute to develop programs where candidates can pursue both an MBA and a CFA, allowing them to prepare for the CFA exams while in school for their MBA. Andrew Clare, a professor at Cass Business School, recommends getting the CFA first and then the MBA later when the candidate is ready to move into management positions later in their career.
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