Hot ESG Trend Could Give CFA A Boost Over MBA

CFA vs MBA

By Crush Empire

This year, about 140,000 aspiring charterholders took the grueling Chartered Financial Analyst exam, and less than half of them will pass. Only one out of five people who start the CFA program make it through all three levels and successfully complete the requirements to become a licenced CFA.

Jesse Marrus, founder of recruiting firm Street ID, said, “Anybody can get an MBA at a certain level. If you’re decent at math and you know how to plug in equations and you’re paying attention, it’s not going to kill you.” Not everyone can get their CFA, however. It requires a lot of math and reasoning skill and it probably won’t kill you, but it will try its best.

It’s a huge achievement to pass the CFA exam and a major asset to your career. It’s also a better option than pursuing an MBA for many reasons.

Time and Money

An MBA can cost around $100,000, and even more at reputable schools—that’s the other thing, with MBAs, the school matters, but with the CFA, everyone takes the same test and most use similar CFA prep courses. The test is made up of three separate levels each costing around $1,000, depending on where you take your test.

The only other costs are additional CFA study materials, which I recommend to everyone who is taking the exam. Even if you have to retake the test (which statistically will happen), the cost of the CFA is much less than the MBA. $100,000 or less than $5,000? No contest.

While The CFA is dramatically cheaper, it also does not take up as much time as a MBA program. Don’t get me wrong, studying for the CFA exam is probably the most challenging thing you can do in the world of finance. Each level requires about 300 hours of studying and it usually takes about 1.5-3 years to pass all three levels of the CFA Exam. But, this can be done while working full time. An MBA program can be a full time job within itself and usually takes about 2 years to complete. Most people will take time off work to get their MBA to avoid a 3 plus year process. So, they generally take the same amount of time to accomplish, except you can easily keep your job when studying for the CFA Exam.

Better Salaries for CFAs

If you are wanting to bump up your salary, an MBA or a CFA will get you there. However, according to PayScale, CFAs make more than MBAs. Here’s the breakdown:

CFA vs MBA

As you can clearly see, CFA charterholders make on average $27,000 more than people who have an MBA. If you want to be a total financial stud, you can shoot for both the MBA and CFA to get the highest salary.

The Future of Finance – Who Can Adapt?

The MBA program is much more general and can lead to a variety of fields, but with a CFA license, you join a specialized organization that constantly adapts with the times and future trends. For example, the CFA Institute is updating its 2017 curriculum to include more focus on corporate ethics, risk management and environmental, social, and governance (ESG) issues after feedback from its investment management practitioners.

CFAs are “telling us loud and clear that investors are demanding ESG, and there’s increasing academic evidence that sustainable companies are better-managed companies and have higher risk-adjusted returns,” said Steve Horan, managing director of credentialing for the Charlottesville, Virginia-based institute.

There is growing evidence that suggests that ESG factors, when integrated into investment analysis and portfolio construction, may offer investors potential long-term performance advantages. This gives people who pass the CFA a leg up on MBAs because they are adaptable thinkers that will make companies sustainable.

Ultimately, the choice between a CFA or a MBA comes down to the plans you have for your future and what stage you are at in your career. It is evident, however, that the CFA provides opportunities that the MBA simply can’t.

Article by Stephanie Murguia