The Chartered Financial Analyst (CFA) program and the Master of Business Administration (MBA) degree are two prominent paths for those aspiring to build a career in finance. But how do they compare? How is one different from the other? And most importantly, which one should you choose?

The decision to pursue a CFA program or an MBA degree depends on numerous factors. Some individuals even undertake both programs as they provide complementary skill sets and knowledge. In fact, it is not uncommon for prospective MBA candidates in India to complete the CFA Level 1 or Level 2 exams prior to joining a business school, signaling their commitment to the finance industry to potential employers during internships.

However, not everyone has the opportunity or desire to pursue both qualifications simultaneously.

Whether you are interested in acquiring both credentials and any one of them, knowing the differences between these programs is crucial. It’s the first step to making informed decisions and charting a successful career trajectory.

In this blog, we’ll discuss how a CFA program and an MBA degree compare and explore the differences from various angles.

What’s Your Career Plan?

The choice between a CFA program and an MBA degree largely depends on your career goals within the finance industry.

If your aim is to move up within finance, the CFA institute India is a compelling option. It equips professionals with specialized knowledge for roles like investment research analyst, portfolio manager, or asset manager. The rigorous curriculum covers financial analysis, valuation, investment management, and ethics, demonstrating expertise and dedication.

An MBA degree provides a broader skill set for those seeking a career switch or exploring different avenues in finance. It covers finance, marketing, operations, strategy, and leadership, opening doors to corporate finance, investment banking, consulting, or entrepreneurship roles. An MBA equips you with skills to navigate complex business challenges and offers a holistic understanding of different functional areas.

Both the CFA program and an MBA degree can be beneficial for entry-level positions in finance. The CFA program offers a quick path to employment after Level 1 or Level 2. On the other hand, one must complete the full MBA program to be considered for the job. However, MBA internships are a good way to experience different domains of finance before deciding to pick one.

Ultimately, your career goals and desired specialization will determine whether the CFA program or an MBA degree better fits your aspirations.

Cost of Pursuing CFA vs. MBA

The cost implications of pursuing a CFA program or an MBA degree can significantly influence the decision-making process. Generally, the CFA program is considered more cost-effective than an MBA.

The primary expenses for the CFA program include the CFA Institute exam registration fee for 3 levels of CFA exam and any fee for coaching or preparatory materials. In India, the cost of pursuing the CFA program typically ranges from ₹2.5 lakh to ₹3.25 lakh, excluding coaching expenses.

On the other hand, pursuing an MBA can involve substantial financial commitments. The cost of an MBA program varies based on factors such as the reputation and location of the institution. Indian Institutes of Management (IIMs) often have higher tuition fee (ranging between ₹ 12-24 lakhs), and foreign MBA programs, especially those offered by renowned business schools, can be significantly more expensive. One must also consider the potential loss of income during the study period, as many students forego employment to focus on their studies.

How Long Does It Take to Complete Each Course?

The time commitment required for completing a CFA program or an MBA degree is crucial when deciding between the two.

For the CFA program, candidates often pursue it while working – it can be completed in 2 to 2.5 years if a candidate clear all levels in the first attempt. One must dedicate approximately 300 hours or more of study time for each level.

On the other hand, an MBA program typically requires a dedicated commitment of two years full-time. (There are some one-year MBA programs too like ISB and INSEAD) This period allows students to immerse themselves in the curriculum, participate in internships or experiential learning opportunities, and build a strong professional network.

Salary to Expect After Pursuing Each Program:

In terms of salary levels, the CFA Institute conducts surveys to provide insights into compensation trends for CFA charter holders. A recent survey of 2000+ CFA constituents from India’s major cities revealed that a new charter holder with 6 years of work experience on an average earn ₹28.6 LPA.

On the other hand, for MBA graduates, referring to placement reports of specific business schools can provide an understanding of the salary levels and job opportunities typically associated with an MBA degree. According to National Institutional Ranking Framework, the average MBA salary in India can be anywhere from ₹ 6- ₹23 LPA, depending on the rank of the business school you're graduating from.

How difficult is it to Enroll?

The enrollment requirements and difficulty level differ between the CFA program and an MBA degree.

To enroll in the CFA program, candidates must meet any one of the three criteria set by the CFA Institute. These criteria include

• Completed a bachelor's degree, or
• Pursuing a bachelor's degree and being within last two years of its completion, or
• Having 4,000 hours of work experience and/or higher education.

The enrollment process is straightforward, allowing individuals with diverse backgrounds to pursue the program. However, the CFA exams are known for their challenging nature, with pass rates typically hovering around 45%, requiring diligent preparation and commitment.

In contrast, enrollment for an MBA program typically requires a bachelor's degree. For reputable institutions, additional entrance exams such as CAT/GMAT (for Indian colleges) or GMAT/GRE (for foreign programs) are necessary. MBA programs can be more competitive, with admission committees considering factors like academic achievements, work experience, recommendation letters, and personal statements.

Curriculum & Exam Format of CFA Vs. MBA

The curriculum and exam formats differ between the CFA program and an MBA degree.

The CFA program is structured around ten topics covering ethics, economics, financial analysis, and portfolio management, to name a few. Exams are conducted in testing windows and consist of multiple-choice questions (MCQs) for all three levels. Level 3 also includes essay-type questions that assess candidates' ability to apply their knowledge and critical thinking skills.

In contrast, the MBA curriculum offers a broader range of topics, encompassing various business areas such as finance, marketing, operations, and strategy. The evaluation methods in MBA programs typically involve semester or term-end exams, assignments, class participation and projects. Additionally, internships or experiential learning opportunities may form an integral part of the curriculum to provide practical exposure and real-world application of concepts.

What Type of Placement Support You’ll Get

The level of placement support differs between the CFA program and MBA degrees.

The CFA Institute does not directly provide placement services. However, each local CFA society in a particular country may list job vacancies on its website, offering opportunities for CFA candidates and charter holders. Having a CFA designation enhances job prospects compared to those with only a bachelor's degree. Leveraging platforms like LinkedIn and tapping into the global CFA network can benefit networking and accessing job opportunities.

On the other hand, MBA colleges in India typically provide robust placement support, connecting students with potential employers. These institutions often boast strong alumni networks, providing additional support and industry connections to secure internships and job placements. The alumni network of MBA programs is often vibrant and active, offering valuable resources and networking opportunities to help students advance their careers.

Conclusion

The decision between pursuing a CFA program or an MBA degree should be driven by carefully considering various factors. Both offer unique advantages and cater to different career goals within the finance industry.

The CFA program provides a rigorous curriculum and globally recognized credentials for those seeking specialized knowledge and advancement in finance roles. It equips professionals with the necessary skills to excel as investment research analysts, portfolio managers, or asset managers. With its relatively lower cost and flexible study options, the CFA program offers a viable path for individuals seeking to enhance their finance careers.

On the other hand, an MBA degree offers a broader skill set and a holistic business education. It is ideal for individuals seeking a career in finance or exploring various avenues within the business world. An MBA provides opportunities to develop a strong network, gain practical experience through internships, and acquire various business skills.