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Why CFA Might Become The New MBA Degree

CFA charter holders are thought to have an advantage over MBAs in the financial sector. But will it become the new qualification of choice?

Sun Aug 10 2014

This summer, thousands flocked to examination centres to take on the CFA (chartered financial analyst) exams. The three-level test is gaining traction with employers, and business schools are beginning to recognise its value.

There are now more than 100,000 charter holders and that figure is set to rise in June 2015 when the next crop of test-takers grapple Levels I, II and III.

But analysis of data suggests that more than half of them will fail at each stage of their attempt. The difficulty of the CFA examinations means that qualification is reserved for an exclusive group.

Low pass rates and the complexity of study have turned the qualification into a premium, which is revered by financial employers. Some business school insiders think that students who have completed all three levels of the CFA have an advantage over MBAs.

“For roles involving fund management, mergers and acquisitions, and portfolio analysis, the CFA is becoming really important. It dominates the MBA in the finance sector,” says Steven Young, head of the accounting and finance department at Lancaster University Management School.

“Most of the financial institutions are putting their junior employees through CFA training,” he adds.

The UK-based business school recently launched a specialist Master’s program which prepares students for CFA Level I. In the final term of the MSc Financial Analysis course, Fitch Learning, an external specialist in financial education, provides CFA coaching.

LUMS launched the program, which requires a minimum GMAT score of 650, in-part because the CFA is becoming the industry-standard qualification, says Prof Steven.

The school’s MBA and master students previously studied for the exam independently, but the curriculums were not sufficiently aligned. “The CFA testing environment is very different. Although they might have the knowledge, they weren’t prepared to pass the exam,” adds Prof Steven.

Even though many MBA students seek the qualification, about a quarter of all test-takers who sign up do not sit the exam.

Part of the problem is the exam’s difficulty. Each level of the CFA program requires at least 300 hours of studying and preparation, says Kate Lander, head of education for EMEA at the CFA Institute.

“Many candidates are juggling a challenging career, family commitments, as well as a life whilst taking the program,” Kate says.

But this has not deterred candidates, who are taking the CFA exams in record numbers. Data show that the number of charter holders has doubled in the past decade, from about 50,000 to nearly 109,000 – about two thirds of which are in the US.

This is being driven largely by exponential growth in major markets in the Asia Pacific region.

Taking the MBA is considered a comparatively easier process. While it is difficult – and expensive – to gain admission to a top MBA program, once admitted it is highly unlikely that a candidate will not pass.

Each stage of a CFA qualification costs about $1,000, while an MBA can cost upwards of $100,000 per year at a top-flight business school. Yet many students study for the CFA while juggling a full-time career – an MBA on the other hand usually requires one or two years out of industry.

The large number of MBA holders means that the degree has lost some of its early lustre. The small number of charter holders means that the CFA remains exclusive, and that can give you an edge in the jobs market.

More than one-third of the CFA candidates surveyed in June 2013 cited career advancement as the primary reason they chose the CFA program. Employers are increasingly seeing its value, says Kate.

“Recruiters and employers see the CFA charter as a stamp of quality,” she adds.

In the past, the CFA was most relevant for analyst and front-office roles. But it is becoming increasingly useful for sales and relationship roles, risk management roles as well as positions in the middle office, Kate says.

In light of the financial crisis, between 10% and 15% of the CFA curriculum is now focused on ethics. “Clients want credibility, and employers want to hire people who have a good understanding of risk and regulation,” she adds.

But it is argued that CFA holders lack networking opportunities, which is a key component on business school programs like MBAs.

The CFA argues, however, that it can match this. Test-takers can become a member of one of 144 CFA societies globally. These societies provide regional and global conferences, and allow members to network with peers in the financial sector. Job support is also available.

However, Prof Steven thinks that there is room for further collaboration, rather than competition. “If you can have the best of both, that is an attractive package,” he says.

It is a sentiment echoed by Pascal Gantenbein, who teaches the corporate finance module on the St. Gallen MBA. “I do not see very much competition between the CFA and the MBA. Rather, they provide complementary competencies.”

Prof Steven says that there is no reason why business schools cannot develop a CFA stream within an MBA. “I’m surprised they haven’t already,” he adds.

For a career in finance, an MBA may risk being seen as too broad. “The CFA requires specific experience relating to the finance sector, and the type of job that the candidate will be doing,” Prof Steven says.

This specific knowledge that candidates obtain during the CFA program is exactly what they need for the sector, says Pascal.

Kate has a similar verdict. “While most graduate school programs cover a broad range of topics, the CFA program focuses specifically on investment knowledge."

But she adds: “A CFA charter has the greatest value when combined with experience – it won’t open doors on its own.”

Student Reviews

Lancaster University Management School




An exceptional educational establishment in the North West of England.

This university has been a fantastic life experience as well as a great academic one. I first decided to go to Lancaster University Management School due to its exceptional business education facilities and have not been disappointed. I recommend the university to anybody that wants to put themselves in a strong position for a career upon graduation.




On Campus

Student Ambassador

Overall, the instruction is decent, however it also depends on your department. The people are friendly, in my opinion. The sporting events are enjoyable, and there is a good sense of community. Although the city is quite remote, it is nonetheless attractive.




Lancaster University honest review

The education system in the university is excellent especially that of the Management School. The campus has great facilities for students to study and live in a relaxed manner. The students can engage in various activities through the socities.




Great opportunities to think beyond

Lancaster University provides a lot of good opportunities to think beyond.There Entrepreneurship in residence program helps students to meet and seek guidance about entrepreneurship and the challenges.Their Work in progress program help to fabricate your startup idea and further to pitch to the potential investors.Apart from that there are lot of programs like Enactus, guest lectures and guidance from seniors to help and shape your career needs. They provide lot of opportunities to shape up your employability skills.




On Campus

A top university in the UK for management science!

If you’re interested in management science studies, Lancaster University is one of the top universities in the UK. The faculty is renowned and have a sterling reputation for research in management science. Candidates specifically interested in Forecasting would find the Centre for Marketing Analytics and Forecasting especially relevant to their field. Besides, the ROI is good as the overall cost compared to other universities is less.




Great university for academia – not great for 'entrepreneurs'

Please keep in mind that my review is nuanced by my expectations of an Entrepreneurship degree :) I came to Lancaster University because it was one of the top universities to have a course in Entrepreneurship. After 4 years in this degree, my most valuable experience has been my placement and not the actual course. The course is heavily focused on impractical elements, which is a bit odd for an Entrepreneurship degree. There are some modules that involve hands-on work but the faculty support for such things has not been great. My course also involved a lot of teamwork which has been fantastic and really prepared me when it comes to dealing with the diversity of opinions. In terms of career prospects, the management school does A LOT to host events, workshops and support sessions to help you build up your employability skills. Although, I wish there was more acknowledgement of SMEs/startups as a viable career option. The entrepreneurship team which is meant to support budding businesses is really stepping up their game with tons of guest speakers, workshops and pitching opportunities. The location is a concern if you're not in STEM, Law or Accounting and Finance. Business requires networking with the broader community. However, for Lancaster students, the best bet is a trip down to Manchester or London. On the flip side, living in Lancaster is much cheaper! Overall, if the purpose of your university experience is to receive top academic education and have great facilities at your disposal, Lancaster is a great choice. But if you want to be in business and entrepreneurship, I would look elsewhere.