CFA versus MBA

MBAs are not the only route to a golden career. Training as a Chartered Financial Analyst offers financial specialists an alternative springboard to success, writes Brutus Lo

In today's economic environment, every professional is very cautious about making the right investment in value-added training. Should one acquire an MBA degree? Should it be full- or part-time, local or overseas? These issues have a major impact on total costs and, to a great extent, the return. As a solid MBA degree costs quite a few bucks and criticism of the return on investment (ROI) from an MBA degree is growing, are there alternatives to putting MBA after your name?

Perhaps the answer is neither yes nor no. What is key, however, is the question of whether alternatives exist that give a comparable level of prestige, recognition and, most of all, income. While there is no general answer that applies to all professions, as far as the investment banking world is concerned the designation of Chartered Financial Analyst (CFA) may be worth just as much, if not more, than an MBA.

CFA was introduced in the United States over 40 years ago and is administered by the Association for Investment Management and Research (AIMR). A glance at the profile of its over-50,000-strong membership from over 100 countries underlines just how successful CFAs are. Indeed, according to a statement by AIMR Canada, salaries rise a steep 21 percent after this designation is acquired.

Obtaining the designation is like entering into an elite club of successful financial professionals, including CEOs, CFOs, CIOs and portfolio managers. Their average salaries are well over US$100,000, regardless of where they work - proof that a portion of the ROI equation is heading in the right direction.

Regulatory bodies in various countries are even using the designation as the entrance into certain professions - regulators from Singapore, the UK and Canada, for example, use all or a portion of the examination as proxy examinations. This endorsement creates an even higher level of credibility and prestige for designation-holders.

As this is a graduate programme, candidates entering Level 1 must have acquired their degree by December of the examination year. While there are exceptions, 93 percent of members possess an undergraduate degree.

What is the cost of getting a CFA? Before you sit the first of three levels, you must pay a one-time registration fee of US$250 to US$450. In addition, examination fees range from US$350 to US$450 per exam. Level 1 can be taken in June or December, while other levels are taken in June. You can only become a CFA after three years; the global pass rates for each level in 2003 were 42, 47 and 68 percent respectively.

Of course, you can prepare for the exam without taking any courses - instead of buying recommended textbooks, which cost hundreds of US dollars, you might want to utilise a library. So, what's the total cost of pursuing this designation? I'm sure you know how to do the maths!

Acknowledgement Lee Yih is currently executive director of the Chinese Entrepreneur Association, a US-based non-profit organisation of scientists, entrepreneurs and business professionals. He is also the chairman of Kaplan Educational Center (HK) Limited. He holds a MBA degree from Stanford University.

Taken from Career Times 2003/11/14