The financial-services industry tops the list of fields with the highest variety of postgraduate courses covering different areas of finance. However, when it comes to business management across the financial-services industry, the MBA (Master of Business Administration) and the CFA (Chartered Financial Analyst) are considered to be the most popular and best designations for managers and business leaders. While the two are highly recommended for a financial career, each comes with a different set of skills.
Before the CFA became popular, the MBA was the pinnacle for any individual with a dream of scaling up the corporate ladder. Many organizations would even go an extra mile by sending their top talents to the best business schools to earn this designation. When the CFA was introduced, the MBA gained a strong competitor, with many people evaluating the two as if they were equals. However, the truth remains that even though the study content is similar, the two qualifications are designed to mold professionals in different ways. The skills acquired in each of the two qualifications have their main areas of application, and the decision on which to pursue should be based on career objectives.
Go for an MBA if you are looking to acquire these slots.
If there is one thing for which the MBA has a reputation it is developing business leaders. According to a study by Spencer Stuart, a Chicago-based executive-search firm, about 40 percent of S&P 500 CEOs have an MBA. The study further shows that in these companies, new directors are selected from retired chairs, presidents, CEOs and CFOs, the majority of whom are MBA-holders.
In the US, the MBA is considered the traditional way to the career of investment banking. Even though the CFA may be preferable for positions that require skills in financial modeling and number-crunching, the MBA is the top qualification for managing directors. This explains why a much larger share of top investment-banking managers across the globe have Master of Business Administration degrees rather than the Chartered Financial Analyst credential.
While detailed technical skills are critical in top management roles, the ability to get the big picture and make strategic decisions is the key to successful business management. Even though the MBA program may lack the specialized training offered in the CFA, studies show that it equips graduates with skills such as financial acumen, strategic decision-making and business savvy, which are vital in business leadership. Unlike the CFA, the MBA program allows better networking among professionals hence preparing them to be the business leaders of the future. The course is structured to bring out top management qualities in individuals, making it applicable across all business fields.
Go for the CFA if you are targeting these opportunities.
On the other hand, the CFA Institute reports that only 7 percent of all its graduates are working as chief executive officers of big corporations. The most popular career for CFAs is portfolio manager, with 22 percent of individuals working in this position being charterholders. By 2020, this number is expected to grow to 32.4 percent. Unlike the MBA, which imparts broad-based knowledge, the CFA is more specialized, and its main aim is to confer super analytical skills to graduates.
Most CFAs tend to stay on Wall Street working in hedge funds, bulge-bracket banks or private-equity firms. A study by eFinancialCareers lists asset management as the biggest employer of CFA-holders, with 15 percent of the study participants reporting to have worked in this area. When it comes to investment banking, the survey shows that only 7 percent of the CFAs end up working in investment banking and only 4 percent in wealth management. For the charterholders working in investment banking, the study shows that the majority tend to work at the associate level or below.
Asset management encompasses a broad range of services revolving around managing money, bonds, stocks and real estate for high-net-worth institutions and individuals. CFA-holders in asset management end up working as portfolio managers, research analysts, financial advisors or fund accountants. The CFA charter is also a gateway for careers in risk management, wealth management and trading.
You can also become a MBA- and CFA-holder.
For people looking to develop leadership and specialized technical skills, the two courses can be taken together. Even though a bit expensive and time-consuming, the return is higher than when each of the courses is taken individually. Research by PayScale shows that individuals with a combination of an MBA and a CFA earn $16,000 more than persons with a CFA only and $43,000 more than individuals with an MBA only.
While the decision on the best of the two should be determined by the individual’s career objectives, the MBA remains the best option for those already in leadership positions and looking to climb a notch higher.