CFA® vs. MS in Financial Analysis: Everything You Need To Decide
Both the CFA Program and an MS in Financial Analysis provide deep specialty knowledge in investment analysis and management. The MBA, on the other hand, typically offers broad exposure to business topics required to manage companies. If you are interested in starting a career as an investment analyst or manager, you will need specialty knowledge such as that provided by the CFA and/or MS in Financial Analysis programs.
“The most frequent question I would hear when I was on the leadership teams of the CFA Institute and AACSB was, “Should I get a CFA or MBA if I want to be an investment manager?” My answer was always that it depends and that the decision is a little more complex. Another viable option that has become very popular in the past decade is a specialized Master’s in Finance, such as an MS in Financial Analysis (MSFA).” - Tom Robinson, PhD, CFA, CAIA, CFA
TABLE OF CONTENTS
- CFA Charter Overview
- MS in Financial Analysis Overview
- CFA vs. MSFA
- Should You Do Both the CFA and an MSFA?
CFA Charter Overview
The Chartered Financial Analyst (CFA) program is a professional certification program for those working in or interested in working in the investment industry. Most holders of the CFA designation work as financial analysts or portfolio managers. The core topics covered by the CFA Program are:
- Ethical and Professional Standards
- Quantitative Methods
- Financial Reporting and Analysis
- Corporate Finance
- Equity Investments
- Fixed Income
- Alternative Investments
- Portfolio Management and Wealth Planning
The CFA program is designed to be self-study with a digital curriculum and a series of three examinations (Level I, Level II, and Level III). There are no faculty or instructors in the CFA program. However, many candidates seek to take additional classes, either graduate classes or CFA exam prep classes, to help them prepare for the exams rather than study on their own.
The level I examination focuses on investment tools such as ethics, quantitative methods, economics, financial reporting and analysis, and corporate finance. This level is primarily testing knowledge and comprehension. The level II examination focuses on asset valuation and your ability to apply knowledge and analyze securities. The level III examination focuses primarily on portfolio management and your ability to synthesize knowledge, evaluate investments, and build appropriate investment portfolios for individual or institutional clients.
Requirements to Enter the CFA Program
Because the CFA is a certification program rather than a degree program, the requirements to enter the program are fairly basic. The screening of CFA charter candidates occurs throughout the 3-4 years of examinations rather than in the entry requirements.
The requirements to enter the CFA Program are as follows:
- You must have completed a bachelor’s program or equivalent from a college or university.
- OR be an undergraduate bachelor’s program student with two years before graduation (you must complete the bachelor’s program before you are permitted to sit for the Level II examination).
- OR have a combination of 4,000 hours of paid work experience and/or higher education. This must have been acquired over a minimum of three sequential years. The work experience does not need to be in investments to begin the program, but relevant work experience will be required to be able to use the CFA designation.
You must also have a valid international passport (the only acceptable form of identification for CFA candidates), be willing to take the examinations in English, attest to having no professional conduct issues (ethical breaches), and live in a participating country (all but four countries/territories globally).
Requirements to Earn the CFA Charter
Once enrolled in the program, there are specific requirements to earn the CFA charter. You must complete each level in order. You must pass the Level I examination before progressing to Level II and must pass Level II before progressing to Level III. To use the CFA® designation after your name you must pass all three levels, have the required number of years of relevant experience, adhere to the Code of Ethics and Standards of Professional Conduct of CFA Institute and become and remain a member of CFA Institute.
CFA exam pass rates for each level vary Since you must pass them in order, the cumulative pass rate is less than 10% if you did not retake any exams. Many people who fail a particular level choose to try again, so about 20% of those who start the program complete all three levels and earn the CFA designation. On average, this takes over 1,000 hours of study and about 3-4 years.
The work experience required to use the CFA designation is at least four years of full-time work experience, where at least 50% of the work involves the investment decision-making process.
Benefits of Becoming a CFA Charterholder
There are several benefits of becoming a CFA Charterholder. The student gains in-depth, specialized knowledge, skills, and abilities in financial analysis and investment management. Other benefits of earning the CFA include:
- The CFA designation is recognized globally.
- Some hiring announcements for investment positions say “prefer CFA” or “CFA required.”
- You become a member of a global organization and can optionally join a local CFA Society for networking and further learning opportunities.
- CFA Institute and local CFA Societies Compensation surveys have found that CFA Charterholders have higher median compensation than non-CFA Charterholders.
MS in Financial Analysis Overview
A Master of Science (MS) in Finance, a Master of Science (MS) in Financial Analysis, and other similar specialized programs, are graduate degree programs offered by colleges and universities. Typically, an MS in Financial Analysis program provides advanced study in financial analysis and investment management, preparing students for careers as financial analysts or portfolio managers. These programs typically include ten graduate courses (30 graduate semester hours).
