Morning Monkeys,
For one reason or another, I've been seeing quite a few references regarding the potential benefits and downsides to being an actuary. And, unsurprisingly, there seems to be a bit of confusion as to the nature and progression of those within the actuarial profession. Hopefully, this will clear some of thse misconceptions up.
Actuaries as a group have to take an ungodly number of tests. Everyone who has ever ventured into the SOA's (Society of Actuaries) website has long since figured this out. But, as you can see, starting in July 2013, there are new FSA tracks available (we'll get to these in a moment.) What's important, especially for readers of this site, is how to get into the industry:
- Have a mathematics degree: Do you need to know the difference between abelian and non-abelian groups, or be able to identify connected and compact sets? No, of course not, but most practicing actuaries have math degrees, and they tend to think that if you don't have one, you might not be up to snuff.
- Pass the first two tests: Oftentimes, when you get your first job, you'll be expected to pass the first two within some period of time, usually 6 months. If you don't, bad times. But, if you've already passed them, that'll really set you apart and maybe, they'll ignore the fact that you don't have a math degree.
- Enjoy modeling: If you think bankers do a lot of modeling, you haven't seen anything until you see these monstrosities that actuaries build. In fact, modeling is so ubiquitous that it's now becoming required by regulatory authorities.
Some other key points about the actuarial profession. Unlike banking, you're not likely to work 1,000 hour days, or catch a bunch of shit from overzealous associates/senior bankers, and the pay is pretty good. One misconception I need to clear up is the "top end" of the salary range for actuaries. Many on this site have pointed out that early on, sure you're probably going to do as good, or only slighly worse than someone in banking, and work substantially fewer hours (except during year end) but that once bankers transition into private equity or a hedge fund, they'll quickly start to outpace their actuarial counterparts. In some ways this is true, but these people don't realize that the top position for an actuary is "Chief Actuary" which is a C-level position. That's nothing to sneeze at by any stretch of the imagination, and I hear that C-level guys tend to do well in the money department.
A last point of note, just in case someone is still interested in this profession, there's plenty of tests (as well as "modules," "experience," and "seminars," but we'll stick to tests) that are required:
- Exam P (Probability): This is unreasonably hard and is considered a "weed out" test.
- Exam FM (Financial Mathematics): This is like your finance tests on steriods. Way more math than you're probably used to in a finance exam.
- Exam MFE (Models for Financial Economics): This is likely most familiar to everyone, but not surprisingly, requires a lot of math. Unlike the CFA, they expect you to know how to use Black-Scholes at least in it's closed form.
- Exam MLC (Models for Life Contingencies): This is where you really get into the guts of actuarial science. If you hate this test, the profession probably isn't for you.
- Exam C (Construction and Evaluation of Actuarial Models): Yep, the third test in a row that has the word "Model" in it somewhere, I wasn't kidding about all the modeling.
Once you get through those tests and other requirements, you can then move forward to one of the ASA/CERA/FSA tracks. Because you're probably sick of reading this already (I'm shocked if you've gotten this far), I'll stick to the FSA tracks (for July 2013) that are available upon completion of Exam C:
- corporate finance and ERM (CFE) Track
- Quantitative Finance and Investments (QFI) Track (this is new, a replacement for the previous "investment track" and looks interesting...)
- Individual Life and Annuities Track
- Retirement Benefits Track (the old Pension Actuary)
- Group and Health Track (if you want to have a job forever that pays a lot, this is your winner, I hear heathcare is big business these days...)
- General Insurance Track (this is also new, which seems odd to me for some reason)
I hope this has cleared up the actuarial profession for those of you who are interested. Like others have noted, it's a pretty different life than that of a banker, but for some, it could be more preferrable, and as you can see by the picture, chicks dig actuaries. True story.
Date > Love.
P(Seeing her naked | Date)
this is the best comment Ive ever read haha :)
I have a friend who considered this several years ago. He didn't pull the trigger because he was afraid if hitting a ceiling early on. He was a math major in college and al all around smart guy, but he felt he might stagnate. Ended up going to med school instead.
Let me add, if you can pass several tests and last in this field, you can apparently make some legit money. There is a true scarcity of people who are both able and willing to do it amongst the greater population. It's no joke.
Stopped reading at the "I date bankers" thumbnail.
