Various designations and certificates are available for investment professionals, stockbrokers, and financial advisors. Chartered Financial Analysts (CFAs) and Master of Business Administration (MBA) are among the most demanding but financially rewarding degrees. People who are interested in becoming financial advisors or investing should take into consideration their differences.
If you want to determine which of these two degrees is the best investment for your time, resources, and money, keep reading.
CFA – Introduction
First introduced in 1962, the CFA designation offers specialized skills like investment analysis, portfolio strategy, and asset allocation to those who pass three exams. Compared to an MBA, it is less general and is highly valued by investment professionals.
In terms of cost, earning a CFA certification is more affordable than earning an MBA since the program is based on self-study and does not require attending classes. The expenses are limited to exam fees. There is a one-time enrollment fee of $450 for the early registration program and a program fee of $700 for the standard registration program, depending on how early you register.
What are the requirements for becoming a CFA?
A 2018 CFA Institute data report shows the average age of candidates for the CFA program is 28. Younger students enter the program during or shortly after their last year.
Many graduate schools teach CFA coursework, allowing students to earn a degree while also preparing for certification. In addition, there are official CFA institutes, such as Wiley Efficient Learning, dedicated to helping students become successful charterholders. The Wiley CFA prep course is designed to help students clear the exam on the first attempt.
What should you expect from a CFA?
Obtaining a CFA is affordable but requires hard work and long hours. There are three levels in the CFA program: Level I, II, and III, each lasting six hours. The candidate must complete each section before moving on to the next. One can keep track of upcoming test dates and events on the calendar. However, these dates may be subject to change depending on conditions.
Students who prepare for CFA exams spend an average of 300 hours studying and pass each section on average after four or five years. In other words, even if the candidate clears all parts on the first go, obtaining the CFA will still take at least 19 months.
As a result, the CFA is one of the most challenging exams you’re likely to take, with average pass rates hovering around 45%. According to consensus, the CFA exam is more difficult to pass than the certified public accountant (CPA) exam.
Forum commentators familiar with both exams on the CPA information and review site generally consider the CFA the more challenging exam. However, accounting students have an advantage when taking the CFA exam as they are well-versed in audit problems.
MBA – Course of Study
Students study full-time for two years to earn an MBA, covering a wide range of business topics. Human resources, accounting, marketing, sales, and supply chain management are the general topics covered in the course. Depending on the field of study, there are several types of MBAs, ranging from healthcare to communications to information systems technology. The focus of these degrees remains on acquiring a broad understanding of business concepts, said Michael Freund, graduated MBA in Finance from Columbia University.
Michael Freund is a New York native who has spent the past 25 years of his life in Israel where he serves the Jewish community through his organization, Shavei Israel. He is a regular columnist for the Jerusalem Post and has co-authored two books and father of 5 sons.
The cost and reward of an MBA
MBAs are usually expensive. Additionally, students miss out on potential earnings during their two years in college. The cost of an MBA program at a top business school can exceed $100,000, which doesn’t include living costs, course books, and other expenses.
If you forego wages while attending school, consider the effects. Financial aid can indeed help reduce this burden somewhat, and some companies will cover a portion of an employee’s MBA expenses. The silver lining here is that the return on your investment will be worth it.
You can demonstrate drive, work ethic, and a solid network by earning an MBA from a well-regarded school. Having shared a long, tough challenge with dozens of other ambitious overachievers allows you to establish lifelong professional contacts.
If you want to work in marketing, consulting, finance, or investment banking, you should consider getting an MBA at the very least. The healthcare industry increasingly relies on MBAs as insurance, government regulations, and record-keeping standards change.
MBA prepares you for a career in finance
MBAs provide a broader overview of business principles than Chartered Financial Analysts (CFAs). An MBA prepares students for opportunities in a variety of sectors and careers in finance by teaching them critical thinking and leadership skills.
Graduates of MBA programs may work as consultants, financial analysts, financial managers, and chief financial officers.
CFA is best for a career in investment banking
Investment bankers often value the CFA credential as a valuable credential. In addition to financial modeling skills, corporate finance, ethics, and financial analysis, the program has a rigorous curriculum.
Commercial banking, consulting, and asset management are common career paths for CFA charterholders.
CFA vs. MBA – Salaries
According to Payscale, MBA graduates earn an average base salary of $91,000, while CFAs earn an average of $97,000.
CFA vs. MBA – Affordability
MBA programs typically cost between $80,000 and $100,000; on the other hand, CFA designations cost less than $5,000.
CFA vs. MBA – Duration
The average MBA program takes two to three years to complete, although some programs offer one-year programs. The CFA exam has three levels: I, II, and III, which take four to five years to complete on average.
MBA vs. CFA – Similarities
As both MBAs and CFAs cover topics such as management, marketing, and strategy, both can complement each other. MBA programs cover topics such as management, marketing, and strategy, while CFA programs cover investment management in greater detail than MBA programs.
An MBA and CFA are particularly valuable for portfolio management and corporate management positions. Charterholders are increasingly filling corporate finance roles that MBAs would naturally fill.
MBAs and CFAs are both valuable in the end. In certain leadership and management positions, companies may require MBAs to enhance job prospects, earning potential and build a broader network.
The CFA, however, is highly prized by professional investors who work for money management firms and registered investment advisors, where most financial advisors start and receive initial training and background.