The Master of Science in Financial Analysis (MSFA) program at the College for Financial Planning®—a Kaplan Company is an online format program. In this program students will learn:
- Economic analysis utilized in investment decision making
- Financial statement analysis
- Quantitative methods and analysis beneficial to financial analysis
- The investment environment, including financial markets, institutions, and the investing process
- Corporate finance
- Security analysis and valuation
- Alternative investments, derivatives, and risk management
- Advanced portfolio management
- Professional standards and ethics in the investments industry
These topics are covered in the MSFA program’s ten required courses:
- FINA515 – The Financial System, Markets and Instruments
- FINA525 – Quantitative Methods
- ECON535 – Economics for Financial Analysis
- ACCT545 – Financial Statement Analysis
- ACCT550 – Advanced Financial Statement Analysis
- FINA565 – Security Analysis and Valuation
- FINA575 – Corporate Finance
- FINA585 – Derivatives and Alternative Investments
- FINA595 – Portfolio Management
- FINA650 – Financial Analysis Capstone
Each course is led by highly qualified faculty who support the students throughout the course. The College for Financial Planning’s MSFA program can be completed in under two years on a part-time basis. The courses include ample opportunities for experiential learning with weekly discussion questions and frequent case studies. The first nine courses provide in-depth content in specific areas of knowledge needed to practice financial analysis and investment management.
The Financial Analysis Capstone course brings all of this together in a project-based format where you apply the knowledge, skills, and abilities acquired in the first nine courses to solve real life cases. You’ll perform economic and industry analysis, analyze companies, value companies, and make an investment recommendation. This course also covers the ethical issues involved in all these areas using the CFA Institute’s Code of Ethics and Standards of Professional Conduct.
Requirements to Earn an MS in Financial Analysis
Selectivity in a graduate degree program occurs at the entry level when you apply for the program and within each of the ten courses. To be accepted into the MSFA program at the College for Financial Planning, you must meet one of the following requirements:
- Have a bachelor’s degree in any major from an institution accredited by one of six accrediting agencies such as the Higher Learning Commission with a grade point average (GPA) of 3.00 or higher.
- Have a bachelor’s degree in accounting, economics, engineering, finance, mathematics, or statistics from an accredited institution with a GPA of 2.5 or higher.
- Have a graduate degree in major from an accredited institution.
- Have a bachelor’s degree in any major from an accredited institution and a GRE or GMAT score at or above the 50th percentile
Additionally, if your native language is not English, you must demonstrate English language proficiency with a minimum score of 85 on the TOEFL exam.
Once admitted to the program, you must complete all ten courses to earn the degree with a grade in each of “C” or higher. Some courses require other courses in the program as prerequisites, with the Financial Analysis Capstone being the final class. Students who have previously completed graduate-level coursework elsewhere may be able to apply some of those credits to the MSFA program.
Benefits of Earning an MS in Financial Analysis
There are several benefits to a graduate degree program such as the MSFA:
- The student gains in-depth, specialized knowledge, skills, and abilities in financial analysis and investment management.
- Graduate degrees from accredited institutions are recognized by employers and other educational institutions.
- Some hiring/job position posting for investment positions require a graduate degree.
- Compensation studies show higher median earnings for graduate degrees relative to undergraduate degrees.
- Once you have earned a degree, it is yours to keep. It does not need to be renewed each year through continued future membership and/or dues payments.
- Interactive classes provide networking with students with similar interests.
CFA Charter vs. MS in Financial Analysis: How They Compare
Both the CFA designation and an MS in Financial Analysis provide in-depth specialist knowledge in financial analysis and investment management. Which one is right for you, or should you consider both? Here’s what you need to know about the CFA vs. MSFA.
CFA vs. MSFA: Program Costs
The cost of the CFA Program can vary depending on how many times you take each exam, when you enroll and which CFA prep courses you use. Including CFA prep, you’re looking at a range of 6,000 - $10,000 for passing all three exams. Passing the examinations does not confer the CFA charter. You must become and remain a member of the CFA Institute.
CFA Institute also has annual dues to remain a member. If you live in an area with a local CFA society, you may have additional local society dues.
Another potential cost is continuing education. CFA Institute recommends – but does not require – 20 hours of continuing education per year, some of which is provided by CFA Institute and local societies (some free and some for a fee).
For the MSFA Program at the College for Financial Planning, the following costs are incurred by a typical learner:
|Initial Application Fee||$35|
|Tuition of $1,725 per course||$17,250|
|Books & Materials estimated at $150 per course||$1,500|
|Total Expected Fees||$18,785|
There are no ongoing costs after graduation. Once you earn a degree, it is yours to keep with no required membership dues or continuing education fees.
