When planning your financial services career path, you can be forgiven for questioning which additional education you should pursue. The two frontrunners, the time-honored MBA and the relative newcomer CFA (Certified Financial Analyst) qualification, both show up on plenty of job listings – but which is best to get you into the investment banking position you are looking for?
If money is tight right now, your decision is almost made for you right here. Obtaining CFA certification costs a tiny fraction of an MBA, with the exam coming in at around the $1,300 mark (plus whatever you decide to spend for study materials). If you end up having to retake all or part of the exam – level one is offered twice a year, levels two and three just once – you will have to pay a smaller fee again.
An MBA is tied to the rising costs of every degree and is no exception to the rule. Expect to put in a solid two years of rigorous study, with obtaining your degree acting as your full time job, and to shell out between $50,000 and $100,000 for the privilege.
It is worth noting that both paths take about the same amount of total study hours (900, give or take) but the freeform nature of the CFA qualification process means many of its test takers study during their own downtime while working their normal jobs. This might result in a longer period before obtaining their certification compared to an MBA, but makes the cost difference even starker.
Income is harder to judge. CFA is most certainly a more exclusive club, and that focus entirely on investment banking translates into respectable incomes in the $240,000 range. MBA statistics show income about half that, but that can be a deceptive number, as actual career paths of an MBA graduate might diverge wildly from investment banking. In addition, salaries from graduates of the big name-brand business schools can trend much higher.
Supply and Demand
As mentioned, CFAs are a much smaller group than MBAs. While no MBA program is easy, nearly 150,000 enroll every year in the United States alone, while the number of CFAs globally is less than 120,000. While MBAs will often choose non-financial careers, a large number will inevitably be attracted to the field, and should you join them they will be your competition.
A newly minted MBA will lack much of the technical knowledge of the financial industry, since their curriculum typically covers a wide range of business and managerial topics. This may cause resentment in those with more targeted financial experience and knowhow tired of answering to an MBA without that background. The higher-ups, however, care less about that: the technical bits can be picked up on the fly, but sight of the big picture and broader managerial skills are much harder to teach.
By contrast, the CFA has fluidity in the company that an MBA is unlikely to ever achieve. Their rigorous financial education can allow a charterholder to seamlessly move between sectors and functions, something clearly very valuable within a company.
Focus and Perspective
That fluidity within the financial sector afforded to CFAs is ironically denied them when venturing outside that realm. As a CFA charterholder you will possess intimate knowledge of complex financial products and great flexibility in your career path.
But an MBA, especially one hailing from an elite school, will always have an exit strategy in his pocket. If you see any kind of career diversity in your future, an MBA will absolutely put you one step ahead of the game.