LondonFinance1
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Management Consulting
A question that I get asked quite often is whether to pursue an MBA or a CFA to accelerate your career. The short answer is – it depends, so buckle up and follow me through a couple of aspects to consider. You might have heard the saying that an MBA is a mile wide and an inch deep while a CFA is a mile deep and inch wide.
The first and probably most important decision between MBA and CFA is which one will be more beneficial for your career plans. The CFA is focussed exclusively on finance (and even within that industry only for roles with a focus on investments) and will not earn you much credit outside of the industry, e.g. in management consulting https://canarywharfian.co.uk/threads/consulting-vs-investment-banking.696/ should you be interested in both. The MBA is giving you an overview of all aspects needed to manage a company. That means that there is a lot of ground to cover, so there is limited opportunity to dig deeper. The CFA offers you more flexibility in learning, so is easier to pursue along a full-time job as there are no classes at specific times and deadlines for papers, exams etc. apart from the CFA exam. While an MBA is an academic degree (quite often from a prestigious institution), a CFA is not. So, if you are eying additional degrees later on (maybe a DBA or a PhD), an MBA might give you additional credits.
Total cost for a CFA is USD 3,050 with early registration and USD 3,950 with standard registration. This will be higher should you have to resit exams – the pass rate at each level is ca. 50%, so chances are that you might not pass all levels at first attempt. On top of the registration fees, you might want to buy additional study materials, a pocket calculator plus travel and accommodation as the exams are held only at a few, central locations. In total, this can be as much as 10k.
Contrast that with the cost of an MBA which is easily tens of thousands in tuition fees (LBS charges GBP 110k at the moment), a year or two without income (minus some internships or consulting on the side) plus cost-of-living expenses. True, there are scholarships offered, but these are more likely to be reductions in fees than a completely free MBA (as the quip goes “if they offer you are full scholarship, you should look for a better school"). Preparation for admissions tests like the GMAT also cost money, so a good MBA will probably set you back you 100k+, if not more.
Some employers will help you with your CFA, e.g. by offering training sessions, extra time off or by sponsoring your exam cost. There is also support for an MBA, but as the sums involved are much bigger, so your employer will ask for something in return, usually requiring to staying on for a couple of years after graduation. A model that I know from management consulting is that you get tuition fees paid in full if you stay for three years, but you have to pay back 2/3 of it if you leave after two and so on. Support could involve offering extra time off for applications or if you are pursuing a part-time MBA, financial support, training, coaching or mentoring.
Another aspect to consider is that the CFA is a globally standardised certificate whereas the quality and the reputation on an MBA can fluctuate considerably (worth another post, if not a whole book). If you go for an MBA, you need to choose wisely. Pass rates differ as well – as mentioned above, they are ca. 50% at each level of the CFA, whereas you will rarely fail an MBA after you have been admitted, unless you do not attend any classes at all.
On the time needed, an estimate you will find frequently is 300 hours preparation time per CFA level, so 900 in total. This sounds like somewhat manageable 90 full days, but bear in mind that you will probably pursue the CFA alongside a challenging job. You will probably not have much spare time for two to three years.
An MBA takes one or two years and can be done fulltime or part-time. What is also time-consuming is the application process which you should start 12-18 months before the actual start of your degree. You will most likely need admissions tests like the GMAT which you need to study for (probably worth another post), essays, recommendation letters and/or a language test like the TOEFL. While an MBA is more challenging than an undergraduate degree, there is also the opportunity to take off and pursue other interests, especially if you are doing a two-year MBA which is prevalent in the US. Should you look into founding a start-up, an MBA might be a really good time for that.
You can start a CFA at any time, even during your undergraduate studies which might be a perfect time as you are somewhat flexible with your time and some of the investment knowledge is still fresh from your classes. There is a University Affiliation Program offered by the CFA for degrees that are closely aligned with the CFA curriculum. To become a charterholder, you need to prove relevant work experience, but you can collect this during your CFA and even after you have passed all three levels. In theory, you can do a CFA at any age, but you will obviously profit more from it if you are starting the CFA at a younger age. There is a sweet spot for an MBA, usually in your late 20ies/early 30ies with a couple of years of (relevant) work experience. There are Executive MBAs programs if you have more work experience. Basically, start considering/planning an MBA after two years in your first fulltime job.
A big advantage of a MBA over the CFA is the network, both of your class and your school. You spend a year or two in a classroom working together on challenging assignments which gives you opportunities to form bonds that will last a lifetime. Business schools have networks with sometimes 10s of thousands of alumni in very interesting positions and being a fellow member gives you a good chance to grab a coffee with someone. A CFA can feel a bit lonely if you study at home (it helps to form a study group), but you will enjoy a community of likeminded professionals as you need to attend a couple of training sessions, not least to maintain your status as a charterholder.
