actuary vs investment banking
At a non-target school with a great actuarial science program. I have always had dreams to be a banker on wall street. I passed the first few actuarial science exams in high school and had a f500 internship in high school. Now, I have an actuarial internship for my freshman year summer. Not sure which career or major to go into. Any input is greatly appreciated.
What is Actuary?
Actuary, also known as actuary science, tends to deal with risk management. This is a more analytical position that helps organizations plan for the future and potentially hedge against uncertainty in the future. The risk that is affect is on both the balance sheet and requires skills in asset management, liability management, and valuation skills.
Do You need to be in a Target School to Pursue a Career in Actuary?
The short answer is, no. User @IvyGrad" has some good points on how to become an actuary even if your school does not specialize in this field:
You don't need to be in the actuary program or major to become an actuary. That is equivalent to the situation, where you don't need to be a biology major to get into a med school.To become an actuary, you need to pass a series of very math-intensive exams. An idiot wouldn't pass those exams. It doesn't matter if you were "actuary major" at a 2nd tier State U, if you can't pass the actuarial exam, you won't get the job as an actuary.
What is Investment Banking?
Investment banking relates to creating capital and funds for other companies, governments, or any entities. They deal with writing new debt and equity for all types of securities, aid in sale of securities, and help facilitate merger & acquisition. This position revolves around research on companies, valuations, and creating content for firms to view a snapshot of potential mergers & acquisitions.
Average Salary for both Actuary vs Investment Banking
As user @cc66" mentioned, once you finish your exams for actuary, you can expect to make over 6 figures.
Regarding investment banking, you can refer to the chart below from the investment banking report:
Why to Choose Actuary over Investment Banking
User @cc66", an investment banking associate, gives an amazing example of the pros and cons of actuary:
Pros:
- Pay. Once you finish your exams you'll be over 6 figures for sure - for 50 hour weeks thats pretty solid
Interesting work. There are many high profile opportunities at large insurance companies. A chief actuary can easily pull in $1M+ per year. Don't expect to strike it rich in your twenties or thirties though, it takes a long time to move up.Cons:
- Lack of decision making. Even highly ranking actuaries are mainly relied on to provide numbers that senior management will use to make decisions. Expect to have to study 200-400 hours per exam. Even if your company gives you study time you will have to spend a lot of your own time too. Pass rates are 30-50%, so it takes some people 10-15 years to finish.
- Exit Ops. Actuaries are highly regarded within the insurance industry, but many people in outside industries have never even heard the term. I think a lot of the skills you learn are highly transferable, but it's still a tough sell.
If you have any other experiences in actuary or investment banking and have recommendations for picking one or the either please comment below!
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pay much better in banking. math much harder in actuarial sci.
I think you should think about quant trading; the skills you develop in banking are not math intensive.
Post resume?
my resume needs some adjusting; i will probably post it soon. I'm not sure if I can do a major that will set me up for both. I was thinking to use actuary as a back up if I couldn't break into a top investment bank, which is unlikely. I will have a ton of good work and leadership experience as well as a great gpa, but I'm not from a target. Maybe there's a possibility that I be a quant.
I was in a very similar situation to you when I graduated. Since it was in the midst of the financial crisis in 2008 I was basically forced into the actuarial route for lack of IBD opportunities. I passed all my exams in 4 years and am now trying to move to IBD / PE / HF / AM. In my opinion, the pros / cons of actuarial are as follows.
Pros: Hours. I generally only work 40-60 hours per week. Pay. Once you finish your exams you'll be over 6 figures for sure - for 50 hour weeks thats pretty solid Interesting work. You definitely learn a lot of cool concepts - I'd imagine it's a lot more interesting than changing font on pitchbooks in IBD Opportunity for advancement. There are many high profile opportunities at large insurance companies. A chief actuary can easily pull in $1M+ per year. Don't expect to strike it rich in your twenties or thirties though, it takes a long time to move up.
Cons: Lack of decision making. Even highly ranking actuaries are mainly relied on to provide numbers that senior management will use to make decisions. This is my primary reason for wanting to leave for IBD / PE etc. People. A lot of your coworkers will be big fucking nerds. Exams. Expect to have to study 200-400 hours per exam. Even if your company gives you study time you will have to spend a lot of your own time too. Pass rates are 30-50%, so it takes some people 10-15 years to finish. Of course, the bonuses and raises for passing are good motivation. Exit Ops. Actuaries are highly regarded within the insurance industry, but many people in outside industries have never even heard the term. I think a lot of the skills you learn are highly transferable, but it's still a tough sell.
thanks guys, so how do you plan on transitioning over to finance. Also, I heard it is difficult to change from actuary to finance; did you major in finance in college? Lastly, do actuaries have decent opportunities to get into upper-level management and executive positions in general. thanks in advance!
if you get the CFA certification in addition to actuarial credentials, you will be set up pretty well for more non traditional actuarial roles.
