The Beginners Guide to Select Your Career MBA or CFA or FRM
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In this e-book, I will be covering about what choice one has when s/he would like to move to or excel in the finance field. In this e-book I have taken my own example where I have described that after working in sales and marketing, which is totally different domain than Finance, how I shifted my career to Finance. This e-book talks about what additional education after college one should go for to improve his/her credentials. Should it be MBA or any financial certification(s) like CFA, FRM, and PRM? In this e-book, I will tell you why I chose CFA over MBA and other financial certifications available in the financial world. After completing my engineering from one of the top institutes of India, I started working in sales and marketing of a big Automotive Manufacturing company of Japan. You can access my profile at: http://www.linkedin.com/in/rupindermonga. I got introduced to finance during my school where I did some optional credits in finance. My main purpose of doing those two introductory courses was to just expand my purview but who knew that this will change my whole career path. I was happy in my sales and marketing profile, decent salary, diverse and challenging role but I was not content. I wanted to shift as I felt finance field is more analytical, and logical. Working in finance means getting a high-paying job in banks and financial institutions. Finally, one day after two years of working in sales and marketing, I decided that I will change my line to finance. But this was a huge career risk, so I wanted to be a bit careful. MBA v/s Financial Certification (CFA/FRM/PRM) I decided first to research about how to switch my career to finance. I found out that in today s world of fierce competition, getting additional education after college has become a prerequisite. Especially in my case when I not only want to excel in finance but first switch my career to finance. My research criteria was simple, I did not want to spend too much as shifting career domain itself was a huge risk and also I wanted to know what will be my takeaway (knowledge wise) with which extra credential. While researching I discovered that for those considering a career in Finance, the question is whether to obtain Masters of Business Administration or The CFA Institute s Chartered Financial Analyst designation or GARP s Financial Risk Manager designation or PRMIA s Professional Risk Manager designation. All these additional credentials have their benefits but considering the expense of MBA and difficulty of attaining other designations, make the decision difficult. Many financial firms used to pay to send some of their best and brightest to business schools before the advent of the certifications like CFA, FRM, and PRM. These professionals came back with a much better general business skill, but not necessarily the skills needed for high-level, specialized asset-management responsibilities, such as portfolio management, risk management.these specialized skills were usually obtained on the job as professionals worked their way up through the ranks. Financial firms still send their candidates for MBA but in a much lesser way then they used to.
The first thing I did was to research about what I will study in an MBA and in different certifications. I found out that an MBA can vary significantly in content, rigor and reputation, as compared to standard financial certifications (FRM/PRM/CFA). These certifications are conferred by GARP, PRMIA and the CFA Institute respectively, which are professional associations and voice of the asset management & research field. These organisations create, administer and test a curriculum that strives for perpetual relevance in a constantly changing complex world. The curriculum is designed keeping in mind global relevance and competitiveness. The Charter costs less than US$3,000, not unreasonable when compared to an MBA that can foot to in excess of $50,000 which is a great disadvantage of the program. On the other hand, earning the CFA/FRM/PRM is a gruelling process. You can understand the kind of devotion; sacrifice and commitment required for the different designations that approximately one in five entrants into the program see it through completion. I thought to myself that before I think that it s worthwhile to begin the process, I should better check my preconceived ideas at the door and make sure my dream is not just a passing fancy. It is my advice to all that before anyone commit, consider what it takes to earn the charter, how it will benefit you and your career, the negatives of going through the process and whether the pros outweigh the cons. As every MBA has a different curriculum, I found out that the importance of certifications is increasing as the B-schools begin to incorporate CFA course work into their class offerings. According to the CFA Institute, in April of 2006 the CFA Institute began a partnering program with 41 graduate institutions worldwide to provide some level (at least 70%) of CFA course work as part of the MBA curriculum. The result of my research was that the skills obtained during an MBA in a business school are better suited for employees in more general disciplines, such as marketing or general management. The advantage of an MBA is that it is valuable in other industries. The designations (CFA/PRM/FRM) are devised to provide charter holders with specialized skills, such as investment analysis, portfolio strategy, risk management and asset allocation. One way to explain the differences in the programs is to say that the MBA program is a mile wide and a foot deep, while the designations are a foot wide and a mile deep. I told myself if I go for an MBA, I will have good business skills but people in business don t know how much effort I have put and what curriculum I have followed. But if I go for a designation (CFA/FRM/PRM), people in the business know the time and dedication it takes to earn the charter. Once I get it, people will likely believe in my ability, dedication, ethical grounding and analytical skills but don t know about business skills which at the same time are important. So, I could say that MBA and certifications are not complementary but supplementary. Because of this reason, these days I saw that few opt for both (MBA and one of the certification). The proof of the above statement can be easily seen on LinkedIn or Job sites, following are few examples:
Now in the above profile, along with MBA, the person has gone for financial Certifications too. Following is the detailed profile:
