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[ZT] CPA vs CFA vs MBA

本文发表在 rolia.net 枫下论坛CPA vs CFA vs MBA

CPA, CFA or MBA?

It’s not a question of which one is better. It’s a question of which one is better for you. Traditionally, the CPA would lead to a career as a CFO; a CFA was on the path to become a portfolio manager; and a MBA would eventually become a corporate executive. This notion still holds today, however, achieving one of these certifications no way guarantees success.

Deciding which certification to pursue is usually made subconsciously. In our daily lives we read, talk and listen to friends, family and colleagues. Based on these interactions, we develop a superficial understanding on which certification to pursue. After much career and soul searching, I've come to realize that the most important question to ask before choosing a path is “what do I want to do?”

Do I want to be a CFO of a hedge fund?

Do I want to be a portfolio manager at a hedge fund?

Do I want to be a managing director at a private equity firm?

Do I want to be VP of business development at a corporation?

Now this might seem easy, but in reality it’s difficult. It’s difficult to verbalize why you want to pursue a particular career. My advice is follow the work, not the money. Regardless of the risks or the sunk costs, pursue your passion.

CPA
The Certified Public Accountant certification is a benchmark credential. It carries stature, significance and job security. In economic booms or busts, accountants are always needed. The more personable and diligent you are, the more success you will achieve.

Accounting is the basis of business. And being an expert in accounting gives you a unique business perspective that your other friends might not possess. However, the thing I have come to realize is that once you’re labeled an accountant, you may be an accountant the rest of your life. It’s incredibly difficult to make the switch into a different career path within the business world (when I say business world I mean hedge fund analyst, private equity associate, business development).

My opinion on the matter might be affected by the economic environment in which I recruiting. It is difficult to switch business careers in a bear market. Ultimately though, my conclusion is drawn from the countless interactions with professionals throughout my recruitment process. Every time I would talk with headhunters, recruiters, HR and interviewers, it would become apparent that they just wanted a two year analyst from an I-bank or consulting firm. My two years at PwC didn’t mean a thing to anybody. They would always tell me of a great job in the middle or back office and convince me that was the best role for me.

CFA
I am not a Chartered Financial Analyst charter holder. So I cannot express the opportunities that have or have not presented themselves as a result of the CFA. However, as a Level III candidate, no unique opportunities appeared. No special career doors opened. When I was recruiting, it was thought more of a differentiation than a value added credential. I am interested to know what the future holds if I successfully pass the third part, complete the work experience, and receive the designation.

MBA
After talking with many people and seeing it first hand, I am convinced the only sure way to change career paths and make it to the top echelon of finance, without a background in investment banking or strategy consulting, is to attend a top 10 MBA school. Of course, you can get great finance jobs through other methods (that’s what I’m hoping to do) but this way seems the most certain.

So if you want to work in private equity or at a hedge fund and are not an investment banker or strategy consultant, I highly recommend crushing the GMAT (above 700) and going to a top 10 MBA school.

I have merely outlined my insight based on experience, which I hope can help you better decide which certification path to follow. No path is a straight line or certain.

Let me know if there are topics you want me to discuss or elaborate on更多精彩文章及讨论,请光临枫下论坛 rolia.net
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Replies, comments and Discussions:

  • [转贴]citi credit risk面经
    本文发表在 rolia.net 枫下论坛上周拿到offer后来又拒掉了。谈点面经。

    人都很友好。印度老板,交谈不多。两个老印两个老中。两个老印很老实,而且不故意
    刁难。老中比较严格,但也不刁难。答出问题是最重要的,不是100%正确也没关系,态
    度最重要。

    记得的问题写一下啊。大部分都忘了。

    老印问了个编程题,找出树的深度。我只答了用recursive, 写了两行意思了一下,老
    印觉得很满意了,没有深究。不像bloomberg,非要你把整个code都写出来,少了个分
    号都不行。

    数学主要问到蒙特卡罗模拟,几个相关的随机变量,怎么生成这些随机数。volatility
    heston model解释一些arbitrage的问题。

    老中问了些编程和智力题,都不难。最后拿到offer,两个老中肯定起了很大作用。老
    印看起来也很满意。

    总结一下哈。

    1. 水平一定要过关。要不然别人想帮也帮不了你。回来抱怨说老中不帮你,我看是你
    自己的问题。在现在这种形势下,我想老中能帮是一定会帮的。
    2. 背景要和工作吻合才行。牵强附会的把简历和工作要求扯一块儿效果会很差。有实
    际的经验,对一个tricky的问题的讲解会比较独到。别人会更认同。
    3. 运气也很重要。老印一般喜欢刨根问底直到把你问倒,碰到这种,自认倒霉。你再
    复习都没用的。碰到比较好的,要抓住机会,因为这很难得。对老印,不要自夸和吹嘘。老印其实思想很中国化,很能看透你内心想的是什么。你如果吹嘘,老印一定会不依不饶把你问到原形毕露。你的面试就完蛋了。
    ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~``
    在街上混,编程是最基本的要求,尤其对中国人来讲。

