CFA vs MBA

I’ve been getting a good bit of email asking about what doors the CFA designation actually opens, and whether this is the best way to make a career switch into investing from one’s current profession in the field of _______.

Now there are a variety of ways to break into the investment field and the required additional education (if any) depends upon what exactly you want to do.

But for many the final question comes down to whether they should go for a CFA designation or an MBA. Just thought I’d provide a few interesting links today to sites that discuss this decision.

    CFA vs. MBA, which is best for you?
    Written by a charterholder. Love the mile-wide foot-deep vs. mile-deep foot-wide analogy. And there’s even a discounted cash flow problem – where he computes the NPV of both programs. 🙂

    Almost everything you’ve ever wanted to know about the CFA charter
    Good interview with a director of the CFA Institute – Bob Johnson. After reading his take don’t miss the comments by other analysts at the end (in italics, above the comments).

    Should You Get the CFA?
    An older article (some out-of-date links) but some interesting points nonetheless – like who employs the most CFA charterholders.

    CFA and MBA?
    Take a gander at that median salary for those who hold both! I wonder if they have any free time to spend it?

For engineers out there, for what it’s worth I was catching up on old podcasts the other day when I came across this one from Fidelity. It’s basically an advertisement for a new fund, but in the intro the fund manager, Bob Chow, gives his brief biography.

He started out with a BS and MS in electrical engineering like me. So what did he do afterwards to gain the skills to run his own fund? He got an MBA from the University of Chicago! And given that Chicago is one of the best places to do an MBA, this was a smart decision.

As for my decision to go with the CFA over the MBA, knowing that both are respected made my choice easy – I just picked the one with the curriculum I liked best. I’m more interested in buying companies, not running them. So some of the MBA’s courses in leadership, team-building, operations, human resources, and marketing just didn’t appeal at all. But in balance, I recognize that if you know how to run a good business, you probably know how to identify a good one to buy too.

Finally, it’s worth considering how many thousands of people complete the MBA and/or CFA programs each year. It would seem as if sometime in the future (or now?) completing at least one of these programs may become a prerequisite instead of a differentiator.

Back to the books…

18 thoughts on “CFA vs MBA”

  1. Thanks for the info. One thing anyone should consider if you are pursuing a career as an investment analyst is whether or not you are willing to relocate. Most jobs are in NY, Chicago, etc. There are plenty of available jobs that i am finding that say MBA or CFA preferred but also a lot that say CFA preferred specifically. The CFA website has a job line with plenty of available jobs being posted each day. The job hunt is the same for anything. They all want experience but how to you get the experience. It seems most jobs requiring CFA are experienced or even senior level. I think the MBA has a great advantage because employers recruit on campus and because of the university resources. But if you pass the exams and can get that one break and land a job where you can get some experience it seems you will be good to go…and save yourself a ton of money. The way i looked at it is that if i cant break into the field by passing the CFA exams i could always get the MBA later. One thing that bothers me is that they talk about the network of CFA charter holders but you can not become a member or join a society without the 4 yrs work experience. The network would come in handy to get the first job.

  2. Thanks for the info Mick. Good to hear that there are a lot of opportunities out there. 🙂

    I remember a bunch of us engineers as we were graduating during a recession wondering how we were going to find jobs when (1) there didn’t seem to be much available, and (2) all wanted a few years of experience, which none of us had.

    However we all seemed to find something though our first jobs were not necessarily exactly what we were looking for. I got my foot in the door doing exactly what I wanted by offering to work for a substantially lower salary than average. After one year they bumped me up to what I was actually worth.

    I guess if you can afford it there’s always the possibility of doing an unpaid internship. It’s my understanding that unpaid work doesn’t count towards the CFA work experience but certainly counts for your resume.

    Funny thing about that networking, huh? If worse comes to worse we all can pool our money and form Greenhorn Asset Management after we pass the exams…

    -Lumilog

  3. Since i am paying for the job line i figured i would show what jobs are being posted by category and geographical area. Obvioulsy since these are all being posted on the CFA sight these employers are looking for CFA. some say either holders or pursuing preferred, others say required. I am from Michigan. yes one job. 🙂 check out United Kingdom (London)!

    6,874 jobs found

    By Category

    CEO/CIO/Partner/Principal (13) Investment Manager (267)
    Compliance Officer (172) Marketing/Sales (71)
    Consultant (59) Other (4771)
    Derivatives (466) Portfolio Manager (297)
    Director of Research (166) Private Client Advising (37)
    Economist (50) Product Management (104)
    Equity Analyst (343) Quantitative Research (561)
    Equity Research (215) Relationship Management (267)
    Fixed Income Analyst (330) Risk Management (707)
    Investment Administrator (48) Venture Capital (9)
    Investment Banking (1041)

