CFA vs MBA: Which Credential Is Right for You?

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Before starting on that long and difficult journey to the CFA Charter, people often ask (or if they don’t then they should) whether the Charter is the best educational credential for their needs. The CFA Charter is a non-university professional credential where the student takes three exams testing proficiency in various finance-related topics. The most popular alternative to the Charter is a two-year university graduate degree such as a general Master of Business Administration (MBA) or the more specialized Master of Science in Financial Analysis (MSFA). This article compares the CFA Charter to the master’s degree in finance, showing the advantages and disadvantages of each across three major aspects: Networking, Career Development and Cost which will help you answer the CFA vs MBA question for yourself.

NETWORKING

If you’re thinking of getting a master’s degree, be aware that universities often highlight their alumni networks as a prime selling point. Alumni networks allow students to develop professional contacts who may help them advance their careers. The size of that network can be a major factor in the decision to attend that university. According to The Council for Aid to Education, the average American university alumni network is around 60,000 people. Some of the largest state schools boast half a million or more. Many universities cultivate their alumni associations by supporting local chapters that host social events and other activities.

The CFA Charter has a networking element that approaches that of a university alumni organization. The CFA Institute website operates an online database of over 150,000 members worldwide. In addition, the Institute supports a network of local CFA Societies that connect Charter holders, host local events, and offer continuing education. Over 150 such Societies exist around the world.

While both options provide professional networks, they have several key differences:

The strength of an alumni network varies by university. Alumni of one school may be more willing to offer professional help than those of another. The responsiveness of CFA Charter holders also varies.
The network of a given university likely depends on its geography. An alumnus of a school in the Northeast may not find strong support in California or Texas. In contrast, the CFA is a worldwide credential with a geographic reach that corresponds to the local finance industry.
University resources often go beyond the alumni database and local chapter. Some schools support their alumni through career counseling and on-campus events. These resources vary widely by school. The CFA Institute does not have a central, open physical location to serve as the epicenter of the community.
A university degree is more social than a CFA Charter. At a university, students take classes and study together, which allows for the development of lasting bonds among students. In contrast, the CFA Charter is a self-study credential requiring the candidate to complete a series of exams alone in his or her own time.

CAREER DEVELOPMENT

For financial professionals, the desire for advanced education is usually driven by the need to advance beyond a “glass ceiling” level in their careers. Large companies often use an advanced degree as a check box for jobs above a certain level. Making the most of an advanced degree means obtaining the one that most closely applies to your chosen career.

In corporate finance organizations, an MBA or MSFA is most often a requirement for high level positions. A CFA Charter is appreciated in those organizations, especially for its rigor, but it is not considered a full qualification for certain jobs. Other credentials may be relevant, such as certified public accountant (CPA) or financial risk manager (FRM). A candidate who is targeting a specific field or organization should become familiar with the credentials of the people who work there to discover which is the most useful.

The CFA Charter is mainly recognized by the institutional investing industry and is less relevant to other areas of finance. At actively managed mutual and hedge funds, a master’s degree may be appreciated, but nothing less than a CFA Charter is often required for all mid- and high-level employees who are involved in the investing process.

In terms of career advancement, the choice of a CFA vs. master’s degree lies in the commitment to a field. For a candidate who is targeting corporate finance or who is undecided, a master’s degree or other professional designation may be preferred. For those who commit to a career in investing, there is no substitute for a CFA Charter.

COST

According to educationdata.org, the average cost of a Master of Science degree in the United States is $59,720. Tuition figures vary greatly among public and private schools, and by selectivity of the institution. Moreover, obtaining a university degree may mean quitting a job and relocating to a new city, meaning additional expense and loss of income. With more executive and online programs, though, this may not necessarily be the case.

The costs of earning a CFA Charter mainly consist of the registration fees for the exams, and any prep tools needed to increase the chance of passing them. An average CFA candidate can expect the following expenses throughout the process:

Enrollment fee: This is paid to the CFA Institute at the beginning of the overall program along with registration for the level 1 exam. As of January 2024, the fee is $350.
Exam registration fee: The standard registration fee for the 2024 CFA exam is $1,250. This fee applies to all three levels of the exam. Given the reasonable assumption of two failed exams throughout the process, a candidate can expect to pay five registration fees at a total cost of $6,250.
Prep tools: Although this is optional, most candidates find third-party resources crucial to their success on the exams. Leading test prep companies like 麻豆色情片 offer self-study tools at prices starting at $600. Many companies offer a pass guarantee whereby the candidate can pay once and use the tools until passing the exam. A candidate who purchases a self-study course for each level would expect to pay roughly $2,000 over the full course of study.

Based on these assumptions, the average candidate can expect to pay $8,600 over all three levels of the CFA Charter exam, a small fraction of the cost of a master’s degree.

As an additional note, the CFA Charter requires an annual fee paid to the CFA Institute, currently $299. An additional fee to the local Society is optional and varies from $175 to $250 by Society. A university degree does not require membership fees, although alumni donations are always appreciated.

NOTE: CFA candidates sometimes express reluctance to spend the money for premium prep services and tools for the exams. Since a CFA Charter comes with such a low overall cash expense and a single exam involves such a heavy time commitment, candidates may be more inclined to pay for test prep courses that will increase the chance of a passing score.

When thinking about CFA vs MBA, deciding between a master’s degree and a CFA Charter is an important and complicated decision. In addition to those mentioned, other factors should be considered such as time commitment, self-study discipline, and university reputation. The most important element of the decision lies in how to best leverage your education for your career path. The CFA curriculum tests many subjects, but its brand recognition lies mainly in the investments field. If you are planning a career in corporate finance, or you are still undecided on your specialization, then a master’s degree may be the better choice. When it comes down to it, this is a very personal decision about what path is right for you.