    这就相当于一个call option, 跌的再低,你的身价不会低于一个程序员,起到了止损
    的作用。而如果涨的话,用到quant skills来增值, 你的上涨空间会很大。更多精彩文章及讨论,请光临枫下论坛 rolia.net
    • [转贴]high frequency trading shop面经
      纽约downtown的一家prop trading firm,300多人,有一个小team,做高频交易的。公
      司CEO提供strategies, blackbox models,greybox models。两个trader编程序交易,
      完全靠commission过活,无底薪。按照ceo的说法,the two guys may be the best
      paid programmers in the world. 一个老美,一个澳大利亚人。又按照ceo的说法,是
      全澳大利亚最聪明的人!!!比较搞笑。

      面试过程两轮,技术问题不多,包括多线程,并行计算,socket/TCPIP,不考具体语言
      。虽然他们用C++.

      主要是两轮考试,每次一小时,基本上是数论题,类似高中数学竞赛题的东西。

      说一个记得的吧。存在整数n, 使得(n+1)^2能被(n+7)整除。这个n最大可能是多少?

      读一段程序,写出输出结果。写出来是一个级数,看了一下是e^x的泰勒展开。

      其他有很复杂的题,不记得了。轻松搞定两轮考试之后,基本上就算成了。对方很兴奋
      ,然后演示了他们的data feed,和自动交易系统。一阵眼花缭乱之后啥也没看明白。
      恭维了几句,大家都很high。期间屏幕上highlight了一个交易SRS,我指出这是一个房
      地产ETF,对方有点吃惊。呵呵。

      最终工资谈不拢,没去。
      • Buick 兄好像对Quant Trade、Trading 的行业特别感兴趣,不知你考CFA之后有什么打算?
        • "考CFA之后有什么打算?" - Seriously, it is a good topic which worth our discussion. :)
          • I don't know yet. I go with CFA just for my interest. Now I am doing a PM job in an IT company, maybe I will go stufy ecomonics after I am tired with my job.
        • [ZT] CPA vs CFA vs MBA
          本文发表在 rolia.net 枫下论坛CPA vs CFA vs MBA

          CPA, CFA or MBA?

          It’s not a question of which one is better. It’s a question of which one is better for you. Traditionally, the CPA would lead to a career as a CFO; a CFA was on the path to become a portfolio manager; and a MBA would eventually become a corporate executive. This notion still holds today, however, achieving one of these certifications no way guarantees success.

          Deciding which certification to pursue is usually made subconsciously. In our daily lives we read, talk and listen to friends, family and colleagues. Based on these interactions, we develop a superficial understanding on which certification to pursue. After much career and soul searching, I've come to realize that the most important question to ask before choosing a path is “what do I want to do?”

          Do I want to be a CFO of a hedge fund?

          Do I want to be a portfolio manager at a hedge fund?

          Do I want to be a managing director at a private equity firm?

          Do I want to be VP of business development at a corporation?

          Now this might seem easy, but in reality it’s difficult. It’s difficult to verbalize why you want to pursue a particular career. My advice is follow the work, not the money. Regardless of the risks or the sunk costs, pursue your passion.

          CPA
          The Certified Public Accountant certification is a benchmark credential. It carries stature, significance and job security. In economic booms or busts, accountants are always needed. The more personable and diligent you are, the more success you will achieve.

          Accounting is the basis of business. And being an expert in accounting gives you a unique business perspective that your other friends might not possess. However, the thing I have come to realize is that once you’re labeled an accountant, you may be an accountant the rest of your life. It’s incredibly difficult to make the switch into a different career path within the business world (when I say business world I mean hedge fund analyst, private equity associate, business development).

          My opinion on the matter might be affected by the economic environment in which I recruiting. It is difficult to switch business careers in a bear market. Ultimately though, my conclusion is drawn from the countless interactions with professionals throughout my recruitment process. Every time I would talk with headhunters, recruiters, HR and interviewers, it would become apparent that they just wanted a two year analyst from an I-bank or consulting firm. My two years at PwC didn’t mean a thing to anybody. They would always tell me of a great job in the middle or back office and convince me that was the best role for me.

