Here are five ways an MBA and the CFA® Program work well together and can help you achieve your career goals in the investment industry.
Earning a CFA (Chartered Financial Analyst) charter is indeed a time commitment: the average recipient spends an average of 300 hours studying for each of three levels of the exam, and fewer than 20% of entering Level I candidates successfully complete the program.
Many financial professionals might wonder whether pursuing an MBA in addition to the CFA designation is worth the effort and how the two programs could complement each other. Here are five ways the two work well together and can help you achieve your career goals in the investment industry:
1. An MBA helps you to gain the leadership experience needed to move up in your organization and manage effectively.
At both large financial institutions and smaller investment firms where CFA candidates tend to work, a relatively hierarchical structure tends to be in place, resulting in junior analysts lacking opportunities for leadership, organizational, and management responsibilities. These softer skill sets tend to be vital to moving up to the management or executive level at a firm, and an MBA is an effective way to develop them. In business school, you can help lead group projects, student organizations, and treks to visit investment managers or Wall Street firms, all while enhancing relationships. The takeaways from these leadership experiences will be instrumental when the stakes are higher in your post-MBA career.
2. Although the CFA exams test the basic formulas and principles used to value investments, a quantitatively focused MBA goes further. MBA students test the limits of financial models and learn to apply them to real-world markets and investment scenarios.
Like most standardized tests, the CFA exam benefits those who can be precise and recall vast amounts of information within a short time span without electronic aides such as a computer or phone. Although this can be useful in testing one’s analytical rigor, the modern investment industry requires other skills, such as creativity and abstract thinking, which an MBA can provide. A staple of many business school courses is the case study, which allows students to peek into the history of a particular organization and ask themselves what they would have done under similar conditions. Learning with and from classmates with diverse professional experiences further enhances the insights students gain from discussing cases. Often, advanced analytical techniques using Excel and statistical tools are needed to arrive at a meaningful answer. These kinds of experiences cannot be simulated simply through taking the CFA exams.
3. The extensive network in place at the world’s top business schools will make the process of finding an attractive role in the investment industry much easier.
The investment industry, particularly the buy side, is notoriously difficult to break into, and with new CFA charter holders being minted each year, job seekers find that they must do even more to differentiate themselves. Many top business schools have student-run portfolios through which you can learn to develop and execute a portfolio strategy in a safe and supported space. Furthermore, while in business school, you might have the opportunity to organize or attend investment management conferences, through which you will engage with industry leaders. Developing relationships with the right professionals tends to make the recruiting process much easier, and a degree from a top business school offers access to accomplished individuals. Once you are enrolled in a top MBA program, often all that is needed to get the right person’s attention and move closer to your dream job in the investment industry is a nicely worded email or message on LinkedIn.
4. Many applicants to top business schools have career goals within the asset management industry, but a CFA candidate describing these goals will have much more credibility.
Describing career goals in your MBA applications is much like telling a great story—it has to be believable and make sense from start to finish. Although many applicants to top business schools are hoping to use an MBA to transition into the investment industry, only a few can effectively make the case that this goal is their passion and that they are the perfect candidate to pursue it. If you don’t work in the industry but have passed one or more levels of the CFA exam, your “story” of making a career change into the investment management industry will be much more credible. The CFA exams are offered annually worldwide, so admissions committees appreciate that this pursuit is a credible and serious way of showing your commitment to the investment industry.
5. For applicants who lack significant community service involvement before applying to business school, becoming involved with your local CFA Society can help fill this critical gap.
Each year, many MBA applicants scramble to fill the hole in their candidacy that exists from a lack of community involvement. Volunteering with your local CFA Society can help mitigate this gap while also enhancing your relationships with industry professionals and your knowledge of the investment industry. Society activities can range from organizing stock pitch events to coordinating speaker series. Many of these same kinds of events also take place at top MBA programs, making these engagements excellent preparation for business school. Admissions committees want candidates who will be involved on campus and are serious about their careers, and dedication shown in the form of service to a professional organization is a great way to make this case.
Because they have been able to monitor the progress and accomplishments of students who were accepted without a standardized test during the COVID-19 pandemic, some leading schools are continuing to offer test waivers. Having your CFA charter or perhaps simply having passed one or more levels of the exam might allow you to apply to top MBA programs (MIT Sloan, Berkeley Haas, UVA Darden, Michigan Ross, and UNC Kenan-Flagler to name a few) without having to take the GMAT or the GRE.
Earning your CFA charter before you apply to business school is not crucial. Simply having made progress toward obtaining your charter is a strong indicator of your desire to pursue a career in the investment industry.