Should I earn a CFA or an MBA degree? – this age-old question lingers in the minds of many finance professionals.
Both Master’s of Business Administration (MBA) holders and Chartered Financial Analyst (CFA) holders enjoy many perks due to their credentials. It should be clarified at the very outset that there is no clear winner among these two credentials. However, there are certain distinctions that you should know if you’re aiming to pursue either and are facing a dilemma.
1. Career paths differ for CFA and MBA holders
The CFA program is very specialized and designed in a way that keeps finance in the center of the entire curriculum. On the other hand, the MBA program is quite broad and focuses on a variety of topics, such as Human Resource Management (HRM), Marketing, and Accounting. Finance is usually just a part of the general MBA program.
If you are certain that you want a career in the investment banking industry or in the finance arena, it is highly advised to pursue the CFA degree. If you are looking to broaden your understanding regarding all the facets of business and are unsure which industry you want to have a career in, then perhaps MBA is the way to go.
2. Obtaining a CFA degree generally takes more time than an MBA degree
A full-time student can earn an MBA degree in two years. A CFA degree can also be earned in about 19 months. However, most CFA candidates take about 3 to 4 years to take all three levels of exams. Each of these levels is said to require at least 300 hours of studying. Hence, finishing all three levels of CFA in about 2 years is extremely challenging.
However, many graduate schools also offer part-time MBA programs. On average, these part-time MBA programs are completed in 2 to 3 years but there are programs that may also take upto 5 years to finish.
3. Cost of programs and salaries vary
MBA programs are generally a lot costlier than the CFA program. Obtaining an MBA degree will cost you on average USD 100,000. Whereas, the CFA program is expected to cost you around USD 5,000 and around USD 12,000 if you include all the exam preparation materials.
Since the pass rates for CFA and MBA largely differ, the expected average salary of a CFA holder and an MBA holder also vary. CFA has a pass rate of around 50% whereas MBA has a pass rate of around 85%. This means there are relatively fewer professionals with the CFA credential than MBA ones. Hence, according to Payscale, a CFA charterholder is expected to have a starting salary of USD 94,875 and an MBA holder to receive USD 89,000.
Although wrongly conceived as substitutes, CFA and MBA programs complement one another. If you can afford the time and curriculum fees and are aiming to become attractive as a business professional, obtaining both degrees would be advisable.