          CFA
          I am not a Chartered Financial Analyst charter holder. So I cannot express the opportunities that have or have not presented themselves as a result of the CFA. However, as a Level III candidate, no unique opportunities appeared. No special career doors opened. When I was recruiting, it was thought more of a differentiation than a value added credential. I am interested to know what the future holds if I successfully pass the third part, complete the work experience, and receive the designation.

          MBA
          After talking with many people and seeing it first hand, I am convinced the only sure way to change career paths and make it to the top echelon of finance, without a background in investment banking or strategy consulting, is to attend a top 10 MBA school. Of course, you can get great finance jobs through other methods (that’s what I’m hoping to do) but this way seems the most certain.

          So if you want to work in private equity or at a hedge fund and are not an investment banker or strategy consultant, I highly recommend crushing the GMAT (above 700) and going to a top 10 MBA school.

          I have merely outlined my insight based on experience, which I hope can help you better decide which certification path to follow. No path is a straight line or certain.

          Let me know if there are topics you want me to discuss or elaborate on更多精彩文章及讨论,请光临枫下论坛 rolia.net
          • My choice is still CFA.
            Good article. I am a risk taker all the way of my career. So I don't believe CPA fits my taste. MBA, I've tried and seems it is relatively valuable or not that valuable, purely depends on your personality, job nature and your desires or greedy of being success. But as a CFA, you can do whatever you want, and just to compete by using your own inteligence and dedication, you can be a good trader in a hedge fund, or just doing for yourself in your own basement.
            • I like your attitude
              the author of that post laid information out nicely. What s/he described in CFA section is particularly interesting - "However, as a Level III candidate, no unique opportunities appeared. No special career doors opened."

              BTW, you mentioned that being a CFA, you can be a good trader in a hedge fund. Well you don't need to be a CFA in order to be a good trader, also I doubt how much a CFA can help in term of becoming a trader.

              Additionally, I agreed with this guy on his/her comment below
              "It is difficult to switch business careers in a bear market. ...it would become apparent that they just wanted a two year analyst from an I-bank or consulting firm. My two years at PwC didn’t mean a thing to anybody. They would always tell me of a great job in the middle or back office and convince me that was the best role for me."
              • Yes you are right.
                CFA doesn't mean you can get money from trading.

                But for me, I just want to know what those 'Professional' thinking about FA, economics, and etc. before I can do better in trading analysis.

                CFA doesn't cover those sophisticated trading technics, but it tell you something about main concensus of those analysts. 孙子云“知己知彼,百战不殆"!

                But beyond above reson, CFA can really bring some value-added knowledge in a wide spectrum of accounting, FA, economics, policies and etc. It's a time saver for me. As I can learn much more in depth than a MBA program, which I tried before, the only thing I learnt from MBA is how to bull shit over the publics.
          • Very Nice writing. Could you please share who is the arthur?
            • PMed you his blog
              • 多谢。像俺这英语需要提高的,能找到读得懂的文章不容易。:)
          • [ZT] CFA versus FRM, Part 1: Job Markets
            本文发表在 rolia.net 枫下论坛A question from Walter:

            "Mr Harper, I've enjoyed reading your articles on the net. Your article on Contango and Backwardation cleared up something that confused me for some time. I was hoping I may ask your opinion regarding the FRM exam. Is it worth taking over and above the CFA exam? Does it cover a lot of additional material? Kind Regards -" Walter

            Walter, thanks for your question. (I'm glad you liked the contango/backwardation article. The difference between "normal backwardation" and "backwardation" is vexing. Here is a another way to look at it: because contango/backwardation refer simply to the slope of a forward curve, you can observe contango or backwardation. But since normal backwardation/contango refer to the relationship between a future price and the expected future spot price, you cannot observe normal contango/backwardation; whether it's true that normal backwardation or normal contango exists is a truth only revealed over time).
            CFA versus FRM

            I often get this question about the CFA versus the FRM. I don't have a great answer because:

            1. Individual goals vary (we want different things from our certifications),
            2. Job markets are diverse. The CFA is helpful if you want to work in equity research or, say, become a distressed debt analyst. The FRM would be more relevant to a risk manager (but the FRM, at the moment, is probably not a prerequisite for any job). For other Financial Services jobs (e.g., consulting, sales, management), these credentials are elements that complement your overall presentation. Like the MBA (which has suffered some commoditization), they don't buy you advancement per se, rather they enhance your portrait.
            3. It's getting harder to generalize about job markets, even accounting for their diversity. Almost across the board, there is a higher bar on technical skills (e.g., visual basic) or specialized knowledge (e.g., CPA, SOX)
            4. Please also note that under the financial certification umbrella, you have more and more choices. Each with their own focus. Just two examples. In alternative investments, we now have the Chartered Alternative Investment Analyst. In performance measurement and evaluation, the CFA Institute recently opened a Certificate in Investment Performance Measurement. Certification fragmentation, I suppose, follows naturally from the trend toward skills specialization.