Actuarial / Investment Banking (Originally Posted: 07/12/2012)
i passed the actuarial exam 1 and i wanted to know if i should write that on my resume. I am a rising sophomore at a non-target school majoring in finance and minoring in mathematics.
Im mainly trying to go into investment banking but am writing the exams though I am not planning on going into actuary.should i write this on resume or does it look bad when bankers see it?
Also, do actuarials go into investment banking, if they could? Does it give them an advantage do u think compared to others?
why bother studying for them if you don't plan on being an actuary? there are much better uses for your time.
Pro tip: Go be an actuary instead. They appear to have excellent overall job satisfaction.
Yeah actuaries are paid quite well, I don't think most people know enough of that career, if they did it would be more competitive
idunno ya'll. i looked into it and even signed up for the first exam. it's a great lifestyle once you're FSA/FCAS but the exam process is more rigorous than any profession that i know of. do you really want to spend 10 years or more after undergrad studying for exams?
ITS CALLED HAVING A BACK UP WHEN BANKING DOESNT WORK
thanks for using all caps, really accentuates your point..
"you are absolutely correct!" said another acutrial intern dreaming an wall st. job
You could better spend that time studying models and networking. Hence "models and bottles" (from the bottles of water you drink while meeting for coffee but you've already had too many cups)
I-banking Analyst VS Actuarial Analyst (Originally Posted: 11/25/2012)
I have several friends from college working as I-banking analysts in NYC banks. Despite their 6-figure salary, not one of them seem to be genuinely happy with their job. Actually, one of my friends just quit his job with nothing lined up. He told me he just hated his job so much and couldn't take it anymore, grinding out 90-100 hours a week, doing mindless data-entry work on excel spreadsheets.
The most common complaints I hear regarding banking are: 1) intense workload, 2) unpredictable work schedule, 3) mind-numbingly boring work, 4) retarded hierarchy culture.
Now, I don't work in banking so I can't confirm any of the above, but I give my friends benefit of the doubt, anyhow.
On the other side of the fence, I have 2 other friends from college. Both were math majors at HYP. They passed actuarial exams, and took analyst jobs at large insurance firms in NYC, as actuaries.
Their starting comp was 140-150k/ year, and they only work 45-50 hours a week. My friends tell me they love their job, as they can truly achieve work-life balance and the fact that their job is intellectually stimulating. They say that, having been math majors back in college, they appreciate the fact that they can use the math/stats/CS skills they honed in college directly at their job.
I am not a banker nor actuary. But, it sure as hell sounds like, if I can choose either career path, I would go for becoming actuary. For some odd reason, I will say that the profession of actuary is somewhat under the radar, as many people, myself included, didn't hear much about the profession during college years, while most were exposed to the constant I-banking/ consulting recruitment propaganda in college.
I think that I should've been a math major back in college...
I feel like you can learn what you want to learn about the IB lifestyle on here pretty easily, so I will address only what I know about actuaries.
It comes down to personal preference- I would never want to work at an insurance company, and personally as of now think I want something more demanding out of college. I also know people who have been actuaries for a long time and love it. The lifestyle is nice, though I wouldn't expect to make it big at all.
This is very accurate. Actuaries trade upside potential for a comfortable work environment with minimal required initiative. As someone on the outside (Economist) that works with actuaries, I have noticed the following things when you bring a large group of these people together under one roof:
1) Everyone is married or in a long term relationship regardless of their age and/or attractiveness of partner. Actuaries take risk aversion seriously in all aspects of their life. 2) Much of the time spent involves arguing about arbitrary assumptions, who made said assumptions and why all other assumptions are inherently wrong... 3) Attention to detail is revered regardless of its utility to the bottom line. 4) Top line potential is very low i.e. 200k and actuarial skills are not very useful in fields outside of insurance unlike stats or math.
5) Exams take a long time to finish - the average is somewhere around 10 years though I have seen it done in 4. 6) Many Actuaries are actually quite bad at math/stats. I find that they are very good at learning new equations but get very uncomfortable when faced with actually questioning and/or creating new equations. 7) Actuaries are dull. Actuarial studies filter for people that are very good at studying and writing for exams. All other aspects of life are secondary.
