November 18, 2009, 5:00 am

CFA or MBA: Which One Should I Get?

by: The Financial Blogger    Category: Career
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I recently received an email from Pete (name has been changed, duh!). He has been a loyal reader of The Financial Blogger and he is seeking advice looking at his future career options. Here’s the email he sent me:

Hi There

I just wanted to know what your advice would be.

I would like to make a decision between completing the MBA or CFA .(Is there something else?)

I currently work full time in a large insurance company on the infrastructure ops and development side and am married with 2 kids and another one on the way.

I have an undergrad in accounting, a few diplomas and a CFP certification.

I currently view myself as someone that is good at planning and organising, has vision and likes to look at things from a high level (bird’s eye view).

From a personal perspective, I feel that I need to complete one of the above qualifications to make myself more marketable in the work place. But at the same time, I have a dream of one day (soon hopefully) working for myself.

My working years these past 12 years have been in financial services. My wife is a stay at home mom and I get the feeling that she prefers it that way. So I need to work to bring home the bacon.

I’m good at strategising, and also good working with money. I can work on my own and also on a team, but I tend to be the quiet, thinking team player

I know both qualifications require tremendous sacrifices.

Given my personal circumstances, what would be my best option at this point in time?

Here are a few general thoughts:

  • First things first, the decision of doing either a CFA or a MBA will require a lot of your time.
  • Prepare your wife and your children, explaining that you won’t be around for a good 2 years (for the MBA) or 3 years for the CFA).
  • The CFA will require self discipline as you don’t have any classes or teachers… just books!
  • The CFA will also require self learning skills in order to understand the books.
  • The MBA will give you a general view of the world and requires a lot of time for group projects. You will also have to travel to attend school (unless you do an online MBA but employers opinions are divided regarding this option).

Having said that and considering your profile (from what I know of your situation) I would choose the MBA because;

  • It will help build a great network where you can find several resources for your future project (starting your own company).
  • It will enhance your bird’s eye view and push your managing and strategic skills to another level.
  • With an MBA, you will be able to get a management position. This is one of the requirements for most interesting management positions anyway 😉
  • It’s easier to do than a CFA ;-).

On another note, the CFA title is very appreciated due to the hard work and natural genius that is required to achieve the title. However, this will lead you to highly analytical positions such as financial analyst and traders. This is not related to management at all.

So I guess that if you eye a management career or want to start your own business, you are way way better off with an MBA or even receiving an online mba. On the other hand, if you would like to become a stock market specialist, the CFA is the right choice.

And what about you?

Do you have any other feedback to give to Pete?

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I’m in total agreement here. For most folks the MBA will be the better choice (have one myself). The CFA is a narrow designation (though not one for traders, contrary to indication above), so if you aren’t going to be an analyst or portfolio manager for the rest of your career then it could end up being constraining. Also, if you look to requirements for the types of jobs you’d be after you’ll probably find that they ask for either CFA or MBA.

I took the first level of the CFA (and passed). I can tell you that while it is difficult, the time commitment and cost is nowhere near that of an MBA. You really only need 4 months or so of part-time study for each level.

by: The Financial Blogger | November 18th, 2009 (9:57 am)

that’s because you are Brain 😉

However, you are right about the cost and the fact that the MBA is ongoing compared to the CFA where you can study 6 months before the exam and take a break for another 6 months waiting for the next exam….

Great topic! Gotta ask yourself whether you want to cont specializing in finance or branch out to another industry.

At your age with family, I wholeheartedly discourage you to go full time for your MBA, unless you are super rich already. Go part-time, and not miss a beat. The first year is brutal, but the rest is fun. I wrote a post called “To MBA or Not To MBA” on my site if you want to check the pros and cons.

If you don’t have a quality PT MBA program, get the CFA regardless. It’s worth the effort in the long run.

Depending on where “Pete” is, for example

Wilfred Laurier University in Waterloo, Ontario, they offer full-time or part-time MBA programs WITH CMA options, either in Waterloo or in Toronto downtown

i am more inclined towards the CFA because of the skills it will give you in advanced analysis in stocks and bonds. I seem to think that with it, you will be at a better situation to understand what your broker is suggesting when analysing stocks and getting investing suggestions

If you’re not going investment analysis, portfolio management, or some other financial field that requires that you understand more complex quantitative concepts, I would go for the MBA.

The downside to the MBA is that it will be more expensive. The upside to the MBA is that you’ll have a well-rounded business education, you’ll have the opportunity to network with other MBAs, and having your MBA plus experience in your field will make you a more attractive candidate for management positions in your field.

If you want, you can always choose a finance concentration within an MBA program. Just about every MBA program I’ve seen has a finance concentration. If you want to work for yourself, you may also want to look for an MBA program with an entrepreneurship concentration. This would give you the opportunity to not only learn about what it takes to run your own business, but also make connections with other aspiring entrepreneurs that may someday reap substantial rewards for you.

I think that your analysis is spot on. I went through the same struggle a few years ago and I ended up choosing the MBA over the CFA (I also have my CFP). I am happy that I ended up choosing the MBA as it definitely serves me better than I imagine the CFA ever would as I run my different companies. My next step is potentially to sit for the State of Florida CPA exam since I already have most of the eligibility requirements met – although I am just not sure I am ready for the time requirement for studying 🙂

A portfolio manager once told me that a CFA is good if you are already working in a related job (ie junior investment analyst) so that you can get the experience needed for the designation. Plus so many people get the CFA that it’s not much of an advantage for investment jobs.

MBA might be better for someone who doesn’t have an investment job but wants to get one.

by: The Financial Blogger | November 19th, 2009 (6:42 am)

you are right, it is much easier to do your CFA while working in an investing firm. As there are many CFA’s, it is a long process to become part of a portfolio manager’s team.

Therefore, if you start your CFA, you are better off by doing it while you are working in this environment at the same time.

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