It presents a very compelling...argument. Of course, you have to click Original to get all the...nuances.
Huh. pretty interesting post. So when do you take these exams? When you start working for a firm, or during college? How many years does it take to prepare for all of the exams?
I passed 2 of them in college (I am still in college now), usually students pass 1 ~ 3 exams in college. It takes about five years after graduation to get FSA (my boss did so). However, you are not asked to pass all exams in order to land a decent job. Studying and testing is a (great) part of junior actuary's life. Fortunately, firms are always willing to help their employee to study for exams and provide a lot PTO.
I still have no idea what an actuarial is.
Just curious - what's your perception of the Actuarial Science degree, as opposed to Math?
Actuarial Science is a subset of Mathematics. Usually, at least in my experience, it's a concentration within an Applied Mathematics degree. That being said, if for some reason it's outside of a Mathematics major, I'd be wary of it. You can never go wrong with a straight Math degree.
I don't think a math degree would actually adequately prepare you for an actuarial career. I have a straight math undergrad and there were ZERO (yes you read that correctly) required stats classes for me to get my degree. That may vary school to school but I graduated without taking stats 101. There were elective stats classes (400+) that I could have taken that would have satisfied certain degree requirements but none that I was forced to take. I'm not too familiar with actuarial sciences but I am pretty positive that they require more than 0 stats classes. You could, obviously, get a math degree and use the stats classes as math electives and be good to go but that's not what I saw/experienced for the most part. Apart from the kids who knew they wanted to be actuaries already
Really? No statistics? That seems odd, I had to take a calc based probability and a calc based stat course, but I suppose each program is different. Did you have to take topology? (Not related, just interested.)
What may surprise you, there's not as much stat on the actuarial exams as you might expect. A lot of probability, though.
I've done a BSc in math/actuarial science and the main difference would be that my pure math classes were extremely abstract whilst the actuarial science classes were much more practical. It is the difference between asking "prove that 1 is bigger than 0" and "how much would you charge for an annuity paying 1$/year to a couple which drops to 0.75$ when the first person dies and then continues for 5 years after the second person dies assuming different distributions for the lives of the husband and the wife as well as different starting ages".
Question for the guys with knowledge/experience of the Actuarial field.
Don't care about the pay/prestige etc.
Are there any firms (I understand that most will not) that sponsor for H-1B work visas or are you shut out if you are not a US Citizen/Permanent Resident?
What is more important for getting a job: A degree in Actuarial Science or passing the first tests? How many, and which tests are you required to pass in order to be competitive to get a job?
If you had to choose between these options for a college Math grad to become an Actuary, what would you choose: (Is the specific degree important when it comes to hiring?)
a. MS in Math, 2 Years. Free because of TA-ship. Let's assume will pass two Actuarial Exams. b. MS in Actuarial Science at the same school. 2 Years. No Financial Aid. Very difficult to pay for me; will have to take loans. Will also pass two Actuarial Exams also.
Thanks.
Won't answer 1 and 2 because I am not familiar with how insurance companies recruit in the U.S.
As for 3: honestly, go for Math, and if possible take courses in actuarial sciences.
Actuarial sciences are...let's say far less sophisticated than theoretical maths. If you are able to do maths, and you can get down to practical level, you can do the actuarial stuff. But you'll need to start early, it's not something you can cram in a month of study.
For #1, maybe health insurers if you've got a group/health track FSA. I wouldn't bet on anyone else, but this is all really a guess.
For #2, passing the first TWO tests is the gold standard for new actuaries. Usually this can be accomplished prior to graduating college.
Frabjous, my degree is in pure mathematics (i.e. theoretical math) and I think you'd be surprised at how sophisticated the actuarial sciences have become. I mean, you're not out there proving the Poincare Conjecture or the Riemann Hypothesis, but it's some pretty heavy shit. Actuaries have come a long way from tables and slide rules.
[quote=JamesHetfield]Question for the guys with knowledge/experience of the Actuarial field.
Don't care about the pay/prestige etc.
Most of the firms provides H-1B for foreign students, a lot asians work in insurance firm. In fact, many firms (Europe based) are international and happy to hire foreigners
We had a few stats, mathematical finance and economy classes that pure math didn't have and which help with the exams. You don't absolutely need them to be an actuary but I think that there are certain classes needed to achieve the title called "Validation by education experience" such as time series, macroeconomics, etc.