You don't need to be in the actuary program or major to become an actuary. That is equivalent to the situation, where you don't need to be a biology major to get into a med school.
To become an actuary, you need to pass a series of very math-intensive exams. An idiot wouldn't pass those exams. It doesn't matter if you were "actuary major" at a 2nd tier State U, if you can't pass the actuarial exam, you won't get the job as an actuary.
An interesting question to ask, here, is exactly how many of those IB analysts end up cracking high 6 figures? The vast majority of IB analysts don't make it to MD/ Partner level, at IB or elsewhere.
In theory, I-banking has high ceiling, but it means very little if you can't attain that level of comp yourself. And, even if you do, you will have sacrificed 70-80% of your waking hours in order to make that happen.
I would be surprised if your IB friends were happy - the life of an IBD analyst sucks. Any 1st year analyst who is thinking "I would like to do this for the rest of my life" is more than a little unusual. You do it for the exit opportunities. Making VP in IB (complete with 500k+ all-in comp) is largely achieved through outlasting your peers. Pre-director level, most attrition is voluntary.
Hedge funds and PE will usually get you to the 200k+ mark in your first year post IB. Going the corporate route normally comes with a paycut, but you are still in the low-mid 100k range as a 25 year old. So I would say the % of IBD people who eventually make it to 300k+ salaries is fairly high, provided that they do not exit by choice.
Not to knock being an actuary - it is a great career. But you need to like math, and you need to like the work (modelling risk). You will have solid work-life balance.
And I do think those starting salaries (140k) are very high for actuaries. 70k + a small relocation bonus is a normal new hire package. If you look at the salary statistics, 140k is average for an actuary with 6-7 years experience and 8 exams passed.
As was addressed above regarding scales of pay etc. It is hard to compare the two outright- When you choose actuary you are choosing a career. When you talk about IB you are choosing a route that has the possibility of continuing in banking but more likely exiting to PE/HF/corporate or many other possibilities. So in considering the pay you have to consider the pay of a career as an actuary vs. the pay that comes with the route beginning with IB. Most any way you slice it the latter is higher paying. An established actuary working 6-10 years is probably making around 200k all in. The same person who moved to PE after their 2 year IB stint is likely making somewhere around 2x as much (if not more). This isn't a rule, and I'm sure you can find people who began in IB and are making less than someone who began as an actuary at the same time 5 years ago, but I think this is much more rare. To provide a specific example- my uncle is an actuary for a large insurance provider in the midwest. He has been doing it for about 25 years and makes around 250-300k all in + good benefits.
Regarding your first point (and sorry to work backwards). The majority of actuaries are people who have studied actuarial science in school. As I alluded to, there are a number that study math at an Ivy or other top school and decide (somewhat randomly) that they want to study independently for actuarial exams. This is much less common. No, you can't be an idiot to pass the exams, but they are not all that difficult with the right amount of preparation. My 2 friends who are studying to become actuaries were very average math students in high school and continue to be quite average students overall. They have each passed 3 (I believe) exams. Additionally, actuarial science is different in the sense that employers look much less closely at GPA and much more closely at # of tests passed. Take that as you will- it can be a good thing or a bad thing.
Source- friends studying actuarial science + relative working as actuary.
if your an actuary, you better like school because you basically just signed yourself up for several years of exams
How hard is it to find a job if you do pass the two initial exams?
Dont become an actuary unless you LOVE maths/stats (actually - more stats) and a bit of finance. I used to study Actuarial Science at LSE. It was hard like anything. Worst then anything I have done before. You have to really enjoy Stats. you have to remember a lot of stuff. When they say its hard - trust me - its HARD!
Its a good job though. I have friends at top firms who are becoming actuaries. BUT THEY LOVE STATS. I cannot emphasise it anymore then that. Also - generally speaking - actuaries are nice people but a bit one-dimensional... IBD people tend to be multi-dimensional. (please do not confuse that with being a boring person)
bankers are quite possibly the most narrowminded ppl in the world.
I meant the undergrads/grads who get in... tend to have travelled/done sports/other ECs etc. Actuaries tend to just 'study study study' orientated.
I have tons of Actuaries as friends due to going to a school with a top math program. You make it sound like its so easy, oh you just "take insanely hard math classes, you pass these crazy ass math exams, you go work and print 140k-150k" boom done.
