MBA vs CFA: Making the Right Choice

MBA and CFA are two most financially rewarding courses, but they require serious dedication and sincere focus to clear or get admission into. But before that, one must understand what they are.

CFA or Chartered Financial Analyst is a US accreditation for finance professionals in the US. The institute is headquartered in Virginia, US. CFA requires 19 months of self-study and clearing three levels of examinations to become a certified CFA.

MBA, on the other hand, is a Masters of Business Administration and can be pursued in any country, including the US, and is a two-year post-graduation program. Often the question arises whether one should focus on getting selected in an MBA course or study to clear the CFA exam or should do CFA and then pursue an MBA, which means doing both courses one after the other? 

Students or professionals who want to make it big in the world of finance are often faced with this choice, whether an MBA or CFA or both. MBA in finance and CFA are both professional Finance courses that give a big boost to the career and catapult it to the higher rungs of significance, on successful completion. But the question remains – which one?

MBA vs CFA – Detailed Comparison

• • MBA takes two years of full time (or part-time) study in a post-graduation institution or a B-school, whereas CFA takes almost 19 months (often more) of self-study to clear Level 1, 2 and 3 of the certification.
  • While an MBA on an average in the US can cost about $90,000 (approximately INR 65 lacs), a CFA costs $5000 (INR 3,50,000) for the certification. To compare this with Indian variations – the cost of MBA programs in India range between Rs 7 lacs to 21 lacs on average, while CA (Chartered Accountancy) in India (which is equivalent to CFA in the US) costs about Rs 9800 only.

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• From the perspective of the scope of learning – MBA is a full-time course, and a student pays for the tuitions, course material, faculty member, workshop, seminars, industry exposure, whereas CFA is a certification which is mainly self-study for aspirants. The body takes care of the examination and the certification alone.
• An MBA student has the scope to learn about all aspects and subjects of management sciences, from Human Resources to Finance, from Marketing to Business Analytics. Irrespective of which subject the student specialized in, all MBA students cover the basics of all subjects in their first year. In other words, MBA students gain a broader knowledge of a wider spectrum of business concepts. Whereas in the case of CFA, an aspirant focuses on portfolio strategy, asset allocation, and Investment analysis.
• On taking a look at the starting salary, an MBA graduate receives about $ 20,000 to $40,000 more than a CFA certified professional. This figure may vary greatly depending on the geography where the work is sought, prior experience of the candidate, and the rank of MBA college.
• CFA certification from the US is accepted and acknowledged in 27 countries worldwide. MBA degree, while recognised everywhere, the significance may vary on the rank of the college from where the course is pursued.
• MBA is a two-year full-time degree, students who are doing the course are spending the higher course fee and are also not earning any money during two years unless they do executive MBA or part-time MBA. Whereas, CFA being a certification, most aspirants prepare for the exams while pursuing a job, and thus they don’t lose (not earn) any money during the time frame of getting this accolade.
• MBA helps a student to get a lifelong network of like-minded or equally qualified networks through peers, faculty, guest lecturers, and seniors. This solid networking achieved through the course and during the span of two years remains with the professional for the rest of his career to be used as he pleases. However, no such network is built or developed while pursuing CFA as there is no interaction with fellow aspirants and/or faculty.

Thus, it is seen that both MBA and CFA programs have some merits and demerits when compared with one another. While the MBA provides and holistic knowledge, CFA provides a specialist knowledge in finance and investment..

It is not an easy choice, knowing full well that the scope of both is different. It all boils down to what is the end objective. For someone who wants to work in a managerial role, it would be good to have an overall knowledge of processes, systems, administration, operations and even finance.

They can go for MBA. But for someone who wants to be an expert in investment or asset allocation, CFA is a better option. The best thing about an MBA is that it throws open the option to work for not only finance but also marketing, HR and operations.

One can choose to venture into a business initiative and become an entrepreneur. MBA grads also can choose the industry or sector they want to work for and need not limit themselves to the finance sector alone. From hospitality to mining, from Manufacturing to retail – an MBA is required everywhere.

The advantage for a CFA is, however, that it allows a candidate to work while acquiring the certification, which is undoubtedly a coveted one and a very difficult one to get.

The pass percentage is only 11% from among those who apply for the certification, which itself talks about the difficulty level. However, the pass percentage is 43% for each level separately.

Considering a student clears each exam in the first attempt, the total duration would be 19 months. However, as per the official version, on average, each student requires at least four years to complete the certification and about 322 hours of self-study for each exam.

The level 1 exam takes place every year in December and June, and levels 2 and 3 are offered only in June. And these exams are considered to be extremely strenuous and difficult to clear, but the result is highly prestigious.

Some students who are genuinely interested do go through both MBA as well as CFA. Having both degrees is an added advantage for finance professionals in the corporate.

Some of the roles that a CFA candidate can work with are as follows:

• Portfolio Manager
• Finance research analyst
• Finance Brokers
• Risk Managers
• Trader
• Finance regulator

More and more B-schools are these days introducing concepts taught in the CFA course in the MBA curriculum. This has a dual advantage – a) a student is better prepared to take up the CFA exam at a later stage b) Even if a candidate does not do CFA, they have an understanding of some of the concepts.

To make the Finance management course in MBA more attractive to students who want a career in Finance, good B-schools have started incorporating syllabus from the CFA program into their curriculum.

So that a student completing this course from one of these colleges, can be more efficient, without having to go for a CFA separately.

These courses being management courses provide a wide spectrum as well as an in-depth understanding of core concepts.

As of 2006, the CFA institute had partnered with several B-schools across the world to customize their program and incorporate at least 70% of their course material in the syllabus. This has greatly benefited students from those colleges.

BMU MBA #2020

BMU is one of the prestigious institutions owned by Hero Group in India, has a tie-up with the Imperial College London. This provides a global benchmark to the courses taught in the college. The 108-year-old College, not only provides mentorship to students and faculty of BMU but also actively contributes to curriculum design, research activities, content management.

BMU also has a student exchange program with the Imperial College London. As per the exchange program, students from BMU can do 2-3 weeks of the program on the Global Leadership module in the Imperial College itself. This provides the students a considerable exposure to international competitiveness.

BMU also believes in Experiential learning, and 45% of its curriculum is based on practical learning rather than theories learned through textbooks. The course structure includes and lays great emphasis on hands-on learning methods through presentations, workshops, seminars.

Experts from the industry, visit the institution to interact with students and deliver talks, which are exceptionally beneficial to students. Regular industry visits provide the students an opportunity to familiarize themselves with the corporate environment, manufacturing setups or retail shop floors.

The Finance program in MBA covers the following concepts: Investment strategies, Local and global economics, Mergers and acquisitions, Insurance and corporate risk, Securities and portfolio management, Direct and indirect taxation.

Students who complete an MBA in Finance from BMU can expect to work in the following capacity:

– Accounting Manager

– Financial Analyst

– Finance Officers & Treasurers

– Chief Financial Officers

– Cash Managers

– Credit Managers & Specialists

– Corporate Controllers

– Investment Banking Associates

– Investment Bankers

-Investing, Sales Traders & Associates

– Insurance & Risk Managers

– Manager Consultants

To conclude, it can be said that as per career scopes, both MBA and CFA are lucrative. Hence a person needs to decide the course depending upon his future goals and interest. If the course of choice is taken, then obviously every student is going to flourish in life.