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This article is originally from 300Hours.com. You can read the full article here.

As we've covered the MBA subject briefly in a recent post and many readers wrote in for more, a natural follow up would be the classic question: CFA or MBA?

A very, very popular question among potential candidates compares the CFA charter to an MBA - which would be better? Like most comparisons, the answer is - it depends.
Firstly, it’s a very tricky thing to compare a CFA charter and an MBA - they’re fundamentally different creatures addressing different disciplines. However, at the same time there is a real need to evaluate these two qualifications side-by-side these days, as many up-and-comers looking to reinforce their CVs look to these two qualifications and are not clear about what each can offer to them and their careers. 

In trying to address this scenario, I will therefore critique both qualifications based on the benefits gained from a career perspective, and the costs involved. Always remember - the better qualification depends on your individual case. Read these points carefully and consider your own case before deciding which to pick (if at all).

#1. CFA: great for finance

The CFA is the qualification if you’re looking to build a successful careers in asset management, private wealth management, equity research or in ratings advisories in financial institutions. In these sectors an MBA will simply not be as valuable as a CFA charter. A CFA charter will also be an asset in all other financial services, as well as additional recognition even outside of financial services especially in Asia and Middle East & Africa.

#2. MBA: more widely recognised outside of finance
However, the MBA has the CFA beat in most industries outside finance. Acquiring advance financial analytical skills does not have the same pizazz as an MBA in non financial industries (say, advertising or manufacturing). If you’re unsure of what industry you’re planning on spending the rest of your career in, an MBA might be a good consideration.

#3. CFA: more time-efficient
The CFA holds an edge over an MBA in terms of time needed for preparation - although the CFA program demands an approximate minimum 300 hours worth of study per level, you can schedule these as you see fit. As the CFA study program is a distance-learning program, many candidates find it perfectly possible to squeeze in study preparation with a full-time position - hence you can continue accumulating work experience (not to mention continue earning) while studying for your qualification. The MBA on the other hand, will require a typical 2 year full-time commitment, which can be a significant opportunity cost and impact your work experience.

#4. But you can expect to earn an MBA sooner than a CFA charter
Hang on a second. Doesn’t this point directly contradict the previous paragraph? Not necessarily. The shortest time period you can hope to complete your CFA exams is 18 months. And that is only if you start in December for your Level I and pass all your exams on your first try (which happens to about 4% of candidates). 

The average time for a CFA candidate to completion is 4 years, which is 2 years longer than the average 2 years for an MBA. Another point to remember is that the CFA charter will also require 4 years of work experience.

#5. CFA charter costs less
The monetary cost for qualifying for the CFA depends on how many exams you need to get there and how much you spend on prep materials. Typically this adds up to about $2,500 to $8,500, but can go up to $15,000 if you spend like a drunk oil baron’s first-born every exam, and fail several times. 

This still pales in comparison to an MBA’s weighty $200,000 cost over the full term. Adding the opportunity cost of not working for a typical 2-year MBA makes the CFA qualification much, much more cost efficient however you slice it.

#6. CFA & MBA success rates are about equal
Some arguments on the CFA vs MBA thread sometimes point to the CFA pass rates. About 40% of CFA candidates pass each year, compounding to a very low total pass rate across 3 levels. Comparing this to 95% pass rates at Harvard, surely that’s one point for the b-school folks? 

Not necessarily - that argument assumes you already have been accepted to a top-tier school like Harvard. If you factor in acceptance rates into a mid/top tier school, the chances of an average person acquiring a CFA charter and graduating with a mid/top-tier MBA are about the same.

#7. Both have great alumni networks
Both the CFA Institute and typical business schools maintain thriving global networks that will be further enhance your career. However just like the studying process, I feel that to benefit from the CFA network from a career perspective, a CFA charterholder has to be more driven and proactive compared to an MBA graduate. It’s not a matter of alumni participation or events, it’s just that MBA events tend to be tuned towards a networking & business angle whereas CFA events can take on a more academic tone.

