Trading Tips

Which to Choose: CFA or MBA

I got a question via a comment to my Trading Jobs – Making the Transition from a Non-Trading Job post which I thought presents a good follow on to my recent Picking a Good Business School post.

What is your opinion on the CFA program? Is it any good?
Will it help land a job in trading or money management (hedge fund)?

The CFA is the Chartered Financial Analyst designation. It is comparable to a CPA in terms of it being a test based certification. There are three testing levels which must be passed to become a CFA. You can learn more about it at

The CFA is primarily a professional money management (think mutual fund or pension fund) type of designation. I took the first level of the exam right out of undergraduate. It’s pretty intense and covers a number of different subjects. I opted not to carry on in pursuit of the certification, however, because I really had no plan on getting into money management.

These days, the CFA and MBA are virtually interchangable. In most job postings which list a CFA requirement you will find “or MBA”. There are a few exceptions, but the either/or is something I’ve seen in most listings.

That being the case, my general view is that an MBA will serve you better than a CFA. This is a simple case of it being a wider certification, applicable in many more areas than a CFA. Considering that most people change careers multiple times in their life these days, the MBA offers more job flexibility than does the CFA. There’s also the networking that you do through the grad school process which the CFA cannot really match.

If you’re thinking in terms of trading, neither one is going to help you much more than to provide high level background and theory. They are not practical trading programs.

That’s my two cents anyway.

Trading Tips

Picking a Good Business School

The question of business schools (meaning MBA programs) comes up on a fairly regular basis on the trading forums. Colleges tend to see an upswing in applications during weak economic periods like this one, as people look to both improve their credentials and ride out a poor job environment. No doubt there are loads of people pondering that very thing right now.

Of course the question among traders tends to be whether an MBA does anything for them in terms of trading and going after professional trading jobs, and secondarily which schools are best.

Will an MBA Help Me?
To address the first part of the question, there are a lot of variables involved. It used to be that to get a professional trading or markets position you had to come through the training program of one of the big banks (read Liar’s Poker). In order to get into those programs you had to be recruited out of college or from an MBA program, though some were able to get in there from the back office side of the bank. That meant you needed to come out of a top program – one which had good placement ties with those Wall Street firms.

Things have changed some in recent years, though. The old training programs aren’t what they used to be and there are fewer of those big firms doing the recruiting. The financial industry has splintered with the development of new trading operations like hedge funds. That’s changed the way recruitment is going for students nowadays. An MBA, however, is still considered a mandatory (or at least strongly preferred), but these aren’t the go-go years of the past.

I personally have an MBA from the University of Maryland with a concentration in Finance. My undergraduate degree was also in finance. I can honestly say that little of what I was taught plays a part in my day-to-day duties or my trading. That isn’t to say the theoretical education hasn’t been of value. One just needs to realize that you aren’t going to learn how to trade or be a professional market analyst in a college or university business school program. They are intended to prepare students for the job market by giving them a knowledge base, not a specialty.

Which Business School Should I Pick?
Your test scores and other qualifications are going to go a long way toward determining what schools will be on your short list. Putting that aside and focusing on what’s going to happen coming out of the program you choose, however, I can offer a couple of suggestions.

First of all, do you know where you want to end up geographically? If so, you should look at the schools that are strong in that region. For example, Harvard and Wharton are big name schools that place people all over the world. If, however, you know that you want to end up in Southern California you will want to look very seriously at schools like UCLA because they have a wider, deeper set of connections and alumni base in the region. That increases not only immediate job prospects, but also future prospects through networking.

Secondly, look to see if the school does a good job placing students at the companies you want to target. Some schools are going to be better than others with certain firms because of different connections and associations. That, of course, means you have to do your homework on your prospective future employers.

High Profile Doesn’t Necessarily Mean High Value
My last bit of advice is that you shouldn’t just go with the biggest name school you can get into. Consider the value proposition. The name on your degree will tend to mean less the further you get away from graduation and into your profession. Think about how much you are going to have to spend for that piece of paper. If you look to the business school rankings you can start to see what the different programs offer you, and which represent the best value. That’s how I ended up at Maryland – by finding it listed just outside the top 25 and noted as one of the best values.