Friday, April 9, 2010

MBA or CFA? What's the Difference?

I've been asked repeatedly by various people about the difference in value between an MBA and a CFA. First there are some notable differences:

  • If you decide to do an MBA, go to a top school. While the MBA teaches you very broad range of interesting topics, the value of the MBA program is heavily weighted towards the relationships and network you build.
  • There is admissions in an MBA program with standards. You know the people getting in are motivated and ambitious and are probably very good at what they do and looking to take it to the next level. Also, with the Party Model of admissions, you have a diverse range of backgrounds and cultures.
  • MBA programs have faculty, admissions, staff and alumni to provide support.
  • Recruiters come to MBA programs looking for talent.
  • You learn a broad base of business topics, not just those related to the Association of Investment Managment and Research (the old name of the CFA).


  • There is no "admissions" into a CFA program. People here are motivated, but focused on finance. No need to write essays, cover letters, resumes etc. to apply. While you can just buy your way into writing the Level I exam, you can't advance without doing an enormous amount of work (mid-30%ish pass rate for Level I).
  • If you don't go to a top MBA (and you are interested in finance), you might want to do a CFA instead. The CFA program has the benefit of being standardized and recognized around the world. It covers a lot of the same basic technical / quant materials as core courses in most MBA programs.
  • If you are working in Toronto, it seems like everyone has one. Apparently, I'm told it also gives you the acumen to speak to buyside clients (or work on the buyside).
  • There are local CFA societies where investment professionals meet. However, events are generally not free (sizable ticket costs for luncheons) but still good events.


  • An MBA will cost you about $70 to $80k at a top international school whereas the CFA is $400 for membership and $600 per exam (give or take) for a total of $2200ish (assuming you pass all exams in one go... A bit of a stretch).
  • Admissions. Because it's not a light endeavour, you want to get into a top school. And top schools don't make it easy. Candidate profiles and application materials tend to skew higher for top schools.
  • It consumes a LOT of time. Full time means you give up 2 years of work experience, pay, advancement, etc. If you do it part time, you give up a lot of "work life balance".


  • To get a proper CFA (the whole designation) it takes at least four years worth of experience [and] having completed the three tests (which will take you one year each assuming you pass each in one go).
  • It also consumes a LOT of study time to prep for the exams. Almost like doing an MBA parttime I'm told for those who are doing it while working.
  • HIGH failure rate. And most exams are yearly meaning a fail equates to a year delay and another $600 out of pocket.
  • ALL self study. While you can take a course with Stalla or Schweser (or PASSMAX which I recommend), you don't really build your network. It's great for building your technical proficiency or signalling to the market (if you don't have any finance on your resume as I didn't when I started), but not as much for extending your contacts.


Matt Russell said...

dood, you don't need 4 years AFTER finishing the CFA exams, that would be retarded. You just need four years flat; if you had them before, it's fine. They'll still accept it (assuming it is in fact approvable work experience).

Joshua Wong said...

Good point. I've been caught up in the DO BOTH perspective (where we write the exams while we are in MBA which means we have to wait 'til we're done basically all the exams before we can get the proper letters. I'll update the note to reflect your point in bold.

Shree said...

Good one bud! I can't believe you are still blogging hard :)