In reality, Actuary is a shitload of math you have to love math/stats/insurance, next its shit ass boring you think banking/consulting sounds boring as an acturary what they do you snooze like no tomorrow, its extremely repetitive same style of analysis over and over and over. Passing the exams is not guaranteed, many people do not pass them on the first try which limits your bonus/earning potential since you are charged out based on the exams.
Not buying the 40-50hrs at 140k story, that salary level you have to work for a Oliver Wyman or another top consultantcy and based on the people I know they do not work 40 hours, the ones who work for insurance firms making less money work 40-50hrs not Oliver Wyman style folks.
I think you are really glamorizing Actuary from a couple friends you have who were probably 100% made to do that, like banking most Actuary analysts dislike their jobs/gigs and only do it because nothing else pays that much for that much school.
Btw, the skills/qualifications needed to do banking vs Actuary is night and day....History majors become bankers.
Yeah I agree with marcellus, being an actuary is not as glamorous as you made it out to be. The actuarial science exams are just as hard, if not harder than the CFA exams, and the crazy part is that you have like 10 of them or something crazy like that. Who wants to live their 20's worrying about exam after exam? Also, an actuary might spend 50 hours in the office, but he will probably spend another 20-30 hours a week studying for the exams if he wants to pass well on the first try.
Just my 2 cents.
I passed the first 5 actuarial exams and thought I would pitch in.
First of all, a starting salary of 140-150k with a 40h workweek seems much too high to be true, especially for someone with only 3 exams. And no matter what the work hours are, what people have been saying regarding the studying is true, even if you only work 40h/week you are probably spending all your nights and weekends studying. The advanced exams recommend around 600h of study time usually cramed into 4-5 months, still far from IB hours but not exactly laid back either.
From what I have seen, starting comp varies very highly with the number of exams completed and even with 5 after a bachelor's, I have not seen a starting comp higher than 75k. It is also worth mentioning that in my year there was no more than 2-3% of people actually getting 5 exams done before graduation. Also, for having done both, the difficulty of these exams is usually way higher than CFA although the difficulty is more in the depth of the material versus the breadth in the case of the CFA. Imagine spending all your free time on an exam with a sub 40% pass rate you need to have if you want to get ahead in your job, it wasn't for me.
Finally, I do think that the actuarial profession is over-hyped with all the job rankings putting it near the top spot almost every year. The salaries are good but not great (if you make more than 150K at 30 you are probably an exception and with that kind of discipline could've probably made much more in IB or S&T), the work and people are mind-numbingly dull (my opinion) and the worst part of it is having to spend your nights and weekends studying for exams until you're almost 30.
DW Simpson is pretty good in terms of salary surveys (keep in mind that the Property and Casualty jobs require even more exams which are also harder). Search DW Simpson on Google if you're interested.
I am an actuary and want to clarify a few points. For reference, my total salary package is 260k after 10 years.
1) The exams are HARD to pass, but not hard in content. I'm an Ivy League maths major and the subject matter isn't difficult. However, actuarial students are all intelligent and highly driven to succeed. Around 50% of people fail each exam. Imagine taking the brightest 2% of your high school year and letting them sit the exams. Then you have to be in the top 1%, all things being equal to pass. As long as you're prepared to work as hard as everyone else....
2) Actuaries have a reputation as being one-dimensional. Historically this is true but the next generation are proving to be better communicators and true business people. As well as starting to dominate insurance board rooms in progressive insurers, they are starting to take over other industries.
3) Being an Actuary often rates as a top five career in the US. This is due to work life balance, job security and salaries. This is the combination of factors to review if you're thinking of becoming an actuary.
Can young Actuaries make it into Finance/Banking/IB (Originally Posted: 07/20/2013)
Hi guys,
Do you guys know a lot of actuaries in Finance/Banking/IB?
I have been working in insurance as an actuary for some time, but I am considering switching to something else in finance. I have been reading a lot about IB, and would be interested to switch to that field, if I could get in a top tier.
So, to you guys working in IB, have you ever worked with former actuaries that are now in IB? If I were to switch, do you care firms would care about my previous experience as an actuary?
If I get into a top business school, would I have a shot at transfering to IB?
Thank you for your time
A couple of things:
I know a few people who are actuaries and they don't even know what IB is. They also think they are the top earners (1st year out of school) out of every fresh college grad in NYC. They also think their 4 bdrm queens apartment that they share with 5 people is so extravagant because they live in "NYC". I know this has nothing to do with you but from my experience, actuaries are actually pretty cocky and pretentious even though they have no idea what a real Wall Street job is like. Ignorance is bliss I guess.
