Loren F.
Senior Research Analyst at Strategic Insight, a mutual fund industry research/consulting firm.
CFA or MBA?
I currently work in the investment management industry and am looking for an educational program to improve and broaden my skills and my knowledge base. Although I do not have a business/finance background, my math skills are decent and I am a good learner. Which would be better for me to obtain: an MBA or a CFA? What criteria should I use in making such a decision? Thanks!
Good Answers (6)
Robin L.
AMDS (Finance) PhD Candidate
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Over the years, I've seen various discussions on the Internet addressing exactly the same question--whether to pursue a CFA or an MBA in Finance. Although I haven't seen it in a number of years, there used to be a complete Net Present Value analysis comparing the CFA and MBA I saw years ago (I decided that neither type of role as a practitioner sat right with me and I decided to apply my strengths to scholarly development of theory because of just such practices: application of NPV with such uncertain outcomes for any given individual, let alone for a general comparison flies in the face of all we, as researchers, hold dear as external validity)
That said, even that isn't necessarily the right decision, since we're not machines with equal preferences, strengths, and competencies. Without already having some introduction to finance, committing to a CFA is a large and significant undertaking. On the other hand, an MBA can usually be completed either with Finance as a major (at my b-school, this meant that after the initial 19 courses in first year introducing all major functional areas of business, the second year would comprise 7 finance courses out of a total of 10) or as a general MBA programme if you decide that finance is not for you after completing the introductory finance course.
Consider also that the CFA is primarily self-study and will require more self discipline, in general, than an MBA, which will generally be fast and furious, but with its regular assignments and exams, keep you from falling too far behind. A traditional full-time MBA takes two years (longer if you continue to work and complete the MBA part-time), but in recent years there has been an explosion of distance and online offerings that can allow you to complete the MBA faster than a part-time degree, but at your convenience.
Keep in mind that the MBA is generally regarded as being a "mile wide and an inch deep," whilst the CFA could be considered an "inch wide and a mile deep." In general, I would expect that since a CFA should be known for technical expertise, that it would make you more suited for more technically-intensive roles, whilst the MBA, with its emphasis on general strategic managerial decision-making, to be better prepared to make strategic decisions cognizant of the strategies, resources, and competencies of the other functional areas.
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Clarification added July 10, 2010:
Further to Dave's opinion that an "these days" an MBA is similar to an undergraduate business degree (here in Canada, they are generally B.Comm, BBA, or HBA) I have in the past expounded on that very topic, particularly in the context of why someone who already completed a four-year degree in business would want to return for an MBA, particularly when superficially the MBA programme I took (which is Canadian, but AACSB) comprised 19 courses in all the major functional areas in first year before any opportunity to specialize.
To me, what I have noticed other than the level of critical thinking and application of theory that is expected of an MBA generally being much higher than that of an undergrad student is also that MBA tends to have a much more strategic emphasis, whereas undergrad tended to focus on the theoretical foundations that would prepare you (perhaps better than MBA) for application of theory more than selecting the appropriate course of action and plan to implement it. The difference sounds quite subtle, but even if your undergrad was not in business, by the time you reach MBA, your skills in decomposing, characterizing, parameterizing, and solving problems, critical thinking, and your more structured methods of organizing information and elucidating the relationships between isolated facts facilitate the emphasis on strategic decision-making as opposed to strict application of theory.
Again, my MBA programme did offer a Finance specialization that stipulated that in the second year (first year courses at the time were six weeks whilst the second year courses were 12; they have since modified the programme so that all terms are 12 weeks), 7 out of 10 courses must be finance courses. While it should provide more than enough finance competency to get you in the door combined with evidence of career progression in finance, what really does set it apart from the CFA is the comprehensive foundation in all functional areas of business, always applied cognizant of strategic considerations. While the CFA seems to be a longer process, requiring three years to complete the three self-study parts, this is due to minimum time requirements and not quantity of material; during our six-week terms we still managed to complete entire textbooks.
I'll post a link to a blog post I wrote about a year ago related to the issue (re: undergraduate business versus MBA).
It seems that having your MBA is almost like having your BA/BS anymore. The next level to me is to pinpoint your learning as it relates to your field of interest. I think having your CFA/CFP in this space is far more valuable. I agree with Robin below about the time to complete - but having your CFP after your name opens just as many doors since folks know all the hardwork and committment it took to get there...
Susan S.
Oppenheimer & Co. Inc., financial marketing writer.