And finally, a very valid question: why not do both? You can cover both aspects, finance and management. You might even pursue them together – there is quite a bit of overlap between the finance classes of most MBAs and the level 1 curriculum of a CFA. I would recommend going for both mainly if you are looking for a career in which you can make use of both, e.g. becoming manager in an investment company.
The first and probably most important decision between MBA and CFA is which one will be more beneficial for your career plans. The CFA is focussed exclusively on finance (and even within that industry only for roles with a focus on investments) and will not earn you much credit outside of the industry, e.g. in management consulting https://canarywharfian.co.uk/threads/consulting-vs-investment-banking.696/ should you be interested in both. The MBA is giving you an overview of all aspects needed to manage a company. That means that there is a lot of ground to cover, so there is limited opportunity to dig deeper. The CFA offers you more flexibility in learning, so is easier to pursue along a full-time job as there are no classes at specific times and deadlines for papers, exams etc. apart from the CFA exam. While an MBA is an academic degree (quite often from a prestigious institution), a CFA is not. So, if you are eying additional degrees later on (maybe a DBA or a PhD), an MBA might give you additional credits.
Total cost for a CFA is USD 3,050 with early registration and USD 3,950 with standard registration. This will be higher should you have to resit exams – the pass rate at each level is ca. 50%, so chances are that you might not pass all levels at first attempt. On top of the registration fees, you might want to buy additional study materials, a pocket calculator plus travel and accommodation as the exams are held only at a few, central locations. In total, this can be as much as 10k.
Contrast that with the cost of an MBA which is easily tens of thousands in tuition fees (LBS charges GBP 110k at the moment), a year or two without income (minus some internships or consulting on the side) plus cost-of-living expenses. True, there are scholarships offered, but these are more likely to be reductions in fees than a completely free MBA (as the quip goes “if they offer you are full scholarship, you should look for a better school"). Preparation for admissions tests like the GMAT also cost money, so a good MBA will probably set you back you 100k+, if not more.
Some employers will help you with your CFA, e.g. by offering training sessions, extra time off or by sponsoring your exam cost. There is also support for an MBA, but as the sums involved are much bigger, so your employer will ask for something in return, usually requiring to staying on for a couple of years after graduation. A model that I know from management consulting is that you get tuition fees paid in full if you stay for three years, but you have to pay back 2/3 of it if you leave after two and so on. Support could involve offering extra time off for applications or if you are pursuing a part-time MBA, financial support, training, coaching or mentoring.
Another aspect to consider is that the CFA is a globally standardised certificate whereas the quality and the reputation on an MBA can fluctuate considerably (worth another post, if not a whole book). If you go for an MBA, you need to choose wisely. Pass rates differ as well – as mentioned above, they are ca. 50% at each level of the CFA, whereas you will rarely fail an MBA after you have been admitted, unless you do not attend any classes at all.
On the time needed, an estimate you will find frequently is 300 hours preparation time per CFA level, so 900 in total. This sounds like somewhat manageable 90 full days, but bear in mind that you will probably pursue the CFA alongside a challenging job. You will probably not have much spare time for two to three years.
An MBA takes one or two years and can be done fulltime or part-time. What is also time-consuming is the application process which you should start 12-18 months before the actual start of your degree. You will most likely need admissions tests like the GMAT which you need to study for (probably worth another post), essays, recommendation letters and/or a language test like the TOEFL. While an MBA is more challenging than an undergraduate degree, there is also the opportunity to take off and pursue other interests, especially if you are doing a two-year MBA which is prevalent in the US. Should you look into founding a start-up, an MBA might be a really good time for that.
You can start a CFA at any time, even during your undergraduate studies which might be a perfect time as you are somewhat flexible with your time and some of the investment knowledge is still fresh from your classes. There is a University Affiliation Program offered by the CFA for degrees that are closely aligned with the CFA curriculum. To become a charterholder, you need to prove relevant work experience, but you can collect this during your CFA and even after you have passed all three levels. In theory, you can do a CFA at any age, but you will obviously profit more from it if you are starting the CFA at a younger age. There is a sweet spot for an MBA, usually in your late 20ies/early 30ies with a couple of years of (relevant) work experience. There are Executive MBAs programs if you have more work experience. Basically, start considering/planning an MBA after two years in your first fulltime job.
A big advantage of a MBA over the CFA is the network, both of your class and your school. You spend a year or two in a classroom working together on challenging assignments which gives you opportunities to form bonds that will last a lifetime. Business schools have networks with sometimes 10s of thousands of alumni in very interesting positions and being a fellow member gives you a good chance to grab a coffee with someone. A CFA can feel a bit lonely if you study at home (it helps to form a study group), but you will enjoy a community of likeminded professionals as you need to attend a couple of training sessions, not least to maintain your status as a charterholder.
And finally, a very valid question: why not do both? You can cover both aspects, finance and management. You might even pursue them together – there is quite a bit of overlap between the finance classes of most MBAs and the level 1 curriculum of a CFA. I would recommend going for both mainly if you are looking for a career in which you can make use of both, e.g. becoming manager in an investment company.
