The CFA Conundrum

12/7/11
The CFA Conundrum
Does CFA with MBA in Finance add value? - Inside IIM
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The CFA Conundrum Finance add value?

The CFA Conundrum
Does CFA with MBA in
Posted under Academics on Friday, 11 November 2011 by Meet Kachhy

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So, if you are doing an MBA in Finance from a top B-School, should you really invest in a CFA? I am sure this question has popped up in many a mind in various forms. Let us try to answer this in as simple a way as it can be.
Does CFA add value if ou are doing MBA Finance?
Yes, and No. Let me explain.
If you pay attention in all your finance classes, and get all your concepts cleared in the major courses (accounting, financial management, security analysis, derivatives, portfolio management, fixed income, risk), then there is very little that a CFA can add to you content wise, from the aspect of what the recruiters need you to know. I know many friends who sailed through B-School with good finance roles/knowledge without ever touching CFA books. Also, remember that most finance jobs need only a sound knowledge of the basics and a good thought process.
What it does add is more knowledge of things such as Private Equity, VC, Pension accounting and so on. Are these areas really useful for placement interviews not really. It does add to your knowledge though, and if leveraged the right way, might help you get an edge in your interviews. But most interviews never go to these depths, and so the utility from this aspect is limited to zero.
So how is it useful? It is useful from a shortlist perspective as most of us come into B-Schools with zero to very few finance CV Points . Here, it helps differentiate your CV as it is a far more powerful point compared to NCFM/winning a stock trading game/etc. Particularly in a country where 90% of the students are engineers with no prior grounding/experience of finance.
Level 1/2 cleared candidates do get an advantage in summers and the same holds true for Levels 2/3 in final placements. It is just a way of showing the seriousness of your fin interest to the recruiter. It shows you were interested to read 6 additional books and also splurge some serious cash! On the flip side, it also ensures that you have more to revise before your interviews, since when you claim to have cleared a certain level of the CFA program, you better know at least the major portions of that level pretty well. But increasingly, it is becoming a hygiene factor in many schools, and since the exam calls for more of diligence than brilliance, I expect this ratio to shoot up in the coming days especially in schools which are not renowned for great finance placements. A fa a he impac / ef lne of he CFA i conce ned . . . he a io finance-domain ole , i i a mi ed bag. Fo ole ch a Co po a e Finance, Con me Banking, Co po a e Banking and P ojec Finance, he CFA ma no be
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The CFA Conundrum
reall relevant. Compared to these, in the fields of Equit Research and Asset Management, a CFA will be a definite plus (both from a profile and a knowledge perspective). Relevance to PE is reall a subjective call, since often specific domain knowledge might also be sought after. Investment Banking is again more a client-interaction role, and while the CFA might be a good add from a CV perspective, it ma not reall matter for da to da work. Can ou manage the CFA workload along with the course load?
I would think so. If you make the decision in time, and plan out your study, it should not be too difficult. Since the first opportunity for Level 1 is six months after you join school, your accounting and finance basics are already in place by then. For Levels 2/3, you can study in your summers. Yes, it might stretch you at times, but (a) it is far easier to get done with these exams when you are studying than while you are working, (b) if you clear them, you do stand to gain some of the benefits highlighted earlier.
How easy or difficult it is to manage is down to the individual. If you are someone who relies more on hard work than sheer brilliance, then you might want to start a little early (around Oct for the Dec Level 1, and around March/April for the June Levels 2/3), and stick to a plan. I say this because revising 6 books for a 3 hour exam (the second exam is essentially a repeat of the first one with different questions) can be quite painful and revision itself can consume a couple of weeks sometimes. If you are more of brilliant child, then you really don t need much advice!
-Meet Kachh The a ho i an al mn of XLRI School of B ine & H man Re o ce (Ba ch of 2011). C en l o king a a financial Anal a Goldman Sach A e Managemen (In e men Managemen Di i ion), he ha in e ned i h A i Bank. P io o hi MBA, Mee o ked fo almo h ee ea i h J. Ra McDe mo ME D bai (an off ho e EPC con ac o in he O&G b ine ), af e comple ing hi BE (Hon .) f om BITS Pilani (D bai) in 2006. He ha clea ed all he h ee le el of he CFA p og am.
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Tagged with: XLRI Jamshedpur Comments (4)

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The CFA Conundrum
Ankit | November 11th, 2011 at 10:35 am Great article. But I think CFA helps a lot even in Investment banking. I was in the US for training and a lot of people in senior positions were asked if CFA helps and the overall gist was that it does. Most people join as analysts at the start even in front end investment banking roles and its not client facing for quite sometime. People who have done a CFA/CA definitely have a great head start when analyzing balance sheets of companies for valuation purposes. But I do agree that corporate banking has not too much to do with a CFA coz thats what I do and no one in my team has even appeared for level 1. Pankil | November 11th, 2011 at 11:50 am Hi If you do your cfa, do you need an MBA then?
Ankit | November 11th, 2011 at 12:59 pm @Pankil Front end jobs are hard to come even if you are a CFA in India/cleared level II CFA unless you have a top tier management degree. Over the years, due to lack of enough number of quality finance jobs competition is fierce. Also, there is an exclusivity mindset which makes people from top tier institutes to only let people from their own institutes get those jobs. Things should change as more and more jobs become available in India.
Karan | November 14th, 2011 at 9:06 pm I know people who get absorbed in good banks in certain posts after clearing an L2. But for good progress along the way, an MBA is probably important.
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