No topology was not required.
a
If there are some questions ya'll would like answered by an actuary let me know.
My brother graduated ~3 years ago from a top 20 (I'm just guessing) university with a math degree and has worked for one of the largest insurance companies since as an actuary. He has passed 7 or 8 of the 10(?) tests, all on the first time. He works roughly 35 hours and they allow him time to study at work (or to study at home? Not sure.). Basically he averages like 32hrs/wk of work. They also send them for a week to conferences to study for each test like a month before the actual test. He's been promoted once and this summer he will be promoted again, he believes. He studies about 150-200 hours on average for each test. I know in the beginning he was getting about ~$2500 bonus for each test completed (or was it an increase in salary by that much?).
His first year he made ~50k Second year ~60k? This year I think he made ~70k?
He feels like he's underpaid but willing to deal with it because of the benefits the company affords him to take the tests, and since he will complete the final few that he has left in the next 12-18 months afaik. Exit ops for him I think are to work for a re-insurer. Let me know if there's any real interest and I can let him know about the thread. Also from my understanding there are more players in the NBA than actuaries who've passed all 10 (9 total but there's one in 2 parts from what I remember), and he's on track to pass them all on his first try.
Just googled and it says that there are 450 players max in NBA? Last time I checked, there were 10k FSA, and there are thousands FCAS out there too. So obviously, there are way more actuaries than NBA players.
Average pay per hour is somewhat more competitive than IB at the entry level (120k for 80 hours a week, 52 weeks a year ~ 28.8 an hour compared with 65k for 40 hours a week, 50 weeks a year ~ 32.5 an hour). However that does not take the study hours into account. You usually get some time off before the exams but it is more like 40 hours than 200 hours. So if you write two exams a year, it comes down to 65k/(5040 + 1602) = $28. You will get 8-10% increase for passing 2 exams but in the second year, an IB analyst may get an extra 30k bonus. You will certainly have a more balanced work-study-life however, dont expect it is a 9-5 job. I used 40 hours above for a quick calculation but I know most of entry level actuarial analysts work for 45-50 hours (at least at the firm I interned).
I think an actuary is like an engineer in term of entry level pay and the pay cap. With 3 exams you will get 55-65 depend on the city and it is not hard to get 6 figures in 4 years. If you are crazily study for exams and pass the rest 4 or 6 exams and all the modules, you can expect 120-130k. However, you are most likely to be capped at 170-180k unless you move up the ladder. Depending on what group you are in, it can be very interesting (product development) or boring as hell (reserve?). But that does not really bother me the most. What I was bothered is that the ratio man/woman is ridiculous. In my internship class, there were only 2 girls and there were at least 11 guys. My group has only one lady and 5 guys (quite frankly, she was group lead). Honestly there are a lot of misunderstanding/misconception about actuarial profession. Even though it is one of the high paying job you can get out of college, it is somewhat overrated.
This was very informative. Thank you!
is Actuary a good way to get into hedge funds? If I were able to pass the P, FM, and MFE would that help me land a job at a hedge fund? I would major in Math while also majoring in finance and minoring in accounting.
In general, no, pursuing an actuarial designation is a bad way to get into a hedge fund. Actuarial science is primarily the purview of the insurance industry, not the investment industry (although concepts do cross over). That being said, there is a new FSA track for Quant Finance, but it's brand new and whether or not such a specialist would be successful in the hedge fund world is likely unknown.
'Chicks dig actuaries'?? No way. Have you realized that most of actuaries have zero social and dating skills? They probably don't know how to kiss. Sorry, no offense but true story.
thanks
how many test do i need to take to get into actuarial consulting (Originally Posted: 03/28/2014)
Hi,
I am considering of switching jobs and considering the option of going into this industry. I now that I need to take exams, but how many must I take in order to get the job like in Ernst & Young or Milliman? Do I need to get internships first in order to break into this industry or just taking 2-3 exams first is enough?
2 exams (P and FM, usually) should be enough to prove you're serious about entering the industry and can handle the mathematical rigor. I got a corporate actuarial role out of college with no exams, but I did have internship experience with the company. That said, full time offers without any exams are less common now, but internships are not required for a lateral move. It will also be important that you have a good story for why you want to make the switch, other than work-life balance (although that is a good reason, you obviously shouldn't say it).
