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Rishiraj Patel, CFA

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This is probably the first thing that pops in one’s mind before taking up this exam- Is CFA worth it?

Apart from the cost, it is actually the time and the effort it requires to become a CFA and that is why these questions come to mind – Should I really peruse it? Does it really pay off in the end?

Let’s find out. 

I researched a lot on Quora, Reddit, analyst form and many other platforms to gain an insight as to what other Charterholders have to say about pursuing CFA as a career option and to what extent has it helped them in their careers.

And the result is just like any other thing, there is the good and there is the bad. So let’s try and cover both the experiences and try to get a very clear picture on CFA as a career option, by the end of this article. I will also share my personal views on CFA and what I would recommend to the ones planning to take up CFA.

THE GOOD!

First of all, going by the data and the statistics the good reviews outnumbered the bad reviews by a mile. So this clearly helps and gives the article a good start and for those, who are already half way in the course I can imagine how glad you must be after reading this, because I was in a similar spot not very long back. 

Just to give you a glimpse I’m sharing some of those reviews from those platforms with you here:

  • “Putting all those hours and those sleepless nights and the countless coffees have all been worth it when I look at the CFA designation before my name”
  • “ It is safe to say that CFA designation is treated with respect in the industry”
  • “One of the greatest moments of my life was being awarded as a charter”
  • “All of the knowledge I gained through CFA is coming to work now”
  • “I’m working as an analyst now with one of the largest investment banking firm and I don’t think I would have made it here without CFA”

So as you can see, most of them are very much satisfied with their decision of taking up CFA as their career choice.  There were many other reviews stating how it helped them move up the ladder and because of the recognition some were able to start their own venture, as being a CFA gave the clients somewhat satisfaction and trust towards them. I would say about 90% of the reviews were in the favor of choosing CFA as a career option, and that it helped them build their career in the financial industry. 

THE BAD!

Although the negative comments were only a fraction in comparison to the good ones but there were a couple of bad ones as well. This is only natural, everything has a mixed review and just like everything else CFA also does. Let me share some of the negative comments also, again picked up from the above mentioned platforms: 

  • “CFA does not guarantee you a prestigious finance job”
  • “I don’t think CFA had any major impact on my career as a finance executive”
  • “The exams were very brutal and it was not worth all that effort”

These were some of the ones who don’t really appreciate CFA and that it was not worth all that effort and time and money. Some of the reviews were completely baseless and meaningless in my opinion, for example- let’s take the first one stating that being a CFA dose not guarantee a finance job. This is applicable in every field, does MBBS guarantee a doctor? and does LLB guarantee you a lawyer? This is applicable in every field, the courses are only to prepare your base and clear the fundamentals rest all is up to an individual as to what one does with that knowledge and how one creates a difference with it. If perusing a course would guarantee a lucrative job everyone would jump into that.     

MY PERSONAL OPINION!

I’m a CFA Charterholder and am working as an analyst with a boutique Investment Banking firm. Now you might say that my opinion will be biased in favor of CFA given I’m a CFA myself. But I will try to be as true to you as I can be.

In my opinion CFA as a career option should only be chosen if you are really passionate about finance, numbers, investments and capital markets. 

CFA does a very good job in terms of imparting knowledge on various asset classes on an in depth level, I would say. The part which CFA does not cover is the practical approach and what actually happens in a finance job.

Does being CFA will make you an expert stock picker? Obviously no, that will come over the years. You will go through multiple business cycles and understand what works and what does not, and over the period you will gain that expertise. But will CFA help you in that process in understanding the basics and fundamentals? Definitely yes.

In terms of a lucrative Finance job, just being a CFA won’t land you anywhere. It’s the skills along with it which will help you get there. Some of the skills I would say would be financial modeling, Power point presentation (PPT) skills, effective communication, staying up to date with the industry news about what’s happening around the globe and how all that is affecting capital markets.

I hope this article will help you make an informed decision.

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As the topic is CFA Vs MBA, we will be talking about MBA in Finance as specialization to give a better picture of both the course and help you decide as to which is better suited for you and what career opportunities does both the course offer.

The main difference between the two is that CFA is a distance learning course whereas MBA is a two year or a one-year full-time course depending on the institute you choose but in most cases, it is a two-year full-time course. Also, another big point is from where you pursue an MBA which we will cover below.

Who is this course for?

First let’s talk about both the course from a broad view. CFA is the most generic international course in finance, as it covers every topic of finance in absolute detail and it is the most highly recognized and respected course in the field of finance throughout the world. CFA is organized by the CFA Institute which was founded in the year 1947 and is headquartered in Virginia U.S.A. CFA is best suited for students who want to build their career in

  • Equity Research
  • Investment Banking
  • Mergers & Acquisitions
  • Private Equity
  • Corporate Finance
  • Portfolio Management
  • Consultants
  • Financial Advisory

These roles mentioned above are pure, niche finance roles and CFA is the golden platform to prepare for such profiles.

Coming to MBA, it is literally the most generic course available in India, every locality has a couple of MBA’s , so if the course is so common and generic what’s the point of even thinking to purse MBA. The catch here is that MBA only matters as long as you are pursuing it from the top 20 if not top 10 institutes of the country.

