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Earnings potential: studying for industry qualifications while working has less impact on wages © Getty Images

For those considering the best route to get ahead in finance, a masters degree is not the only option. 

Beyond academic qualifications, there is a wide range of industry certifications, such as Chartered Financial Analyst (CFA) and Financial Risk Manager (FRM). These globally recognised qualifications provide training in specialised areas, from sustainable finance to financial planning and alternative investments such as private equity and hedge funds.

Often billed as alternatives to a masters degree in finance (MiF), the two types of qualifications can in fact work in tandem, say training providers. Adding an industry designation to a CV can help finance students pursue specific career paths and roles that require niche expertise, such as portfolio manager or climate-change analyst.

“When you think about job readiness, it does augment quite nicely with academia,” says Margaret Franklin, chief executive and president at the CFA Institute, of the CFA programme. Known as the toughest exam in finance, it is split into three levels and focuses on investment analysis, portfolio management and wealth planning.

To some extent, CFA overlaps with the masters in finance curriculum, but Franklin says it offers different opportunities for learning, including a focus on emerging finance trends such as sustainable investing and fintech. “Our programme has very significant input from investment professionals, so we understand what employers are looking for,” she adds.

As a result, the CFA curriculum is being adapted to add practical skills modules and specialised pathways in private finance, but demand for the credential has not recovered from a slowdown during the pandemic. Last year, there were 262,380 exam registrations, compared with 352,085 in 2019.

In contrast, the pandemic delivered a boost to MiF courses, as many young people put off entering a difficult jobs market and decided to remain in full-time education. The proportion of MiF programmes reporting growth in overall applications reached 78 per cent in 2020, up from 41 per cent in 2019, according to the Graduate Management Admission Council. Application growth has since slowed to more normal levels, but business schools say there is no sign of CFA cannibalising demand.

Still, there are benefits to pursuing an industry certification, and an array of options. Dorothy Wood, head of education relationships at ACCA UK (the Association of Chartered Certified Accountants), says these qualifications can improve the accessibility of financial training, at a time when the strength of the job market has thrown into sharp relief the opportunity cost of full-time education: lost earnings.

“You can work and qualify as an accountant at the same time. It gives people who don’t have huge financial resources the chance to gain a professional qualification,” Wood says. 

The ACCA certificate focuses on accounting, unlike the CFA for investment professionals, or the MiF, which is a more rounded qualification. But it can be a much cheaper option, with exam and certificate fees for the ACCA qualification costing £2,160 — excluding the price of tuition, which varies. A MiF can cost tens of thousands.

Additionally, maintaining an industry designation typically requires continuous learning and keeping skills relevant in a changing environment. ACCA has developed certificates in sustainability and data analytics for its 241,000 members and other professionals. “When data and digital are changing everything so quickly, you can’t rely on something you learnt 20 years ago. You need to keep up to date,” adds Wood.

Male student picking out a book in a college library
Greater breadth: a masters in finance prepares students for a wider spectrum of jobs © Getty Images

ACCA membership is growing, up 3.4 per cent last year compared with 2021, at a time when young accountants are in short supply. But David Simpson, masters in finance recruitment and admissions director at London Business School, sees no threat to demand, with applications “stable” and competition healthy. A place on the school’s degree programme for experienced professionals costs £58,700 in fees.

He says industry designations pair nicely with academic qualifications. There is some overlap between the CFA curriculum and the LBS post-experience finance masters course, giving students a head start on the exams. “Many students chose to do both qualifications at the same time. We think so highly of CFA that applicants to our finance masters do not have to take a standardised test if they have Level II,” he says.

Simpson adds that different qualifications bring unique benefits at each stage of a career: “The CFA gives a solid foundation in technical concepts, which is especially useful at the start of a career, but, as candidates progress, building leadership skills and a diverse network becomes even more important.”

That is when a MiF is applicable, as it provides greater breadth of study, says Olivier Bossard, executive director of the MSc Finance at HEC Paris. “CFA is really geared towards the investment management industry, whereas our role is to prepare students for a much wider spectrum of jobs, including private equity and private debt,” he explains.

Indeed, Paul Grimes, chief professionalism officer at the Financial Planning Standards Board, says its Certified Financial Planner credential is no substitute for a MiF, as the offering is distinct. The CFP is geared towards those who are providing services such as tax, estate and retirement planning. “A masters in finance wouldn’t give you that depth of specific knowledge,” he adds. 

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And the CFP goes beyond theory, with a requirement to complete 6,000 hours of professional experience in financial planning, or 4,000 hours of apprenticeship work, to earn the designation. At the end of 2022, the number of CFP-holders topped 213,000, up 4.8 per cent year on year and marking 26 consecutive years of growth. 

Ultimately, finance professionals may need to mix and match qualifications based on their goals and the evolving needs of employers.

“Think of your career as a complex jigsaw puzzle of little pieces you need to constantly put together,” says William Kelly, chief executive of the Chartered Alternative Investment Analyst Association, which offers qualifications in other asset classes, such as private equity.

He warns professionals cannot be complacent, given the velocity of change in finance. “We have to be working as hard as we can to fill gaps in our knowledge, every single day. This sector is accelerating at warp speed. If you’re sitting back on your credentials, you will be quickly marginalised.”

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