The person above is working at a senior position at XXX.And if you notice, he is already FRM and pursuing CFA. One can see that being an MBA and also being on senior position can t be detterant to financial certifications. These certification only help one to climb the corporate ladder. Or I say it like this, if you go for financial certifications you will not climb the corporate ladder but will take the elevator instead.i further researched about different profiles and found out that I am correct in thinking that these days many professionals are going for both MBA and certification(s). Following is just another example to support my point: Now, this one is already an MBA and FRM, also going for CFA. After seeing these kinds of profiles, I got firm belief that MBA and Financial certifications are not complimentary but supplementary. But looking at my pocket and the fact that I want to shift to finance, at first I decided to go for certification rather than MBA. But MBA is still on cards. CFA v/s FRM/PRM But there was still a big question in front of me; the question was which certification I should go for. Which certification will give me an easy switch from Sales and Marketing to Finance? So, I decided to research about 3 major certifications available in the financial world and which are considered gold standards in their respective areas. Yes, I was targeting CFA, FRM and PRM. Now CFA is most powerful for portfolio management, it s also helpful for equity research. Though it is not required for hedge funds, but it is certainly helpful for some hedge funds. My further research helped me finding out that among CFA or FRM/PRM, CFA is broader but less useful for specific fields. FRM and PRM are both Risk management certifications and both of these are similar. FRM/PRM is like a pencil sharpener, it makes you sharper but also more narrow. CFA teaches you inside-out of finance, and FRM teaches about risk management. Coming to choosing between CFA and FRM/PRM, I got to know that if I wanted a more holistic designation in finance then I should opt for CFA. The CFA certification does not restrict the domain to any niche in finance and for students like me who are not sure of their preference in finance should opt for CFA. CFA will teach me corporate finance, portfolio management etc. hence the scope is broader. If I am sure that I want to pursue risk management i.e. any profile in a bank or credit rating agency. The profiles can range from credit risk, relationship management, treasury or any profile related to risk management then I should opt for FRM/PRM as it is more direct and relevant to the niche of risk
management in finance. People at very senior positions are also going for designations as it helps in moving up the ladder. These days management do require extra edge in case someone wants to move up. This statement I confirmed by searching for profiles who are at senior positions and also have some certification. Following are few profiles of senior professionals: As discussed earlier, even if someone is already in finance/investment banking and at a senior position, one must go for certification(s) as it will give boost in the career speed. One of my friend, Christos who is already into Investment banking told me that many people are opting for multiple certifications depending on the requirement as each certification has its own benefits. So, he sent me few following links who have multiple certifications:
After looking at these examples, I decided that I should go for multiple certifications. But from where to start? As I told you earlier that I am not sure of my preference in finance as I want to switch my career to finance, I decided to opt for CFA. As CFA covers almost all topics of the field of finance and after appearing for CFA level 1, I will get to know which field I should target in finance as my career path and the most important decision that Finance is my cup of tea or not. So, after I appeared and cleared CFA level 1 while I am still in Sales and marketing, I got to know that yes quantitative finance is for me and not economics or Accounting. So, I targeted companies, banks with only one purpose to enter quantitative field. I got a job in one of the London s top I-bank and right now I am working in risk management. As soon as I got my preferences right, I got FRM certification. So, my advice to all of you is in case you know what you want to do in your career you can target specific certification(s) but in case you have no idea like me, go for CFA. At least go for CFA level 1 and you will get to know what your cup of tea is. Good Luck.
Summary To summarize, I will say each extra credential has its own benefits. You can see the details as following: MBA: I will recommend MBA to following professionals: 1. You want to improve your general business skills and you are in the field of IT, Marketing, Finance etc. 2. You are at a senior position at a Financial Firm (I-Banks, Mutual Funds etc.) and would like to move up the corporate ladder. 3. You already have financial certification(s) and you want to excel in managerial role Condition: You have the money and time to go for MBA. CFA: I will recommend CFA to following professionals: 1. You are new in the field of finance and don t know which field is good for you. CFA covers a wide range of finance related topics, it gives a good idea to the participant regarding the financial world and help decide for which field you are made for. 2. You are into Portfolio and Wealth Management, Equity Research, Financial Research, Investment decision-making and strategy, Institutional investing, Investment Analysis. And you would like to excel in your current role. CFA helps in proving that you have desired knowledge, capability and commitment required for a particular profile. 3. You are at a senior position at a Financial Firm (I-Banks, Mutual Funds etc.) and would like to move up the corporate ladder. Condition: You have the dedication and patience to clear the CFA exams FRM/PRM: I will recommend FRM to following professionals: 1. You are working in these industries but not limited to: I-Banks, Hedge Funds, Commercial Banks, Insurance Firms, Central Banks, Credit Agencies, Asset Management Firms, Government/Regulatory Agencies, Corporations (including non-financial corporations), Risk and technology vendors, and Consulting Firms. 2. You are at a senior position at a Firms (mentioned in the above point) and would like to move up the corporate ladder. 3. You want to shift to domain like trading, risk management, investments, insurance or any domain which have link to risk. Condition: You have the dedication and patience to clear the CFA exams One can go for more than one credentials depending on the requirement and dedication.
**Disclaimer Any views or opinions presented in this e-book are solely those of the author and do not necessarily represent those of the company. EduPristine is not responsible for, and expressly disclaims all liability for, damages of any kind arising out of use, reference to, or reliance on any information contained within this e- book. While the information contained within the e-book is updated, no guarantee is given that the information provided in this is correct, complete, and up-to-date. Examples used in this article are only examples. They should not be utilized in real-world as they are based only on very limited and dated open source information.