Other than that, I would say business school is probably the only route since you have no prior experience in the field. Being an actuary is still is good job so bschool will probably look upon you favorably is you are at a well regarded insurance place. No to mention you will likely kill the quant portion of the GMAT and get a high score.
As for only wanting the "top tier", I think that is a bit unclear. If you mean GS/MS/JPM only, then you likely should stay in your current career. If you mean BB and elite boutiqes, the odds are still very much against you unless you go to a top bschool. I think a MM or boutique could give you a shot if you know your shit, network effectively, and do well in interviews.
I've met a few lawyers who made the transition without bschool and I've also met a few consultants turned bankers. Once you get into the accounting/actuary/ops side of the equation, everything gets trickier and less likely without bschool.
Thank you
Can I get into Investment Banking with an Actuarial Science degree - Recent graduate from Florida State (Originally Posted: 01/02/2014)
Hello!
A little bit about myself:
Recent graduate (May 2013) from Florida State U ~ 3.5 GPA, Actuarial Science
Passed two actuarial exams (just putting it out there, they are quite hard and dealt with probability and financial mathematics). Are they even worth mentioning or putting on my resume?
No internship experience.
Couple of extracurricular positions throughout college.
Recently took the GRE, got a 332 ~ (Translates into a 750 GMAT). Is this even worth mentioning? I was planning to attend B-School, but have since then changed my mind, given that I need professional experience to actually get into a top 20.
Have some (little) work experience in sales, does this work against me?
Currently located on the West Coast
Well my questions are:
1)Are my stats good enough to get into an I-banking analyst position? I don't need to get into a prestigious one, any boutique will do, really. 2)And if so, how do you recommend I start searching? Networking? Applying through their website? 3)Am I screwed because I am not in school anymore, or is it acceptable for firms to hire from 23 years old recent grads? 4)Should I limit my search to the west coast? Are NYC and Chicago firms going to think I am a waste of time? 5)Can I get an internship even if I already graduated? Wouldn't mind interning if that is what gets my foot in the door.
Thanks!
I am not going to answer to your question because they are USA specific and I don't have any experience there. With regards to the fact that you have been studying Actuarial Science, I just would like to enlight that there is one guy at MS in London which is an Associate within MS FIG team (insurance) and he has started his career as an actuary at KPMG. I don't know how many people made the switch from Actuary to Investment Banker but I am pretty sure that if you have this specific set of skills you may still leverage it for some specific position (ie insurance). Best of luck.
Your stats are good enough to land a position. Actuarial science is more of finance related topic than English and I know quite a few english majors with much lower GPA's who have been able to land coveted IBanking positions. You're going to need to research the culture of each firm and try and best determine where you feel you'll fit best. Also would be good to pick up one of the interview guides and familiarize yourself with the concepts. Interviewers won't be too hard on you since you didn't study finance in school but most attention will be given to your fit (how well you would work with others at the firm) and drive.
All of the above. Your most effective will be networking but it doesn't hurt in to apply as well. I would spend business hours concentrating on networking and save the website applying for the evening hours.
Not necessarily, You're still young but you want to be doing something that shows recruiters some gumption in the interim. Don't just spend it at home. Take an online class. Volunteer. Find an unpaid internship. Something so that you are staying active. Don't become the still lake. Be the river.
Depends on the firm. Some firms would not pay relocation so that would be on you to bite the bullet on the cost. There are plenty of opportunities out west but if it's not poppin for you in your hometown, sometimes you have to take the show on the road.
Yes.
Good luck and feel free to PM me if you have any other questions.
Isn't that degree at Wharton?
Thanks for your answers. @WallStreetBB : I am actually working right now... I am making ~50k as a sales consultant but I am not content with that. I know that with hard work I could be making more. I am located in Norcal (40 minutes from SF). Should I focus my search there? Do you have any list of banks and financial companies that are located there (I know I am asking too much, being a complete stranger). I will PM you with other more specific questions.
Everyone else, feel free to give me your advice, insight or opinion. Thanks!
@"5ways2doit" There are degrees in actuarial science from some (not many) UG programs.
I forgot the name of the guy over the entrepreneurial program at FSU but he is well connected to wall sstreet.I know a few people that just graduated from FSU that are in banking because of him.
If your interested in middle market, Raymond James financial has many FSU alumni. Just get in touch via linked in or alumni directory. My brother and sister graduated from there so I know quite a bit about FSU.
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