            Why do we sit for these financial certification exams?

            Both exams make extraordinary demands on your extracurricular time. A professional analyst once told me he hadn't sat for the CFA because it would require "giving up my Spring and my Summer" (that would be, in the case of the CFA, three years or six sacrificed "seasons"). I think he is roughly accurate about both exams. According to the published guidance, the CFA Level I requires a "minimum of 250 hours hours of study."

            And while GARP does not, to my knowledge, provide formal timeline guidance for the FRM, I think the average FRM candidate probably needs at least 250 hours of study before the exam. Some can spend less time, but I bet among the majority who fail the FRM, their main regret is they underestimated the amount of preparation time required. But notice one difference already: the CFA is a minimum three year commitment (work experience aside) and the FRM is a one year commitment. Although the FRM is harder than any one CFA Level. I'd say it is about 150% - 175% more difficult than the Level I CFA.

            Why sit for these exams? I can think of two reasons:

            * To get a better job (or enjoy the prestige of a respected credential)
            * To learn (new material, refresh old material)

            Walter, if you don't mind, I will divide my answer into two posts. First, about the job market ("is it worth taking...?"). In a second, I'll dissect the exams themselves.
            Job market trends

            Broadly, I perceive the following general trends concerning job markets in financial services (my perspective is partially informed by Pablo Triana's expert overview in the September/October Risk Review):

            * Quant Finance occupies rarified air where the CFA/FRM won't really help you: Surely the headline in recent years is the soaring popularity and importance of Quantitative Finance, or if you like, Financial Engineering (the domain of the "Quants"). This will continue and I seriously doubt the recent subprime fallout, however bad, will put any dent on the demand for this talent. At the top of the skills pyramid, demand for quants will outpace supply for the foreseeable future. But the Quant Finance professional track is a specialized market; you need a Masters in Financial Engineering or a PhD to compete here. (I am not aware that either the CFA or the FRM even help, as much as I'd like to wish otherwise! I consulted for KMV years ago before they were acquired by Moody's and, those Quants were pretty typical in their disdain for anything less than a PhD. They viewed the CFA program as a sort of finance primer, maybe sort of like a nice extracurricular activity.)
            * But Basic Quant and General Finance (quantitative talent) are relevant everywhere and more important than ever: Below the speciality level of hard core Quantitative Finance, basic quantitative skills and general finance (e.g., CFA or FRM) are becoming more relevant to all finance jobs. Years ago, when I consulted to asset managers, a typical relationship manager was an old-school salesperson. One prominent advisor to major pension funds quipped to me, "Do you know who gets the pension fund business?...the guy who bought the last cocktail." But this has changed. As the business has gradually institutionalized, the jobs have become more professional (i.e., requiring threshold sets of competencies). Nowadays, the salesperson (relationship manage, account manager) is often financially sophisticated. Often he or she has an MBA or maybe even a CFA.
            * The bar has been raised. You now compete with talented hybrids. Students get credentials earlier. And experienced workers add credentials. Many are not satisfied to be mere experts (nobody wants to be an "expert in a silo" where they cannot understand how their expertise connects to the business), they want be facile across disciplines. And, if you think about it, leaders must bridge disciplines. You see more hybrid personalities: people who are expert in one domain and impressively exposed to additional domains. There seems to be everywhere a recognition that all key jobs are, to some degree or another, interdisciplinary. Nowadays, on the supply side, recent MBA graduates are often triple threats: the graduate degree, a "first degree" in a hard science (e.g., math, engineering), and off-path, valuable real-world experience (e.g., product manager).

            About the CFA

            The CFA was traditionally a credential for the sell-side equity analyst at an investment bank. But its appeal has broadened over the years. It is now typical to see job descriptions for Consultants that "prefer an MBA or a CFA." Or, the following are among the requirements for a Strategist at a major money manager: "1. Bachelors, Masters, or PhD in a quantitative subject (math, statistics, economics, finance); and 2. CFA, Actuarial or similar professional qualification."

