Month: January 2019

With the actuarial profession outlined and the FSA overviewed, let’s begin with the most popular Fellowship subsection: The individual life and annuities path. People may flock to this path more than general insurance or retirement benefits because of the especially lucrative opportunities, many of which see strong potential for progression within the company.

Furthermore, life and annuity actuaries have both consulting and traditional roles available to them, as the need for their unique skillset exists in both Human Capital Management Consulting^* as well as in life-focused insurance companies like this^* director position at Prudential.

These actuaries’ ability to mitigate a company’s risk by advising on product pricing and to encourage stability by defining costs despite difficult quantification (“reserving”) make their skills valuable and therefore desirable. Since a life actuary focuses on life (and death) expectancy, they tend to deal with the question “when” as opposed to “what.” For example, if a woman dutifully purchased a life insurance plan at her entry level job out of college, the continued to contribute to it throughout her successfully career, an actuary will have complete, data-backed knowledge of how much her family will receive when she passes as well as how that will impact her insurer. However, the actuary does not know, and therefore will attempt to determine, when she will ultimately die; this uncertainty indicates why the “when” question needs answering regarding life insurance (we will dive into other paths’ what/when in future posts).

Those working for direct life insurers, such as Prudential or New York Life, will consider only their own company’s insureds and the impact a claim (or many claims) will have on the financial stability of the firm. Per the description of the actuarial profession (see posts one and two), risk management takes priority here since a successful actuary will effectively mitigate his or her company’s risk by forecasting death dates and thus advising on adequate preparation for claim influxes. Contrarily, a life actuary at a consulting firm, such as Willis Towers Watson or Pryor Personnel, will manage the risk of client companies by analyzing their data and advising on asset and capital allocation with respect to expected claim rates over time.

To get to this point, however, an actuary needs to pursue the Individual Life and Annuities FSA track, which includes three life pricing and risk specific exams. The Life Pricing and Life Finance and Valuation exams each take 5.5 hours and have an essay-based format. The Life Risk Management exam (or substitutable Enterprise Risk Management exam) takes 2.25 hours and also consists of a business focused essay. Alongside the exams, ILA candidates must pass four modules, with Regulation and Taxation and Financial Economics unique to ILA. Otherwise, the FSA in Individual Life and Annuities has few differences from the other Fellowships, of which we will next delve into Group and Health.

Now that we have covered the basics of the actuarial profession and some potential career paths, we can now move on to how to get there. As in any other industry, actuarial science specific credentialing exists and will play a significant role in the both the type and quality of company and position you can pursue. Similar to the Bar Exam, the CPA Exam, or a physician’s specialty board exams, actuaries also have graduate level examinations necessary to progress to the next level in the career. The actuarial exams, however, assume certain characteristics of nearly all other graduate exams, then add their own twist.

While the graphic captures the approximate cumulative length (~14 hours) of the actuarial fellowship exams (3-4) as well as the diminutive relative frequency of passing, some additional idiosyncrasies of the fellowship exams arise in the mandatory modules and fellowship admission course. In addition, the Society of Actuaries offers six separate paths, all of which we will delve into a bit later. The only parallel to the SOA’s fellowship structure lies in the board exams doctors take to enter a specialty; similar to a physician choosing internal medicine or pediatrics, an actuary can take any of the following tracks and end in a different career path:

• Corporate Finance
• Quantitative Finance
• Individual Life and Annuities
• Retirements Benefits
• Group and Health
• General Insurance

Achieving a fellowship, more commonly referred to as an FSA for Fellowship of the Society of Actuaries, in any of these branches will allow an actuary to achieve success at the highest level. We will take a look at each branch individually throughout the course of this blog, but most senior actuary and actuarial director positions open up only for FSA recipients.

Achieving an FSA typically requires three exams, four learning modules, and a Fellowship Admissions Course by the SOA. While the total amount of exams taken varies between three and four depending on the path chosen, the total time spend testing always runs between thirteen and fifteen total hours. Each module consists of 50-60 hours of content in addition to a comprehensive test and business problem (we will visit specific modules in later posts). The SOA intends for candidates to complete the Fellowship Admissions Course upon completing all exams and modules, and hopes that candidates learn and maintain a professional attitude while increasing proficiency in solution evaluation and communication. The FAC consists of a business case to which a team of potential FSAs must create and present a solution; this solution and its presentation will determine whether the candidate will receive the FSA.

Some reason must exist for CNN placing actuaries in the top twenty jobs in America, right? And I suppose it doesn’t hurt that CNN also put the career in the ten top-paying jobs, right? If that weren’t enough, the profession’s 22% projected ten-year growth rate, which, keep in mind, triples that of the average American job, would convince you that the actuarial career path is one worth pursuing, right? Hopefully I’ve convinced you to read about this career that clearly garners respect from professionals, businesses, and the media. Now let’s jump into it!

The simplest definition of an actuary as a statistician for businesses overviews the field a bit, but this explanation needs some refining into something that I can work with and that will help you follow along with the next nine blogs a bit easier. More precisely, a typical actuary works in the insurance field and manages the risk a company undertakes by numerically evaluating past, present, and future events, then helps to devise a strategy for the company to mitigate that risk while remaining profitable. For actuaries serving such an important role, companies typically compensate this profession very well. We will delve into more on a field-by-field basis later in the blog, but nearly any path chosen by an actuary will prove relatively lucrative.

Actuaries have the ability to work in quite a few sectors, but about 85% pursue either insurance (including retirement/benefits) or consulting so the focus throughout this blog will remain on these industries.

Generally, the four finance/insurance opportunities for actuaries consist of the following: Health, Life, Property & Casualty, Retirement & Benefits. You can refer to the above matrix for an overview of the basic differences between each field, but most people find health and P&C the most exciting due to the more short-term nature, while many people find a niche in the life department where the actuary has both long-duration and lots of uncertainty to combat. Most people consider Retirement & Benefits a dryer and slower field, but many actuaries do find success and happiness here.

Typically, an actuarial consultant will work for either one of the big four management consulting firms (Deloitte, Ernst & Young, PricewaterhouseCoopers, KPMG) in a generalist role with an actuarial specialty, or a boutique actuarial consulting company (Willis Towers Watson, Milliman, Wakely, etc.) in a field specific role. Minimal difference in the magnitude of work exists between the two, but a generalist with an actuarial focus will work distinguishably different cases than will someone in a more industry specific role. For example, an actuarial generalist may help advise a tech company on investment strategy by analyzing the risk relating to its current approach, whereas an actuary in a health specific role will almost always advise a health insurance company in pricing and valuation of its plans and management of the risk within its client base.

The only thing more fun than learning about the paths you can take in the future is the credentialing it will take to get you there, and we will take a look at that in the next post!