CFA vs. MSFA: Program Durations
The CFA examinations are now offered more frequently than in the past, and it is possible to pass all three exams in as little as 18 months. The average time reported by CFA Institute, however, is four years. Each exam requires about 300 hours of study, and if you retake at least one exam, you should expect to invest about 1,200 hours over three to four years to complete your exams. If you do not have the required four years of work experience, it may take longer to be able to use the CFA designation after your name.
The MSFA program is offered in five eight-week terms each year. If you take one course each term, it would take just under two years to complete the program. Typical study time for graduate courses varies by both course and the individual and is likely to be 10 to 20 hours per week in an eight-week term. Assuming a 15-hour per week average this, for ten courses, you are looking at approximately 1,200 hours of study, about the same as the CFA program. The degree would be conferred upon successful completion of the ten required courses.
Is the CFA Equivalent to a Master’s Degree?
Since both the CFA Program and an MSFA require an undergraduate degree in most cases and require about the same total amount of study, the CFA is generally considered to be equivalent to a master’s degree. The CFA Institute has had independent benchmarking performed and finds the CFA designation is comparable to a master’s degree in the US, UK, Canada, Brazil, India, Singapore, Australia, Japan, China, South Africa, and France.
CFA vs. MSFA: Career Prospects
Career prospects are strong for both the CFA Designation and MSFA degree holders. According to the U.S. Bureau of Labor Statistics:
- The 2021 median pay of Financial Analysts was $81,410 per year with at least a Bachelor’s degree. The growth in the number of financial analyst jobs from 2020 to 2030 is expected to be about 6%.
- The 2021 median pay for Personal Financial Advisors was $94,170 per year, with about 5% growth in the number of jobs through 2030.
- The 2021 median pay for Financial Managers was $131,710 per year, with 17% expected growth through 2030. According to the BLS definition, “Financial managers create financial reports, direct investment activities, and develop plans for the long-term financial goals of their organization.”
The CFA Institute periodically performs salary surveys of members as well as other reports on the investment industry. Recent reports found:
- The average base salary for CFA Charterholders serving as portfolio managers was $126,000 with total compensation of $177,000 (USD). Note this is not a starting salary but an average over members surveyed (2019 Compensation Survey).
- 55% of investment leaders expect globalization to offer new opportunities for investment professionals (2017 Future State of Investment Profession study).
According to the Graduate Management Admission Council 2022 Corporate Recruiter Survey:
- 61% of corporate recruiters viewed candidates with a graduate business degree as more competitive than learners with micro-credentials (short education courses). Only 7% favored micro-credentials.
- 63% of recruiters globally expect an increase in the demand for business school talent in the next five years, and 35% expect demand to be stable.
- 84% of global corporate recruiters plan to hire Master of Finance Students in 2022 (up from 73% the prior year). The highest demand is in Asia and the Middle East. In the U.S., 55% expect to hire Master of Finance graduates versus 50% the prior year.
Is the CFA or a Master's in Financial Analysis Better?
This is a personal choice that depends on your circumstances and preferences. Some factors to consider are your desired career. First, look at career position announcements for the career (and geography) you would like to have and see what they require – CFA or graduate degree. Some general considerations:
- If you are primarily interested in managing wealth for individuals, you should give serious consideration to the credentials most recognized by individuals. These are the Certified Financial Planner (CFP®)or CFA (with the CFP the most recognized).
- If you are primarily interested in managing wealth for institutions or in an institution such as a mutual fund, then the CFA and/or a Master’s are the most recognized.
- If you are primarily interested in working for a company as a financial analyst, financial manager or in a similar role then a Masters is a good choice. Some companies may also consider a CFA or CPA for these roles.
Also consider your investment in time and dollars. When would you like to complete the program, and which program best matches your goals and how much are you willing to spend?
If you are currently employed, you should look at which types of programs your company supports. Will they support you in a degree program and/or a certification program? Does one or the other lead to promotion?
Should You Do Both the CFA and an MSFA?
This is worthy of consideration. The CFA Program is designed to be a self-study, distance learning program. There is no requirement to pursue a specific degree program or take specific courses. However, many people who pursue the CFA take prep courses or degree program courses so that they have support and instruction along the way. These programs provide the ability to engage with well-qualified faculty, a study plan, and curriculum to help you prepare. Additionally, they allow you to double-dip – to earn a degree at the same time you are earning a professional designation.
Does a Master's in Financial Analysis Help with CFA?
Yes, a Master’s in Financial Analysis can help with earning the CFA charter. This is especially true if the master’s curriculum is mapped closely to the CFA Program, such as the one described above for the MSFA at the College for Financial Planning.
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