Finance professionals seeking an advanced degree usually zero in on two popular options – CFA and MBA. Would an MBA from a top international business school or a CFA help you meet your career objectives is what you need to decide.
An MBA covers a wide variety of general management topics in all areas including finance, accounting, human resources, operations, strategy, marketing, thus widening your knowledge database; so if changing careers in the future is in your mind, an MBA would be able to facilitate the transition.
However a CFA would suit you only if you’re very focussed about your career in finance. A CFA would sharpen your analytical skills in the area of finance.
In this post, we’ll cover the various aspects (pros and cons) of both the CFA and MBA so that you have a clear picture of what each has in store for you.
Most of the international MBA programs have a two year duration, except some of the one year programs which require you to have more work experience. This means that you need to take a hiatus from work for the entire duration of the program.
The CFA has three levels- level I, level II and level III which can be completed even while you’re working which is a huge advantage as your income stream does not take a break.
Most of the good MBA programs require you to have at least 2-3 years of experience and you’d be required to leverage your skills, meritorious achievements and past experience and come up with a solid application in order to improve your chances of being accepted by the business school.
The CFA Level I can be attempted even while you’re in the final year of your graduation, so you can begin early. However in order to appear for level II, you’re required to complete your graduation. Unlike an MBA program, there’s no application involved.
Business schools employ various delivery methods including classroom lectures, case study method, simulations, learning through team-work, real-world business projects as well as experiential learning.
The CFA does not offer all this variety as it is purely self-study based. You need to be focussed and have a regular study-time within your hectic day’s schedule.
Business school application is a tedious process. It begins with the GMAT (or GRE) preparation; multiple attempts at the GMAT if you fail to obtain a decent score. Then you need to shortlist the right business school that suit your career goals and start working on the MBA essays which would vary for each school.
Then there are the recommendations to complete and the interviews that follow. Each of this stage needs a lot of time and energy. However, if you’re able to get into a good program, you may be assured that you’d be able to make it till the end and get your MBA degree (provided you’re able to arrange the finances and meet the requirements of the program).
The CFA program does not require you to enroll in any institute. You can appear for it once you’re done with your preparation. Level I is held twice a year – in June and December.
However, level II and level III are held only once – in June. On an average, the preparation time for each of these levels is around 300 hours, so a lot of dedication and disciplined self- study is needed as you’d be working while you’re studying.
The exam success rates are quite low – for the June 2015 exam, it was 42% for level I, 46% for level II and 53% for level III. So you should be prepared to re-take it in case of a failed attempt.
On an average, you may take upto four years to complete all the three levels. At the end, after clearing the three levels, you’d need to have four years of qualified work experience to earn the CFA certification.
The cost of tuition for a two year program from a good business school would be in the range of $100,000 – $120,000. To this, you’ve to add the cost of living (house rent, travel, food, etc.). You’ve also to take into consideration the opportunity cost which is the forgone income during these two years when you’d not be working.
The CFA, on the other hand, is pocket-friendly. It involves a one-time enrollment fee of $450 and $860 exam registration fee for each of the levels. The exam registration fee also includes the e-book with the entire curriculum and also the mock tests or you’ve to pay an additional $150 plus shipping for the print version.
If you plan to enroll in some form of coaching for your CFA preparation, you’ll also have to consider the additional expense that would come your way.
An MBA from an international location would give you an internship opportunity in and around. You’d also be able to take advantage of your location to look out for jobs in the industry of your choice.
After an MBA, you may choose to continue working in the same field as before or change careers. An MBA would greatly widen your career choices as well as social network and give you a chance to interact with students or alumni coming from across the world.
If finance is your focus, a CFA would be able to offer you better opportunities in finance related areas like corporate finance, investment banking, portfolio management, hedge funds or equity research.
The salary data as obtained from payscale.com is given below:
The CFA salary in the US for the mid-level positions like financial analyst, investment analyst, research analyst is in the range of $45,000 to $100,000 or higher depending on your academic background, designation, past experience, job location and several other factors.
For senior positions like that of a senior financial analyst or a portfolio manager, the salary would be higher in the range of $60,000 to $115,000.
The table above shows figures for CFA salary in India. It may be noted that these salaries depend to a very great extent on your profile.
For example, for someone with a CA (Chartered Accountant) and a CFA qualification, the salary would be much higher than a graduate with the CFA certification.
On an average, the salaries start from 1.8 lakhs to 2.00 lakhs and may go as high as 25 lakhs or much higher for the greater experienced professionals.
The salary for MBA professionals depends a lot on your business school reputation and the industry you choose to work in. Since we’re discussing international MBA programs, we’ve taken into account the two year US MBA programs.
The average post-MBA salary as per Businessweek data for some of the top b-schools is as follows:
|Business School||Average MBA Salary|
|Harvard Business School||$127,236|
|University of Pennsylvania (Wharton)||$123,431|
|Carnegie Mellon University (Tepper)||$109,982|
|Duke University (Fuqua)||$114,109|
|Cornell University (Johnson)||$111,000|