An MBA, or CFA qualification, is a ticket up the corporate ladder. Those who complete either qualification should expect to earn a substantial sum, immediately. The average starting salary for an MBA graduate is $135,000, according to 2018/19 figures from the business school accreditation body AACSB.
The most comparable figure for someone who completed all three levels of the Chartered Financial Analyst (CFA) exams is the $92,600 starting salary for an intermediate portfolio manager in the Americas region, according to the CFA Institute’s 2019 Compensation Study.
CFA vs MBA Salary
The salary of each professional will largely depend on the job, years of experience, industry, size of company and job location, making a direct salary comparison difficult.
For example, the CFA exams are focused on careers in investment, which can pay higher salaries than many career routes followed by MBA graduates.
Stephen Thomas, professor of finance at London’s Cass Business School, says that portfolio managers, for instance, have scope to earn more money through bonuses that are directly linked to an investment firm’s returns. “When I was in hedge funds, the bonus was worth more than the base salary,” he says.
He adds that, although some MBA graduates also choose to work in buy-side finance, they are often managing these businesses, not investing themselves, because the MBA gives them a broad base of management and leadership skills.
While they may earn less initially, without fat bonuses, their prospects to move into higher leadership positions with a correspondingly bigger salary are good. CFA holders can reach the top of their investment companies, but the MBA accelerates that progression, says Stephen.
CFA vs MBA: Cost
Steven Young, professor of accounting at Lancaster University Management School in the UK, says that the MBA and CFA qualifications tend to attract different types of individuals who are pursuing different career paths.
However, the MBA requires a far bigger investment of money than the CFA credential. “Total exam and registration fees for all three levels [of the CFA] don’t exceed $7,000. MBAs, even part-time, from a good business school, are orders of magnitude more expensive,” says Steven.
Elite full-time, residential MBAs cost as much as $200,000. But the average MBA tuition fee is about $35,000, according to AACSB.
While the CFA is definitely cheaper, the return on investment varies depending on the business school you attend and the job you seek, and is likely to be highly individualized.
CFA and MBA are often billed as rival training programs, but in reality they are complementary and not easily comparable. The MBA focuses on business management and leadership, whereas the CFA is a deep specialty program focused in investment analysis.
CFA + MBA: Benefits of doing both
The smartest financiers may think about acquiring both an MBA and CFA. “The combination of the two can provide excellent benefits,” says Tom Robinson, AACSB’s president and CEO.
In the CFA Institute’s Compensation Study, respondents that held both an MBA and CFA designation had the highest median compensation of everyone: $195,000.
If getting both qualifications is the best route to the big time, it makes sense to do the CFA first, says Lancaster’s Steven: “CFA is now a requirement for many asset management roles. But having CFA is no guarantee of a job in financial markets,” he notes.
The MBA tends to attract people already established in their careers who wish to move into senior management, says Lisa Plaxco, senior head of the CFA Program at the CFA Institute.
“To do so, they require a command of the different aspects of running a business, and the MBA can certainly support that goal,” she says. “Many CFA charter holders earn an MBA later in their career as they look to take on leadership roles within their organizations.”