#8. Who says you have to choose? 
At the end of the day, there are many people who end up obtaining both a CFA charter and an MBA. If you’re hell-bent on making your CV the best damn piece of paper the world has ever seen, by all means take both - it’s in no way a either-or situation.

In the end, it’s all about your personal goals and situation. If you’re looking for a qualification to enhance your career in finance or establish your finance credentials, the CFA is the way to go. If you’re looking for a qualification to boost your career outside of finance, or looking to move across industries, an MBA might be a better bet.

Have you chosen one or the other? Or both? Share your thoughts with us here, or check out our other MBA article: Should You Consider CFA Partner B-Schools?

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Comments (38)

  • shark-monkey's picture

    Nice post.

    Fear is the greatest motivator. Motivation is what it takes to find profit.

  • barbariansatthegates's picture

    Excellent for those trying to decide. Nice OP.

    PE is the new black.

  • wannabeaballer's picture

    I actually started to study for the Lvl 1 2 years ago, and quit half way thru because I realized that it was just a piece of paper that would typecast me as a research analyst. I wouldn't recommend research to someone I hated, so I dropped my CFA dreams and decided to pursue an MBA. I think the problem with the CFA is that anyone can sign up for and take the test, regardless of personal and career achievements. There are plenty of unremarkable people with CFAs. It has been a while since I last looked at the numbers, but I think that a majority of the test takers are foreigners who are looking for a stepping stone to better jobs. Using similar logic, the top MBA programs would only take the highest GMAT scorers and not ask for things like resumes, transcripts, interviews, recommendations, or career goals. I think the screening process that goes into top MBA admissions produces a smaller, more diverse group of driven leaders who will be capable of running organizations in the future.

    Think of it this way: How many CFAs would trade in their charter for a Harvard MBA? How many Harvard MBAs would trade in their degree for a CFA charter? I think we all know the answer to this question.

  • In reply to wannabeaballer
    Going Concern's picture

    wannabeaballer:
    I wouldn't recommend research to someone I hated

    Haha, are you saying that you have no idea what bros in their 20s do at hedge funds, or that working at a hedge fund isn't worth doing?

  • YellowRanger's picture

    Second WannaBeABaller's comments,

    I took the plunge three years ago and tried L1 as well. There is a reason why a lot of people don't even show up to the test. For me, I realized two main points after studying many MANY hours. I reached my conclusion midway through a study session. Didn't even finish my second cup of coffee.

    1.) Read the following quote very carefully.

    "The CFA is the qualification if you're looking to build a successful careers in asset management, private wealth management, equity research or in ratings advisories in financial institutions."

    When you get a CFA outside that sub-set, people are like, "Wow, you must be real smart". That's about it... I don't understand why the CFA is clinging to an industry(s) which will likely never see large headcount increase ever again, but that's another debate ( or thread, hint hint, 300 Hours).

    2.) Work smarter, not harder

    If numbers are your thing, go for it. Have fun. But I don't know too many people who love analyzing the difference between US GAAP and IFRS. If you're getting the CFA, just to get the CFA, just stop now, and figure out if the CFA aligns with your long-term goals.

    At the end of the day, anyone can be a number cruncher. I noticed that the people who are in the CFA 'preferred' positions already have degrees from target schools. Which led me to believe, it's not what you know, but who you know. So I opted for the MBA.

    Common man, everyone knows the U.S. meritocracy will only get you so far!

  • duffmt6's picture

    300 Hours:
    The shortest time period you can hope to complete your CFA exams is 18 months. And that is only if you start in December for your Level I and pass all your exams on your first try (which happens to about 4% of candidates)

    Just wondering what the source is for this information? Empirically I find it difficult to believe.

    "For I am a sinner in the hands of an angry God. Bloody Mary full of vodka, blessed are you among cocktails. Pray for me now and at the hour of my death, which I hope is soon. Amen."

  • In reply to YellowRanger
    Going Concern's picture

    YellowRanger:
    I took the plunge three years ago and tried L1 as well. There is a reason why a lot of people don't even show up to the test. For me, I realized two main points after studying many MANY hours. I reached my conclusion midway through a study session. Didn't even finish my second cup of coffee.