I agree with cc66 and it also depends what background you currently have. You may be able to get some exemptions or if you can get into the Big4/an actuarial consultancy they will pay for your exams and give you time off to study. I know a guy who studied maths, landed an offer at PwC, and did every actuarial exam from scratch after he graduated. He was still paid to work but had no internships/'actuarial' background beforehand (most don't!) so I wouldn't worry. Attend the networking events or reach out to actuaries (they are usually happy to chat to you if you want to find out more about the profession).
When I was considering going the actuary route, the Oliver Wyman recruiters suggested 2 exams.
Actuarial Science/Consulting (Originally Posted: 09/15/2014)
Hey guys,
I have been thinking about switching my career into Actuaries since it has a stable work-life balance and other perks. However, a lot of people/friends I spoke with discouraged me from pursuing this path, saying that the work is terrible mundane and soul-sucking, and that it might be replaced by computers soon.
What are your thoughts on this, esp those working in Actuaries? Why is this job always in the top 5 or top 10 jobs charts? My concern is that if I take the exams and then decide not to go into Actuaries, I will waste my time which could have been spent in doing something else. At the moment, I have year of experience and is looking to do something long term, not a 2-3 year stint and then figure everything out all over again.
Thanks guys.
They are right, the work is really boring. When I was in college, I was debating between Act Sci and Banking. I ended up doing a summer internship in both and banking blew it out of the water. You will find that people in Act Sci are mostly the book smart/nerdy types, so if you fall into that category, go for it. In terms of work life balance/pay, it only gets better after you take the exams. When you are still taking the exams, you will be studying on top of working 9-5 business hours, so your QOL is not as great as people say. Once you do pass all your exams, thats when you get to see the benefits of being an actuary. However, it's becoming increasingly more crowded in the space, similar to what people are seeing in Law.
I thought the work in banking in the first 3-4 years is also pretty much mundane and boring that is why people go into banking to go to the buyside?
I am seriously debating either going into banking or Actuarial Science so any help would be much appreciated.
I think work, except either being PM, ER analysts most other jobs are pretty not stimulating and boring?
My gf is has been working in actuarial sciences since graduation. For context, she works for a large insurance company. She's halfway through the tests. She's out of work by 4:30pm most days when she isn't studying (she gets in around 7:30), but during study times can be there until closer to 7. The pay is pretty solid base and you get a raise with every test you pass.
There are 10 tests you need to take, and you can figure you'll do two sittings a year (some do more, some do less). You'll probably fail at least one, so figure it's going to be at minimum a 6 year commitment just to become an "actuary."
As mentioned above, if you don't mind working on math equations, forecasting losses, and pretty much being at your desk working on the same thing all day, go for the actuary path. If you want a little more variety, go toward banking - but know that with that comes added stress and longer hours.
There are many different areas within Actuarial Consulting as well? How should I figure out which one would be a better fit for me? Is there a hot area within this industry as well?
Many actuarial programs start with a rotation so you're exposed to different parts of the business.
Financial Mathematics vs Actuarial Mathematics? (Originally Posted: 06/16/2015)
What are the differences between and features of these two programs? Where are students of these two programs typically placed?
Actuarial students become actuaries at insurance companies. Not very prestigious but actually a pretty good gig.
Financial mathematics students apply to the same type of jobs as regular finance majors or go to grad school. Just an undergrad is unlikely (but possible) to land you a quant job.
Both good options. With the number of electives you likely have open to you, the two programs could be virtually identical depending on how your particular school structures it.
Actuarial Exams (Originally Posted: 05/22/2013)
I've been doing some actuarial exams and have noticed that some firms do hire consulting actuaries.
My question is would it be worth adding that I passed the Society of Actuary exams to the resume? It is an obscure job for most, and the exam process is very rigorous, but I'm not sure if HR will appreciate the fact when they first see it. I am from a non-target school, so I'm hoping this can beef up my resume.
I also would not like to leave the impression that I'm not serious about consulting. I believe the knowledge I gained from these exams can be applied to data metrics, market research, derivative pricing and such.
Thanks in advance.
Can anyone enlighten me please?
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