Further education after college has become a prerequisite for career advancement in many investment fields. For those considering a career in the investment field, the great debate has been whether to obtain a Master of Business Administration (MBA) or The CFA Institute's Chartered Financial Analyst (CFA) designation. Both have their advantages, but considering the expense of the former and the difficulty of attaining the latter, choosing between the two makes for a rather difficult decision.
- Traditionally, someone pursuing a career in the investment field would have to choose between enrolling in an MBA program or a CFA program.
- Some graduate institutions have begun to include a CFA track for their business students.
- An MBA provides business skills while a CFA program teaches high-level, specialized asset-management responsibilities.
To attract students, graduate institutions have begun to teach a large portion of the CFA program within the graduate business curriculum. Some schools have gone so far as to create a CFA track within their MBA course of study, allowing students to obtain an MBA and a CFA at the same time. For those considering attaining both a graduate degree and the CFA certification, completing one of these programs is the most efficient way to get the best of both worlds.
An MBA provides a holistic view of finance and investing, whereas a CFA program dives deeper into the specifics of investing such as asset management.
Understanding MBA and CFA Credentials
Before the CFA credential emerged, many investment companies would pay to send some of their best and brightest to business schools. These students would return with improved general business skills but not necessarily the skills required for high-level, specialized asset-management responsibilities such as portfolio management. Such specialized skills were obtained on the job as professionals worked their way up through the ranks.
In general, the skills obtained in business school were better suited for employees in more general disciplines, such as marketing or general management. The CFA program was devised to provide charter holders with specialized skills, such as investment analysis, portfolio strategy, and asset allocation. One way to explain the differences in the programs is to say that the MBA program is a mile wide and a foot deep, while the CFA program is a foot wide and a mile deep.
MBA vs CFA
The advantage of an MBA is that the knowledge obtained in the program is valuable in other industries outside the investment world. The great disadvantage is cost - both the direct cost of the program and the loss of income that results from a two-year hiatus for those considering going back to school full-time.
The advantages of the CFA program are the ability to acquire specific investment-related skills at a relatively low cost. However, although the CFA program is based on self-study, it is arduous, requiring a commitment of four years and 1,000 study hours (on average) to complete. Because of the commitments in both time and money, few go on to acquire both the graduate degree and the certification.
Special Considerations for the CFA Track
For many willing to make the commitment and meet the other prerequisites necessary to obtain a graduate business degree and the CFA, most will begin the CFA program as soon as they have graduated. These graduates hope to use some of the knowledge gained in their finance courses to give them an advantage over other CFA candidates. However, until recently, most graduate business programs did not organize their finance curricula for this purpose because the advantage for graduates was minimal. This is changing as business schools begin to incorporate CFA course work into their class offerings.
According to the CFA Institute, in April of 2006, the CFA Institute began a partnering program with graduate institutions worldwide, as of June 2021 678 are involved, to provide some level (at least 70%) of CFA course work as part of the MBA curriculum. The CFA Institute audits the course offerings of these partner institutions to ensure they live up to their promises. To attract students, graduate institutions have begun to teach a large portion of the CFA program within their graduate business curricula.
The curriculum offered by these program partner schools ranges from specialized finance courses that facilitate the CFA exams to a specific CFA track, which includes courses that teach the exam material. The CFA track is often designed so that students will take Level I of the CFA exam directly after graduation.
Boston University's Master of Science in Investment Management program was the first CFA Program Partner in the United States, but the final class of the program graduated in 2013. In comparison, the Johnson School at Cornell University seems to be organized with the CFA as one of the end goals of its graduate degree. Johnson School provides CFA Institute study materials, scholarships to waive the registration portion of the CFA exam enrollment fee, and professional development events held in conjunction with CFA Institute member societies.
Many business schools are incorporating CFA course work into their class offerings so that students can fulfill the majority of the CFA commitment within their graduate school course work.
The Bottom Line
Due to the program partnerships between business schools and the CFA Institute, there is now an efficient means for investment professionals to obtain both a graduate business degree and a CFA. Whereas it used to be adequate to obtain one or the other, this trend and the number of new investment professionals acquiring both graduate degrees and the CFA may ultimately require professionals to obtain both. Where the commitment was once two years of graduate school and four years of self-study, now candidates that choose a partnering institution can perform the majority of the CFA commitment within their graduate school course work. Although it will still require an immense amount of commitment and discipline, an increasing number of institutions allow investment professionals to gain both breadth and depth of knowledge for all the investment management disciplines.