The problem here is that getting into these institutes is extremely challenging as you need to score a minimum of 98 percentile and then crack the group discussions and the interviews to get yourself a seat in these institutes. Major roles offered after MBA in Finance from such institutes are:

  • Consultancy
  • Investment Banking
  • Portfolio Management
  • Finance Associate

To conclude the first point CFA and MBA (Finance) from the top institutes both offer the most niche finance profiles in the top companies. So, if these are the profiles you are looking forward for then both the courses are the right choice.

Note:  All the details with respect to MBA from now will be in reference to the top tier- I MBA institutes.

Difference between CFA and MBA

CriteriaCFAMBA
EligibilityMust be in the final year or have a bachelor degree/ 4 years of work experience in any fieldCAT Percentile of 98+ minimum Great academic records in 10th and 12th.  Work experience is an added advantage. Excellent in any sports or extracurricular activity is also an added advantage.
Exam DetailsLevel – I 240 MCQ Questions Exams held in June & December Level – 2 120 MCQ Questions Exams held only in June Level – 3 10 essay type questions and 60 MCQ Questions Exams held only in JuneEvery Institute has their own customized syllabus and exam pattern but most commonly there are a total of 4 semesters divided in a 2 years program. Where in the 1st year all the subjects are generic and in the 2nd year students choose their specialization.
Passing RatesLevel – I     42% Level – 2    45% Level – 3    52%Depends on various quotas, talking about the general quota a minimum of 95 percentile CAT score is required to get an interview call.
Time taken2-3 Years2 years (Full Time)
Fees$450 Registration Fees (Valid Throughout) $700/$1,000/$1,350 for each level depending on the time of registrationAverage fees for a Tier- I MBA institute for their flagship course is around INR 15 Lakhs.

As clearly seen above from a cost perspective MBA is very expensive from any top institutes, and for many of us such big fees might be feasible only through a student education loan, but the average placement packages makes up for that fees in the very 1st year of work.

Which is more Difficult CFA or MBA?

Let’s answer this by crunching some numbers to give you a better look a feel of the competition and intensity of both the courses.

For MBA, total CAT applicants in 2019- 2.44 Lakhs

Total MBA seats in the Tier- I Institutes- 5,000 approx.

This shows that only about 2% of the total CAT Applicants make it to the Tier- I institutes.

For CFA,

Level 1 pass percentage42%
Level 2 pass percentage46%
Level 3 pass percentage55%

So about 10% of the Level 1 candidates make it, also this figure includes only the candidates who appear for the exam and also includes the ones who are re appearing so after accounting all that about 7% actually become CFA.

SO, both the exams are extremely difficult and are highly competitive but in between the two it is MBA that is more difficult assuming a Tier- I institute.

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Assignments and Field Visits

As mentioned earlier CFA is a complete distant learning course and hence there is no question of any assignments or field visits. In case of MBA these are an integral part of the curriculum and are a very good exercise to give the students a real hand feel of the industry and give a glimpse into the daily life as a professional. This really helps students to get a practical approach towards the course and they are not restricted to just the theory and academic part of it.

Top few firms that recruit CFA and MBA

  • Deutsche bank
  • Citi Group
  • Goldman Sachs
  • Mckinsey and co.
  • BCG
  • J.P. Morgan Chase
  • Morgan Stanley
  • HDFC Bank
  • ICICI Bank
  • SBI Bank
  • EY
  • Deloitte
  • KPMG
  • PWC
  • Black Rock
  • Mirae Asset Management
  • Morning Star
  • Nomura
  • CRISIL
  • Care Ratings
  • Bloomberg
  • And many more

Average CFA Salary Vs MBA Salary in India

After CFA Level- 1  (3- 4+ Lakhs P.A.)
After CFA Level- 2  (6- 10+ Lakhs P.A.)
After CFA Level- 3  (12+ Lakhs P.A.)
After CFA Charter  (18+ Lakhs P.A.)

Average packages from the top MBA institutes is around 15 Lakh + P.A.

Highest packages is in Investment Banking Industry and Consulting industry, here the salary is north of USD $100,000 plus bonuses. Only difference here is that with CFA you reach this level with a minimum of 5 years of prior work experience in the same industry, where as if you are a graduate from an ISB or IIM Calcutta, IIM Ahmedabad this kind of packages are received from day one.

Benefits of doing MBA + CFA Combo

CFA on a standalone basis is not considered optimal for niche finance roles, although this only true for INDIA, in other countries such as USA or UK or other Asian countries CFA on a standalone basis is self-sufficient, but the course is still evolving in the Indian space and it might take some time for the country to recognize CFA on a standalone basis.

Hence, if your end goal is to work in India it is in your best interest to club CFA along with a MBA to up skill yourself and stand out from the crowd. Finance as an industry has only started its journey in the Indian markets and the growth rate over the next 15-20 years is going to be tremendous with the help of mutual funds trying to channelize savings into investments for the better growth of the economy.

This will help in an efficient capital allocation which will ultimately help the entire economy grow as a whole. As the industry grows there will be a huge amount of job opportunities for skilled and professional people to efficiently manage funds and being a CFA+ MBA will give you an edge over the other candidates.

The main benefits of clubbing CFA along with MBA is that MBA gives you a network in the industry as your batch mates and alumnus will be in the same industry and one major asset in the industry is to create to a wide network, also MBA will give you insights into real-world business examples, complex case studies etc. CFA, on the other hand, will brush your technical and analytical skills to understand every product available in the financial markets.

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