CFA Vs MBA: How CFA Will Help Your MBA Application

While the CFA and MBA are often cast as rivals, they offer different things. In fact, being a CFA-holder makes you more attractive when applying to business schools

The CFA (Chartered Financial Analyst) qualification is often billed as a rival to the MBA degree, since its low pass rates and the sheer complexity of the syllabus give it premium status in the investment world.

Yet CFA designation (passing all three levels of the CFA exams) can make someone more attractive as an MBA applicant.

CFA vs GMAT?

According to Imran Kanga, admissions director at Toronto’s Rotman School of Management, CFA holders demonstrate that they can manage the academic rigour of the MBA, that their quantitative skills are strong, and they are highly employable in finance.

A Rotman MBA applicant who passed CFA Levels I, II and III can bypass the Graduate Management Admission Test (GMAT), the widely used business school admissions exam that requires much swotting.

“There is an admission advantage for CFA charter holders,” says Imran, explaining that the charter proves strong quant and finance skills, negating the...

or the GMAT.

The CFA exams test candidates’ knowledge of economics, financial reporting, investment, fintech and ethics. The GMAT measures abilities in analysis, synthesis and evaluation, including quant problems, and is usually a core element of any MBA application, along with essays, recommendation letters, and undergraduate GPAs.

Both tests require significant preparation—the three rounds of CFA exams equates to more than 300 hours of study. The difficulty means that most CFA candidates are likely to fail at each level, historical data suggest.

“The failure rate for each stage of the exam can be around the 50% mark: this is not just a rubber stamp,” explains David White, founding partner of MBA admissions firm Menlo Coaching.

However, he does not think CFA can meaningfully substitute for a good GMAT score or GPA for business schools, since average GMAT scores are used as a measure in MBA rankings, like the one produced by US News, while the CFA is not.

Check out: CFA Vs MBA? Here’s Why You Should Do Both

Benefits of the CFA for MBA candidates

There’s no doubt the difficulty of CFA exams, which require commitment, hard work and resiliency signals that an applicant can succeed in an MBA—an enormous intellectual and time management challenge itself.

Therefore, CFA adds great value to an MBA application, says David Simpson, admissions director for the MBA at London Business School. “Having qualified at any level is very positive,” he says. “The commitment to complete all levels shows great drive and ability.”

The CFA is also an indicator of potential success in finance courses, as the material will overlap with the MBA syllabus to some extent, David says. However, MBAs are thought to be more hands-on than the CFA exams, with more practical application of knowledge.

“Someone who has the CFA may have the fundamental or theoretical knowledge, but they need to learn to apply that to solving real business cases, so there is still a lot to learn through the MBA program,” says Rotman’s Imran.

Nevertheless, the CFA is highly prized in finance, especially on the buy-side at investment firms. Many charter holders have strong work experience in global financial institutions such as JPMorgan and UBS.

“Working for a top employer, such as a mega-cap private equity firm, is a reliable signal of an MBA applicant's quality, regardless of whether they hold a CFA certification,” says David, the admissions consultant.

“Showing that you are going to be an appealing job candidate to employers is definitely part of making a successful MBA application.”

Ultimately, business schools take a holistic approach to MBA admissions, evaluating not just work experience, but intelligence and capability, leadership potential and interpersonal communication skills too.

The CFA helps with MBA admission, but it’s not enough on its own.