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CFA Vs. MBA, which is best for you?

It’s a question asked by nearly every aspiring finance professional at one time or another – is my time (and money) best spent pursuing the Chartered Financial Analyst designation or a Masters in Business Administration? There’s no question that both are valuable credentials, each are capable of delivering higher salaries and better advancement prospects. However, the answer to this question depends on many factors, including your professional goals, background and resources, both in terms of time and money.

What do you want to be when you grow up?

One obvious difference between the CFA program and an MBA program is the breadth of the curriculum. A good analogy is that the curriculum of the CFA program is a foot wide and a mile deep while the curriculum of MBA programs are a mile wide and a foot deep.

If you plan on working in finance, the CFA program will provide a wealth of knowledge. However, if your career path veers out of finance, the chances that you’ll be able to utilize the curriculum are limited. In contrast, an MBA program is likely to provide exposure across numerous fields of study that can be applied in almost any position, whether in finance or not. As such, potential CFA candidates are advised to step back and assess their commitment to a career in finance.

For those who are working in another field and view the CFA program as a way to break into a finance career, it may be more appropriate to first obtain a position in the field, even if it’s at an entry level, to assess your commitment to a finance career before beginning the CFA program.

What’s the Price of Admission?

One of the most popular motivations for enrolling in the CFA program or an MBA program is to create new career opportunities. Today, many finance jobs require either a CFA designation or an MBA. What’s the cost to become qualified for these positions? While there are no exact numbers for either the CFA program or an MBA program, we can make a few assumptions that will apply to many aspiring professionals.

First, let’s look at the cost of the CFA program. Our first assumption is that it takes, on average, four exams to complete all three levels of the CFA program. Enrollment and registration fees for four exams will cost $1,815 with early registration. The cost of preparation materials can vary widely between CFA candidates. At the low end of the price range is the purchase of study notes and textbooks. Realistically, many candidates require additional preparation such as study seminars, software, online programs, audio programs, video programs or flashcards. The cost of such a comprehensive study plan could be an additional $2,000 per year. Given our relatively aggressive assumption that all three exams will be successfully completed in four attempts, we will assume a fairly aggressive study plan with $1,000 of study material per year, for a total of $4,000 over four years. Therefore, the total cost of obtaining the CFA designation, including registration fees and test preparation materials, would be $5,815.

The cost of an MBA can range dramatically, from a part-time program at a state university to a full-time program at an Ivy League school, the costs may range from $20,000 on the low end to over $100,000 on the high end.

In summary, the cost of obtaining an MBA will range from four to twenty times the cost of the CFA program.

What’s Your Time Horizon? 

In the previous section we listed an assumption that it will take the average CFA candidate four exams to complete all three levels of the CFA program. Up until December 2003, all three levels of the CFA exam were administered just once per year. In December 2003, the Level I CFA exam was available to be taken twice per year. If a CFA candidate takes the Level I exam in December, the Level II exam the following June, and the Level III exam one year later, it would take approximately two years if you assume that studying for the Level I exam begins in June. While this is certainly an achievable task and there are people who accomplish this, it’s becoming very difficult to do with lower pass rates and more demanding careers that allow less study time to prepare for each exam. Since we assume it will take four attempts to pass all three levels of the CFA program, we will assume these four exams will be completed in three years.

In contrast, most full-time MBA programs can be completed in two years. This is perhaps the biggest advantage of pursuing an MBA compared to the CFA designation, because it’s likely to qualify you for a better paying job about a year earlier than the CFA program will. If you’re able to increase your compensation by $30,000 with an MBA, you will be making $30,000 more than you will be making in the CFA program for an entire year.

I’ve developed a spreadsheet that computes the net present value of both the CFA program and an MBA program. For illustration, here’s a hypothetical scenario with the following assumptions:

Factor Assumption

Current Salary:


Cost of Capital:


Time to Complete CFA Program:

3 Years

Annual Cost of CFA Program:


Projected Salary Post-CFA Program:


Time to Complete MBA Program:

2 Years

Annual Cost of MBA Program:


Projected Salary Post-MBA Program:


Based on these assumptions, the Net Present Value (“NPV”) of the CFA program is $204,394 while the NPV of the MBA program is $177,884. This means that, based on these assumptions, the CFA program is a better investment than an MBA program. However, a change in assumptions can change the answer. If you expect an MBA to deliver a higher salary than you expect after attaining your CFA charter, the answer may be very different. We’ve made this spreadsheet available so that you can use your own assumptions and see what alternative has the most value for you. To download the spreadsheet file containing this analysis, click on the attachment below.

Self- Study vs. The Classroom?

Perhaps the biggest difference between the CFA program and an MBA is the learning format. The CFA exam is essentially a self-study program that allows candidates to move at their own pace and study as their schedule permits. There are no classes to attend unless you choose to sign up for a review course (for a list of review courses, visit our test prep directory). There are no pop quizzes or progress exams, rather there is the equivalent of one big “final exam” for each level where you must be ready to apply everything you’ve studied.

The CFA Institute does provide a recommended study timeline that can be used to gauge your progress as you approach the exam date. However, it’s up to you to keep up and there will be nobody holding you to the schedule, so self-discipline is important particularly given the quantity of material covered at each level. A great number of very smart people have failed the CFA exam simply because they procrastinated and were unable to catch up.

In contrast, a traditional MBA program has a great deal of structure since it’s classroom based. Each class typically consists of several quizzes and exams so it’s easy to tell when you fall behind. The learning format in an MBA program is also more likely to be lecture-based, whereas the learning format for the CFA program is text-based.

So, What’s Best for Me?

For those individuals who are committed to a career in finance, the CFA program offers a unique opportunity to learn while you work. Very few professions have access to comparable opportunities to earn a renowned designation through self-study at a relatively low cost. However, if you’re relatively uncertain about a career in finance, an MBA may be a better choice since it applies to other fields.

In summary, there is no one-size-fits-all approach to continuing your education. Each individual brings a unique background with a unique set of goals. As such, it’s important to assess your own situation to determine which opportunity is right for you before you make a significant investment of time and money.

Wouldnt it be worth while to incoporate the lost income due to a full time MBA or time taken off to study for CFA

Akhan, I’ve added a foregone salary line to the MBA since it could be full time. There is also a new switch to toggle between a full-time and part-time MBA program.

This is very interesting analysis. However, I have some comments. I guess the projected Income post-MBA/CFA may not be realistic. First, an MBA from a mediocre school may not command as high as a 100k, whereas an MBA from an Ivy league school will most likely command much more than a 100k, so I guess like you mentioned, the assumptions will determine the NPV. Secondly, it may not be practicable to advise someone to first get a job in finance before deciding on whether a finance career will be ideal. Frankly, in recent years, good finance jobs in the leading financial centers are too competitive for anything short of a stellar degree/degrees from top schools/CFA Charter holders. Even CFA L3 candidates (myself included) are not finding it easy to secure jobs in these cities, much less somebody who wants to test the waters. Some undergrad courses in finance/career counseling can provide a necessary gauge on whether a finance career is ideal or not. Anyway, this is a very interesting analysis.

I want to go to the MBA school that only charges $35,000 per year! In the economist article on MBA programs this week it seems a more likely figure would be 45-55k for most.

At this point in time, If you wanna progress in IM faster you might as well do both

This model was initially developed about 7 years ago so I guess that validates the inflation of tuition rates. Feel free to update the costs of both programs using your specific schools.

I was hoping CFA would make it easy to get in a leading business school, because honestly their admission criteria are mysterious and difficult (even if you can afford it).