If you’re considering a career in finance, chances are you’ve heard of the MBA and CFA, two designations carried by many finance professionals. While both programs are rewarding and can lead to lucrative jobs — average starting salaries for graduates of both programs are close to $100,000 — aspiring professionals often wonder which to choose and the benefits of each designation.
In this article, we’ll break down the pros and cons of each program, including costs, duration, and career prospects. In short, while the MBA provides general business knowledge and the CFA teaches narrow technical knowledge, both serve as a launchpad for a career in finance.
MBA stands for Master of Business Administration and CFA stands for Certified Financial Analyst. An MBA is a graduate degree granted by an institution of higher education. Once you earn it, you have it for life. The CFA is a professional designation that requires passing three exams, gaining relevant work experience, and then paying annual dues. You are a CFA charterholder as long as you maintain your membership in the CFA Institute.
An MBA usually takes two years of full-time study in the US and one in Asia and Europe, though there are many part-time programs as well for people with full-time jobs. Courses cover all aspects of business, including management, marketing, leadership, and finance. The curriculum is usually focused on case studies and team projects, meaning many opportunities to network and meet students from all different kinds of industries.
The CFA is a self-study program, meaning candidates can take the exams while working a full-time job. To get the CFA designation, candidates must pass three six-hour exams. The material covers all aspects of finance, including corporate finance, investment analysis, portfolio management, and asset allocation strategy. The average student takes four to five years to complete the whole program and spends about 300 hours studying for each exam.
The MBA can run anywhere from $50,000 to $200,000 depending on the length and location of the program (programs in Asia, for example, tend to run on the lower end of the range). The CFA, on the other hand, costs $3,050 minimum if students pass every exam on the first attempt.
In terms of starting salary, the average starting salary of an MBA graduate is $92,000, while that of a CFA charterholder is $98,000, according to data from Payscale. Other studies, however, have found that the MBA can give a bigger boost to salaries because many companies still value the management and communication skills taught in MBA programs.
Because the CFA is a professional designation, the program covers technical knowledge to prepare candidates for careers in finance — skills such as financial modeling, statement analysis, and ethics. For that reason, test takers often work in industries such as investment banking and wealth management.
The MBA, on the other hand, covers broader topics. Finance is one of many courses offered in an MBA program. You might also take courses in sales, human resources, logistics, and other aspects of running a company. For that reason, graduates often go on to diverse fields such as consulting, marketing, business strategy, and yes, finance.
Which program should I choose?
It depends on how certain you are of your career goal. If you know which sector of finance you want to work in, the CFA might provide the technical boost you need. If you are still exploring and open to careers outside of finance, the MBA might provide the flexibility and network to help you explore. Although the cost is higher, it also comes with the on-campus experience of meeting other students and working on projects together.
Of course, many professionals in finance have both designations. The CFA provides technical depth, while the MBA offers confidence for people entering managerial and executive roles where they have to lead a team. Both programs can complement each other.
If you want to hone your MBA applications and find your perfect program, don’t hesitate to reach out to one of Crimson’s expert advisors. We can’t wait to meet you!