    By State/Province

    Alabama (2) Kansas (1) North Carolina (23) Wisconsin (15)
    Arizona (4) Kentucky (2) Ohio (21) Nationwide (25)
    Arkansas (2) Louisiana (4) Oklahoma (1)
    California (174) Maryland (25) Oregon (5) Canadian Provinces:
    Colorado (17) Massachusetts (94) Pennsylvania (48) Alberta (55)
    Connecticut (75) Michigan (1) Rhode Island (1) British Columbia (5)
    D.C. (25) Minnesota (19) South Carolina (2) Manitoba (2)
    Delaware (9) Mississippi (1) South Dakota (1) Ontario (97)
    Florida (16) Missouri (6) Tennessee (3) Quebec (5)
    Georgia (15) New Hampshire (4) Texas (73) Saskatchewan (1)
    Illinois (113) New Jersey (65) Vermont (2)
    Indiana (9) New Mexico (1) Virginia (13)
    Iowa (11) New York (805) Washington (4)

    By Country

    Australia (327) Ireland (131)
    Bahamas (2) Italy (54)
    Belgium (106) Malaysia (6)
    Bermuda (2) Netherlands (57)
    Brazil (2) New Zealand (5)
    Cambodia (1) Qatar (1)
    Cameroon (1) Russia (5)
    Canada (170) Singapore (5)
    China (35) Switzerland (124)
    Egypt (2) United Arab Emirates (19)
    France (378) United Kingdom (2416)
    Germany (74) United States (1737)
    Hong Kong, China (303)

  4. Wow – thanks very much for posting this Mick – interesting to see the breakdown. Switzerland here I come…

    Speaking of networking (your earlier comment) once I registered for the exam I started getting periodic emails from a local CFA society advertising occasional 1-hour talks and lunch. My local chapter is 2 hours away so I haven’t gone to any yet – but seems like a gregarious person might be able to make some contacts at these events.

    -Lumilog

  5. I am also gonna give exam this dec 2007 .. closed eyes praying god .. please get me thru.. else again i have to pay a hefty sum to CFA people along with Study material…uuuuhhhh

  6. I think I need to become more gregarious. Correction to my previous comment. I just looked it up and the local societies have their own requirments to become an affilate member. The Detroit Society only needs one yr of work experience not four.

  7. this is all interesing. What about the difference between CFA ad CFP. Have any of you any interest in investing this and what’s the difference. I’m currently living in a smaller town in the US and I notice a lot of the smaller personal finance places (i.e. Edward Jones) have employees that have the CFP designation. This seems easier to break into but probably less lucrative. Any thoughts or also ideas about the exam requirements here?

  8. Hi Luminous,

    I find your website very helpful and thanks for doing a good research and blogging it. I am also an engineer like you and interested in changing to investment career after I started experimenting with the investments. In order to have a CFA designation, we need to have at least 4 yrs of experience. Right? Will we get a job in the relevant area once we are done with our exams? Is there any demand for candidates who have passed just passed the exams and doesn’t have experience?

    Thanks in Advance

  9. Ray – you might be better off googling “CFA vs. CFP” to fully understand the difference between the two. As one person put it, the CFP prepares one to advise individual clients about a range of financial topics (budgeting, investing, retirement, insurance, buying vs. leasing, taxes, estate planning) whereas the CFA prepares one to work for an investment banking firm focused narrowly (but deeply) only on investing.

    I think most would agree that the CFA is much more rigorous of a program, harder to earn, and therefore “worth” more – in terms of making you an attractive new hire in the investing industry – than a CFP.

    MM – I don’t think it’s uncommon for people to start working in the investment field while still in the process of passing the exams. I’m not really sure how much more it helps in getting hired if you’ve passed level one or two. I need to research this a bit more a do a blog entry on this b/c so many people ask. With an engineering background (depending upon your specialty) you might be able to find a quant job right now in order to get your foot in the door. But it’s important to check the CFA website as to what sort of work counts toward the 4-yrs work experience – not any ol’ job in investing does.

    -Lumilog

  10. Thanks Lumilog, I believe you’ve hit the nail directly on the head here – now all we need is a CFAED (CFA Exotic Derivative) specialization and I’m good to go!

  11. Hi Lumilog

    I passed my L1 this June and realised that L1 is just an introductry course to I Banking. Being an software engineer with 1.5 yrs of exp , I realise that industry requires much more than bookish knowledge of L1. L1 doesnt give you a bigger perspective… May be L2 and furnishing my investing knowledge may provide me a break in finance esp investment management… just keeping my fingers crossed.

    Your sugessions are welcome
    Rajan
    rajan.nsit@gmail.com

  12. Hi Rajan,

    Congrats on passing L1! You give hope to us other engineers. Will definitely pass on any helpful tips I find, but I’m afraid at this point you’re further along the path than I!

    -Lumilog

  13. Hi All,

    Can any one please tell me than whether for Indian nationals are allowed to take CFA exams are not. As per my knowledge due to some legal issue CFA barred Indian nationals from taking this exam even outside India.
    Any one has idea about recent developmets.

    Thanks

    Amit

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