            In many cases, the CFA has more perceived value that an average Finance MBA (unless the Finance MBA is earned from a globally prestigious school). I sort of view the CFA as the today's Finance MBA. The Finance MBA, in my opinion, has suffered gradual commoditization over the years and is sort of stuck in the middle between two dynamic markets. One, true mathematicians with PhDs or Master's in Financial Engineering are wanted for the Quant jobs. Two, the supply for generalists now includes many streams of qualified, non-MBA candidates (e.g., economists, experienced workers; and my pick for tomorrow's hot job, anthropologist). And firms are more eager to directly recruit exceptionally talented undergraduates, some of whom amass credentials like the CFA seemingly before they've worked much.

            Nowadays, an average Finance MBA plays a merely supporting role in a candidate's overall presentation. But the CFA still has glossy sex appeal. On the hiring side, the CFA enjoys a prestige that was, years ago, attached to the Finance MBA. Pretty much everybody knows what the CFA is, and they respect what it signifies about your education.

            Organizationally, the CFA Institute is bigger and more mature than GARP; conversely, GARP is growing faster while the CFA has announced it is now entering its second big phase, dubbed the "Membership Era." Translation: we won't be adding new members as rapidly as in the past, so let's focus on our existing members. But the larger size and maturity of the CFA Institute confers the following perqs:

            * One of the best job boards on the web (I routinely get requests to post jobs under my account due to the focused audience)
            * A voluntary continuing education program that was good even before the CFA recently increased their focus on, and their resource allocation to, continuing education. The CFA Institute has fabulous continuing education resources
            * The actual exam is the gold standard of financial certification exams. From soup to nuts, it is truly marvelous. The body of knowledge is carefully undated each year, their authors are typically "the final-word Gurus" in their area (e.g., Fabozzi in Fixed Income), and their reading materials continue to impress me each year. Recently, the readings were bundled into the exam; e.g. a six volume set for Level I. I think this six-volume set for Level I is just about the best, most well-organized introduction to finance that you can find anywhere. If you could take only one finance text on your desert island sabbatical, I think it should be the Level I CFA readings.

            About the FRM

            As the CFA is traditionally linked to an equity analyst, the FRM traditionally served to credentialize a risk manager at a bank. As proof, consider GARP now starts their advertising with "The FRM is not just for risk professionals in banks." Both organizations (CFA Institute and GARP) are actively seeking to broaden their appeal, and in my view they are both succeeding. But the CFA is further along.

            I would say that the job market for an FRM is less concretely defined than the market for a CFA. When I talk to people, almost everybody knows what the CFA is. It continues to surprise me that not everybody knows what the FRM is! And if they don't know what it is, then it follows they don't know how much pain it took to earn it. Further, where it is common to see "Chartered Financial Analyst" as a job preference or job requirement, I cannot remember the last time I saw "FRM preferred or required."

            But this is mostly due to the relative youth of the FRM credential. Risk is a hot topic and the FRM has a very bright future. Academic institutions are a rapidly growing FRM constituency. Both the CFA Institute and GARP (who administers the FRM) actively seek to partner with universities. Also, regulatory bodies. Even energy companies. And most recently, insurance companies. (In addition to the original constituencies, commercial banks and central/regulatory banks).

            I would say that, against the traditional risk manager job market, the FRM is a solid and valued credential. But some qualifiers:

            * Unlike the CFA which has no direct competition, the FRM has direct competition in the Professional Risk Manager (PRM) certification (so you have two choices for a risk designation)
            * If you want to be an equity analyst, the CFA might be all you need (I would argue it is a pinnacle designation for many careers). At the moment, the FRM is generally (in my opinion) a complementary sort of credential, not a destination unto itself.

            As mentioned before, GARP is growing fast (20-30% per year) so they don't have a continuing education program yet. Their online resources are coming into their own. And, where the CFA Curriculum is a case study in purposeful, well-organized content, the FRM is a bit uneven in areas (e.g., some of the quant readings are stale; operational risk it tough to cover and it shows). These "growing pain" challenges aside, I am partial to the FRM: I think the five competencies (quantitative, market risk, credit risk, operational risk, and investment risk) provide a great blend of both foundation and cutting-edge theory. So, you get exposed to the traditional stuff (e.g., portfolio theory,fixed income) but, at the other end of the spectrum, you get to grapple right along with GARP as they grapple with the definition of a new frontier (what is operational risk, after all?) and as they systemize very timely content (e.g., credit derivatives).

            Next post, I'll compare the actual exams...更多精彩文章及讨论,请光临枫下论坛 rolia.net