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You're a research analyst. Do you wish to remain in research and move up, perhaps, to a position as head of research or perhaps as chief strategist? Then take the CFA, followed by the CAIA certification, which would give you mobility into an asset management firm and help you with mutual funds that short. But if you want an all-around experience that could position you to move into different areas of the industry or more toward client work than research work, the MBA would make more sense.
Ron A.
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Loren, there's no right or wrong answer to your question because it's a matter of personal choice. In other words, it depends upon what you want to do.
The CFA is a highly focused training program! And it's primarily designed for those wanting to become personal financial advisors or consultants. In other words, people who want to do personal financial planning. So it's not a degree; it's a certification program.
By contrast, the MBA is degree, not certification program! And it has many areas in which a student may concentrate (major). Some schools even have a general MBA where students don't need to pick a major area. In my own case, I got my MBA in finance with a focus on investments. And worked for many years in banking and financial services.
Now because you say your goal is to broaden your skills and knowledge base, I would suggest the MBA. And that's because it is broader in scope. And would give you the opportunity to pick up a little of this and a little of that. In other words, there's some management, accounting, finance, etc mixed in with most MBA programs.
Ron Auerbach, MBA
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Success"
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If you plan to run money ... the CFA may be more meaningful. If you are running a business... the MBA comes more into play. I know this sounds simple ... but I just finished my MBA at Michigan last September and started a new business. The CFA would not help in the broad scope of my duties and challenges as a leader. It really depends on the path you plan to take... as an asset manager it is a must! I have found the colleagues in my MBA class an amazing resource of diverse talent in a multitude of industries. Sometimes being so centric to finance it causes tunnel vision and the MBA helps you lift up and out to gain a different perspective on all facets of your core focus. Experience and diversity are the flavors of life - expand your bandwidth wit an MBA.
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Let me offer a different perspective. First off, the CFA is NOT just for personal financial planning as was mentioned above. It is a very respected designation that is recognized globally and can be very useful in a wide variety of areas in the financial services industry (e.g. private banking, investment banking, equity research), and in finance in general.
Bottom line, if you can get the CFA designation by passing all the 3 levels and fulfilling the qualified hours, you will be seen as hardcore and I mean that in a good way. The journey is not an easy one and the failure rate is quite high.
The value of an MBA is decreasing. Unless you are from a Top 10 program, your MBA won't be seen with much respect as everyone seems to have one these days (see the Fedex commerical), nor would anyone recognize the brand beyond the local community. The MBA can also be very expensive. Not just fees, but opportunity cost. You will get a much more broader exposure to business in general and potential expand your network; however, if you're in it just for the content, you can learn almost all of it by picking up a book.
The key criteria as others have mentioned is what you want to do in the future. If it's staying within the investment industry and financial services more broadly, I personally believe a CFA would be the better value for money path if you can make it all the way to the end. If you're looking outside of financial services or interesting in moving into another function, an MBA may be better. Of course, if you're talking about an MBA from a Top 10 school, that's a different discussion altogether.
Cheers,
Jon
More Answers (6)
I believe getting an MBA might be of a little bit more benefit since it casts a wider net. If you have an MBA employers may view you as qualified for more positions than with a CFA. What I'm trying to say is that an MBA will not pigeon hole you into a certain industry as much as a CFA will. of course, this is just my opinion. Any Masters degree will undoubtedly open more doors for you in your career, you really can't go wrong either way.
Juergen A.
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You should go for an MBA. The MBA has a much better reputation on the international market. And, as others sad, it opens you maybe a bit more opportunities in your career.
Wallace J.
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Both. If you want to be a CFO of a huge multinational branded corporation, get both.
Happy to connect you with my sister to ask about the executive MBA program at NYU Stern. its quite flexible and sometimes employers pay for it. i know Charlie Kickham did the program and was able to keep a full time job as well
Gregg H.
Business and Retirement Protection
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One answer I learned in grad school applies here, "It depends"
What is your current background and how well does it serve you?
What skill sets do you need to advance in your chosen career?
Does either of these programs fill that gap better than the other? Is there another program that fills the gap even better.
Try to think 'down the road' for your career. Currently the shelf live of any graduate degree is about 10 years.
A certification program probably requires CE to keep somewhat current, but not enough to keep a mastery of any changing field.
I didn't mean to evade your Q but usually people know the solution to career/education issues, but have to look inside themselves to find them. Hope this helps.