    You needed two cups of coffee for a Level 1 study session? Level 1 is basically the equivalent of intro level undergrad courses in finance, accounting, economics, and statistics/probability. I think I'm starting to see now why you don't like "meritocracy", haha.

  • In reply to duffmt6
    McGurk's picture

    duffmt6:
    300 Hours:
    The shortest time period you can hope to complete your CFA exams is 18 months. And that is only if you start in December for your Level I and pass all your exams on your first try (which happens to about 4% of candidates)

    Just wondering what the source is for this information? Empirically I find it difficult to believe.

    Pretty sure that it was meant to break it down like the following example:

    December 2012 Level 1
    June 2013 Level 2 (+6 Months)
    June 2014 Level 3 (+12 Months)

    If by some godsend you were able to pass Level 1 without studying, you can technically do things in 18 months minimum, no?

  • In reply to duffmt6
    Going Concern's picture

    duffmt6:
    300 Hours:
    The shortest time period you can hope to complete your CFA exams is 18 months. And that is only if you start in December for your Level I and pass all your exams on your first try (which happens to about 4% of candidates)

    Just wondering what the source is for this information? Empirically I find it difficult to believe.

    I think he meant that 4% of candidates finish all the exams on the first try. Approximately equal to 35% x 35% x 35%, although those are a little lower than actual historical pass rates for each level. More like 8% using most recent pass rates.

  • In reply to Going Concern
    duffmt6's picture

    Going Concern:
    duffmt6:
    300 Hours:
    The shortest time period you can hope to complete your CFA exams is 18 months. And that is only if you start in December for your Level I and pass all your exams on your first try (which happens to about 4% of candidates)

    Just wondering what the source is for this information? Empirically I find it difficult to believe.

    I think he meant that 4% of candidates finish all the exams on the first try. Approximately equal to 35% x 35% x 35%, although those are a little lower than actual historical pass rates for each level. More like 8% using most recent pass rates.

    That method ignores conditional probabilities. I would estimate the actual amount to be much higher than 8%.

    "For I am a sinner in the hands of an angry God. Bloody Mary full of vodka, blessed are you among cocktails. Pray for me now and at the hour of my death, which I hope is soon. Amen."

  • imallcash's picture

    I've never heard a charter holder, or even a person who had passed at least level II, bash the program. Go figure that all of the whining comes from people who "attempted the level I exam." MBA, CFA, CPA are all extremely credible and should all be considered depending on where you are and where you want your career to go.

    300 Hours your content is always great. keep it coming.

    It's all manipulated with junk bonds. You can't win.

  • In reply to duffmt6
    Going Concern's picture

    duffmt6:
    Going Concern:
    duffmt6:
    300 Hours:
    The shortest time period you can hope to complete your CFA exams is 18 months. And that is only if you start in December for your Level I and pass all your exams on your first try (which happens to about 4% of candidates)

    Just wondering what the source is for this information? Empirically I find it difficult to believe.

    I think he meant that 4% of candidates finish all the exams on the first try. Approximately equal to 35% x 35% x 35%, although those are a little lower than actual historical pass rates for each level. More like 8% using most recent pass rates.

    That method ignores conditional probabilities. I would estimate the actual amount to be much higher than 8%.

    I think you're right, although probability was probably my weakest area of the CFA's subject soup. It's assuming that someone passing an exam is an independent event, whereas in reality the chance of you passing all three exams on the first try is higher if you already passed one or two levels on the first attempt? What I'm more interested in knowing is the percentage of the pool of bros that sign up for Level 1 and ultimately end up getting their charter. I'm guessing it's somewhere around 20-25%, but I don't have all that much to base it on.

  • oreos's picture

    I'm aiming for both. never stop self improvement

    "After you work on Wall Street it's a choice, would you rather work at McDonalds or on the sell-side? I would choose McDonalds over the sell-side." - David Tepper

  • In reply to Going Concern
    YellowRanger's picture

    LOLz, Did you study for the CFA?

