Posted by Lisa Creffield on 05 September 2016
Professionals pursuing a career in finance often ask themselves if they should get an MBA or a more finance-focused qualification, such as a CFA (Certified Financial Analyst).
While an MBA and a CFA are both highly regarded qualifications that can give your career a competitive edge, it’s not easy to weigh up CFA vs. MBA.
Robert Half asked some experts about the benefits of both qualifications and whether you should choose to pursue an MBA or a CFA.
The benefits of an MBA
Dr Antoine Hermens, director executive MBA, says that many postgraduates are taking up MBA courses so they can move more easily across industries. An MBA gives you a broad overview of how all the different parts of a business interact and work together. Unlike other master’s degrees that tend to focus in-depth on one particular aspect – for example, supply chain – an MBA will cover all the various elements.
“What you learn from an MBA is a broad understanding of how all the different bits and pieces fit together, so you can talk to all the key managers and operators and understand what they are saying,” he says. “It gives you the skills to be able to strategise and harness all the resources available to you to achieve your goal.”
Because there is so much choice when it comes to MBA courses, Dr Hermens advises that it’s important to select elective subjects that complement your skills – those that don’t necessarily reinforce what you already know, but give you access to new knowledge and new technology.
Finance professional Peter Stankovic has worked at an executive level at several major financial companies. He believes an MBA can be useful for winning a senior management role.
“One of my colleagues at QBE Insurance went to the US to do an MBA at Harvard,” he says. “He came back and was promoted to CEO of the Asia-Pacific division, and then became COO of the Group, next in line for Group CEO. The people with this qualification are generally considered for major roles, usually top management.”
But Stankovic also notes that financially-focused qualifications remain critical. The executive with the MBA was eventually passed over for the top job by another candidate with more in-depth financial experience. “The MBA guy lacked the requisite finance skills for insurance. So MBAs are useful for general management but probably not something necessarily key if investment banking skills are needed.”
Does a CFA offer more in terms of practice?
According to the CFA Institute, getting more practical insight into finance is through obtaining the CFA certification. A CFA program bridges “academic theory with current practice and ethical and professional standards to provide a strong foundation of advanced investment analysis and real-world portfolio management skills”. To become a CFA candidate, you will also need to complete four years of professional work experience (accrued before, during, or after participation in the CFA program).
Anthony Serhan, president at the CFA Society of Sydney, says a CFA definitely helped him in his finance career. One advantage he says is that CFAs are rarer and much more challenging to obtain – there’s a high attrition rate among those who embark on the program.
“It has helped my career greatly because people do recognise this qualification and its quality, including the difficulty of the exam,” he says. “It’s clear evidence that you’ve done something worthwhile.”
While the program is specialist and focuses on leadership skills in finance rather than marketing or HR, Serhan says the breadth of knowledge from accounting and analysis to economics and ethics "gives you a really solid grounding" in all the relevant terms and concepts across different disciplines.
Dr Hermens states that that there is a much larger supply of people with MBAs than CFAs, such that it becomes more about the quality of the individual MBA and what business school it comes from. He notes that work experience is also critical to fully realise the benefits of an MBA.
“It’s part and parcel of being a successful MBA graduate that you have industry experience,” he says. “You really don’t get the full application out of an MBA program unless you go into it with five to seven years of work experience. MBA graduates who are still struggling to find a job generally haven’t got the industry experience, so they haven’t been able to acquire as much knowledge of what employers are looking for.”
Dr Hermens underlines the need for students to have industry experience or to acquire it during their study. Otherwise, he recommends doing a specialised master’s degree first, then going back into the industry for three to four years before doing an MBA.
“That’s the value proposition for a successful MBA. That is what the industry is telling us – the feedback we’re getting in the market. It’s important to acquire a broad set of skills because employers expect you to be able to run the company.”
CFA vs. MBA: How to decide
Most MBA and CFA programs are internationally recognised, so they are both valuable in this respect. But how do you decide which one will be most valuable to you? Here are some tips to help you with your decision-making:
- Talk to the experts: Speak to senior finance professionals who have faced the decision of whether to do a CFA or MBA and ask what they think the advantages and disadvantages are. You should be able to get a good perspective from other viewpoints.
- Think about your career aspirations: When it comes to CFA vs. MBA, think about the best qualification that suits your skills and your future career direction. An MBA is best suited to someone who is looking to have a broad understanding of the different parts of a business and a broad set of skills that are transferable to many industries. A CFA, on the other hand, is more suited to someone who wants a more in-depth, practical knowledge into finance.
- Think about the time investment: Think whether the investment of your time is really worth it. The CFA Institute states on average 322 hours of study time is needed per each of the three levels before taking the test, while an MBA on average takes two years’ full time to complete, or on average three years’ part time.
- Think about the financial investment: When it comes to weighing up CFA vs. MBA, do your research around costs to ensure you know what to expect instead of being hit with an unexpected figure. A CFA can be significantly cheaper than an MBA, depending on the education institution.
When it comes to CFA vs. MBA, it’s not always easy to decide which one is best for you. But when you do make the decision, it’s worth reminding yourself that either qualification on your resume will set you up for a successful career in finance.