Summary: CFA or MBA?
I have been asked several times about the value I have gained from completing the CFA charter in comparison to a Master Business Administration (MBA) degree as it relates to my portfolio management career. I had been planning my road map to success in the investment management industry since beginning my undergraduate degree in business. After consulting with several industry professionals, I opted to complete both the CFA and an MBA. In hindsight, I now see things very differently and can put my decision in a different context, prior to understanding and navigating the complicated world of acronyms and accolades. Below I will evaluate the differences between the CFA and an MBA. It is my hope that this article will help you make a better informed decision when deciding between a CFA or MBA.
What are the Respective Costs?
Let us get the elephant out the room, getting an MBA varies from expensive, to very expensive. The price can range from tens of thousands, to hundreds of thousands of dollars. If you enjoyed paying off the student debt from your undergraduate degree, you will really enjoy paying off the debt from your MBA! Keep in mind, if you do the MBA full-time, you are also losing the money you would have been making if you were working, so the opportunity cost of a full-time MBA is very high.
The CFA on the other hand is approximately $1,000 for each level plus a modest registration fee. You cannot even use the washroom at a university for less than $1,000! Only having to spend approximately $3,000 for all three levels (not including third party study materials), is a phenomenal value that blows the cost of the MBA out of the water.
Verdict: Getting an MBA is very expensive and may not offer a return on investment because of its cost. The CFA is a bargain that can enhance your career without breaking the bank, plus you can continue to earn money while working on your CFA. Round 1 goes to the CFA.
Time it Takes to get your CFA and MBA
If you value your money, be wary of the MBA, if you value your time be wary of the CFA. The CFA designation requires an average study time of 300 hours per level (there are three levels) to successfully complete. The MBA can be taken full-time or part-time depending on your schedule. The CFA is usually taken while also working full-time, so studying an average of 15 hours a week over a 20-week period can be very challenging while trying to balance other areas of your life.
The MBA can be challenging when it comes to attending a full course load and having time to meet with your respective study groups. Although there is a time constraint with an MBA, the sheer amount of material is nowhere near as great, compared to the CFA. Additionally, you have a class instructor to help you with each course. When it comes to the CFA, you are on your own.
Verdict: The CFA may be easier on your wallet but a lot tougher on your day planner. The MBA is not a cakewalk; however, it does not have the same time pressure as the CFA and it certainly does not have the stress of over the half the class failing and having to retry the next year. Round 2 goes to the MBA.
Licensing for a CFA and an MBA
If you want to work as a Portfolio Manager in Canada, you will need either a CFA or CIM (Chartered Investment Manager) designation along with real world experience in individual stocks analysis. A lot of young aspiring Canadian Portfolio Managers do not realize that a Portfolio Manager is not only a job title, it is also a designation that allows you to perform discretionary portfolio management for clients. An MBA is not going to help your application to become a Portfolio Manager. Although there may be some useful information in an MBA program, it does not matter to the regulators or to many employers. Many firms use the CFA designation as a screening tool when reviewing candidates as it assumes the applicants have achieved some of the depth needed to succeed in the role, and to fulfil the requirements to become registered in the Portfolio Manager category.
Verdict: Round 3 goes to the CFA as the MBA had nothing to offer in this round.
Knowledge Levels of a CFA and an MBA
The CFA designation is often credited with being narrow but very deep regarding the material it covers. If you really want to specialize in finance, the CFA is a must. By comparison, the MBA is known for being very broad in the categories it covers but lacking the depth needed to specialize in any particular area.
Keep in mind my bachelor’s degree was in business administration, where I majored in finance. This is very important, because an MBA is a post-graduate degree, that you are pairing with your undergraduate degree and work experience to create an impressive talent stack.
A Bachelor of Business is there to teach you the nitty gritty details of finance, accounting, marketing, etc. An MBA is there to teach you how to manage a company and know enough to talk to the heads of the accounting, finance, and marketing department, but by no means will you be able to run them with just an MBA. It is true that you can major in some of the same areas as an undergraduate degree, however, you are learning these topics from the point of view of a manager and not necessarily a practitioner.
Verdict: This is a bit of a draw. The CFA will improve your skill set in the finance field. However, the MBA will help make you more well-rounded if business was not your first degree but adds less value if your bachelor’s degree was in business.
Final Verdict
I feel the CFA is a must to enter the portfolio management profession with the skills needed to succeed. I believe that although the MBA has its merits, it is better for professionals whose first degree was not in business as it lacks the real detail needed to add value to an aspiring Portfolio Manager.
The views and opinions expressed on this article are those of the author, was prepared solely for informational purposes only, are subject to change and should not be considered investment or legal advice. As such, the content published by the author does not constitute an offer, investment advice or an invitation by or on behalf of Logan Wealth Management, to any person with access to this article. Content published by the author may not be comprehensive concerning the matters addressed in the content. Consult with a legal, investment or educational professional regarding your specific situation since, participating in the completion any of these designation does not guarantee future personal outcomes.