    If you can remember all those formulas, I raise my glass to you good sir.

  • In reply to duffmt6
    RiskyBizness's picture

    duffmt6:
    300 Hours:
    The shortest time period you can hope to complete your CFA exams is 18 months. And that is only if you start in December for your Level I and pass all your exams on your first try (which happens to about 4% of candidates)

    Just wondering what the source is for this information? Empirically I find it difficult to believe.

    Empirically or anecdotally?

    I passed the L2 exam but am going to worry about the GMAT in the near term. Will def do L3 at some point, came too far not to. Also, while it's not applicable outside of finance, it's helpful outside of the specific roles quoted earlier ITT. I've seen a surprising number of people in IBD with it, especially considering the rap it has on here, and I think it is looked at as an either/or for the CPA in many corp roles.

  • In reply to YellowRanger
    oreos's picture

    YellowRanger:
    LOLz, Did you study for the CFA?

    If you can remember all those formulas, I raise my glass to you good sir.


    me? yes.

    "After you work on Wall Street it's a choice, would you rather work at McDonalds or on the sell-side? I would choose McDonalds over the sell-side." - David Tepper

  • suchislife's picture

    I'm going to chime in with my personal experience;
    I completed the entire CFA program by age 23,
    Worked in a pension fund (which funds PE shops FYI if you don't know how the business works) and work in PE
    As a side note I'm also applying to 5 top MBAs in exactly 20 days I have all my apps set and ready to go

    Here's the thing with the CFA it is a wildly misunderstood creature, a lot of people say it's not applicable to different fields yet most of those people have not gotten through the first test.

    The reality of the test is that it is in fact very applicable to ALL areas of finance given the broad knowledge base.
    At least in private equity the CFA has allowed me to significantly outperform all of my peers, and has been responsible for me being able to get promoted many times not because of the charter but because of the tools that I obtained from it (after me the CFA has gained tons of value in my firm). Believe me when you can do mental valuation gymnastics while structuring and negotiating an acquisition its well worth the time.

    In addition to all you PE fans out there, I don't know if you have realized this but PE shops are funded by pension funds, and understanding the intricacies of how they work is key to raising a fund. Especially when those pension funds are advised by CFAs who value and know the charter, know what I'm saying?

    I personally sit in the board of 2 companies, and have used the skills I learned from the CFA to implement quite a few successful operating strategies. This is because the charter teaches you something quite important, (which is the key to investing) a value creation mindset.

    Many people argue that it won't get you a job and that it's not a requisite for PE. What I say to that is that might have been the norm, but things change and I for one attribute tons of goodwill to any CFA that applies for a job because as I have been through it and know the discipline and determination required to complete the degree.

    In the end, I completed the charter in my spare time while working full time, this is where I mostly agree with the OP. I have plenty of time to pursue an MBA they are by no means exclusive. It is best if one can complete the CFA early on as it will give you a good knowledge platform to build on during your career.

    The thing is, I'm tired of hearing people (who have not completed the entire program) say the CFA is useless outside of asset management. If you failed level one and never completed the program its ignorant to say that the charter is useless for other fields. In my opinion you don't have a say unless you have completed the entire program, if you have done so and then believe its not worth it by all means feel free to trash it.

    In the end, I believe the CFA go very nicely with my MBA (if I get in). Both have MAJOR merit and I fully respect both and believe that both aver very useful across many fields (not just asset management).

  • In reply to suchislife
    oreos's picture

    suchislife:
    I'm going to chime in with my personal experience;
    I completed the entire CFA program by age 23,
    Worked in a pension fund (which funds PE shops FYI if you don't know how the business works) and work in PE
    As a side note I'm also applying to 5 top MBAs in exactly 20 days I have all my apps set and ready to go

    Here's the thing with the CFA it is a wildly misunderstood creature, a lot of people say it's not applicable to different fields yet most of those people have not gotten through the first test.

    The reality of the test is that it is in fact very applicable to ALL areas of finance given the broad knowledge base.
    At least in private equity the CFA has allowed me to significantly outperform all of my peers, and has been responsible for me being able to get promoted many times not because of the charter but because of the tools that I obtained from it (after me the CFA has gained tons of value in my firm). Believe me when you can do mental valuation gymnastics while structuring and negotiating an acquisition its well worth the time.

    In addition to all you PE fans out there, I don't know if you have realized this but PE shops are funded by pension funds, and understanding the intricacies of how they work is key to raising a fund. Especially when those pension funds are advised by CFAs who value and know the charter, know what I'm saying?

    I personally sit in the board of 2 companies, and have used the skills I learned from the CFA to implement quite a few successful operating strategies. This is because the charter teaches you something quite important, (which is the key to investing) a value creation mindset.

    Many people argue that it won't get you a job and that it's not a requisite for PE. What I say to that is that might have been the norm, but things change and I for one attribute tons of goodwill to any CFA that applies for a job because as I have been through it and know the discipline and determination required to complete the degree.

    In the end, I completed the charter in my spare time while working full time, this is where I mostly agree with the OP. I have plenty of time to pursue an MBA they are by no means exclusive. It is best if one can complete the CFA early on as it will give you a good knowledge platform to build on during your career.

    The thing is, I'm tired of hearing people (who have not completed the entire program) say the CFA is useless outside of asset management. If you failed level one and never completed the program its ignorant to say that the charter is useless for other fields. In my opinion you don't have a say unless you have completed the entire program, if you have done so and then believe its not worth it by all means feel free to trash it.

    In the end, I believe the CFA go very nicely with my MBA (if I get in). Both have MAJOR merit and I fully respect both and believe that both aver very useful across many fields (not just asset management).


    100% agree. particularly with value creation.

    "After you work on Wall Street it's a choice, would you rather work at McDonalds or on the sell-side? I would choose McDonalds over the sell-side." - David Tepper

  • Boothorbust's picture

    Mostly really well made points, but I think comparing the CFA network to an MBA network is a big stretch, to put it kindly.

  • thedude12r43w's picture

    How about the CPA, is the designation valuable outside of public accounting? I have seen cases where professionals in finance have the CPA/MBA combo for F500, IBD, corporate/commercial banking, etc. I considered getting a CPA considering how bad the job market is, if I was ever let go I would be more marketable and could even pick one of those dreaded recession proof public accounting jobs worse case scenario.

  • In reply to duffmt6
    300 Hours's picture

    I'm assuming you're enquiring about the 4% number. This was inferred from official CFA numbers. The process is lengthy and has its assumptions, but the main reason for the empirical difference is probably because pass rates are also highly skewed by country.

  • In reply to suchislife
    YellowRanger's picture

    suchislife:

    The thing is, I'm tired of hearing people (who have not completed the entire program) say the CFA is useless outside of asset management. If you failed level one and never completed the program its ignorant to say that the charter is useless for other fields. In my opinion you don't have a say unless you have completed the entire program, if you have done so and then believe its not worth it by all means feel free to trash it.

    Great points and view.

    Like any investment, I weighed the cost/benefit and realized I didn't want to see how far the rabbit hole went.

    Sure, the CFA curriculum is applicable outside asset management in many cases. Technically speaking, it's incredibly well rounded. The skills are transferable in anything slightly finance related.

    But what a tragedy, if you spent +900 hours just to find out it wasn't worth it. I spent plenty of time studying/researching where it would take me, and I'm not entitled an opinion?

    You don't have to jump off a bridge to see it's not a good idea. ( *Not a good idea relative to my situation )

  • In reply to 300 Hours
    Going Concern's picture

    300 Hours:
    I'm assuming you're enquiring about the 4% number. This was inferred from official CFA numbers. The process is lengthy and has its assumptions, but the main reason for the empirical difference is probably because pass rates are also highly skewed by country.

    Can you post your process here? I'd be interested in seeing it.

  • In reply to YellowRanger
    suchislife's picture

    YellowRanger:
    suchislife:

    The thing is, I'm tired of hearing people (who have not completed the entire program) say the CFA is useless outside of asset management. If you failed level one and never completed the program its ignorant to say that the charter is useless for other fields. In my opinion you don't have a say unless you have completed the entire program, if you have done so and then believe its not worth it by all means feel free to trash it.

    Great points and view.

    Like any investment, I weighed the cost/benefit and realized I didn't want to see how far the rabbit hole went.

    Sure, the CFA curriculum is applicable outside asset management in many cases. Technically speaking, it's incredibly well rounded. The skills are transferable in anything slightly finance related.

    But what a tragedy, if you spent +900 hours just to find out it wasn't worth it. I spent plenty of time studying/researching where it would take me, and I'm not entitled an opinion?

    You don't have to jump off a bridge to see it's not a good idea. ( *Not a good idea relative to my situation )

    Yellow I understand what your saying, what I'm trying to get at is that level one is the tip of the iceberg its basically introductory ratios and theory. Its not until you go through level two that you start seeing the implementation of everything you've learned. Its hard to judge the exam if you just saw the tip because there is still so much left to see.

    Its fine that you made your personal choice, I respect that, but giving advice to others without having fully gone through the experience is sort of misleading. One should let people who are considering the program make the choice for themselves, just like you did, and to do so they should talk to people who have actually gone through the entire experience. I'm sure there will be plenty of pros and cons; I analyzed those myself.

    In my opinion taking the CFA is a very personal choice, people who undertake the endeavor should only do so because they want to; it is by no means an easy feat.

  • R0bin's picture

    Let's keep this in mind, not all CFAers are created equally..so let's put it this way:

    Remember in college, within your finance major...

    1. There was this rock star guru who read How to be a stock market genius at age 10 and started buying stocks by age 15? Now he's killing it at a HF
    2. There was this average student who always did OK in his classes, ended up in a BB doing operations.
    3. There was the hot girl who was better at business law and now does real estate valuation
    4. There was the guy who never "got" finance and never understood the concept behind the Gordon Growth Model, but managed to graduate and now works in an insurance company doing accountancy.

    All four has a BS in Finance from XXX University, but just have different skill sets and professional interests. CFA works the same way, what are your skill sets and professional interests, and how does the program supplement those ambitions?

    Why bother debating over if the CFA will help you "get in x,y,z industry"? Just see it it for what it is, supplementary to your core professional ambitions.

    Baby you're the perfect shape, baby you're the perfect weight. Treat me like my birthday, I want it this way and I want it that way. It makes a man feel good baby.

  • sharkridingbear's picture

    Long time lurker first time commenter. I've just been accepted into Rotman (University of Toronto) and completed level 3 CFA last June so I definitely went through this decision making process. I decided to do the MBA after losing out for a few jobs in the last round because of a candidate that "they just couldn't say no too" ended up getting the job instead, a godfather candidate if you will. With a CFA and an MBA (from a good school) I decided I could be that godfather candidate.

    CFA will help you with your application process as it looks great in the package and shows that you have the ability to focus and study independently. It can also help you if you had some less than stellar undergrad marks (glug glug). The other thing about an MBA is that it offers you the recruitment benefits upon graduation, which is a great pipeline into whatever industry your looking for. CFA is great and does have events / job posting boards, but to be honest, they are not really exclusive and don't have a lot of top jobs (mostly research analyst stuff).

    Bottom line, you can be fine with just a CFA, but if you have the time, money, and ability to do an MBA from a good school, it just puts you that much farther ahead than everyone else. Not just at entry level, but every time you apply for a job.

  • AQM's picture

    I don't know if this has been asked on the thread before, but how does the CFA look in terms of business school admissions? I mean it obviously can't hurt right? I'm looking to work in ER after I graduate, and I was wondering whether getting up to at least CFA level 2 could help boost my candidacy as a business school applicant? I can't imagine myself doing ER for more than 3 or 4 years without a small break. (okay I'll admit it, the real world sucks, I wanna be in college the rest of my life haha)

  • In reply to AQM
    suchislife's picture

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