“ Write here only if you have personal experience of working as an actuary. Why did you decide to become one? What are your qualifications? What are the ups and downs of the profession? „
An actuary? Really? Would I know any of your films?
I'm a member of a profession that few have heard of and even fewer have any idea what we do. This review looks at the role of the actuary and whether it could be the career for you, once you know what it actually is - but a behind the scenes look at the profession's website (www.actuaries.org.uk) covers a lot more detail.
What is an actuary?
The official tag-line for the profession is "making financial sense of the future". Clear? Thought not. Try my versions - how about "Like an accountant but looks into the future rather than the past"? Getting closer. How about "financial fortune teller"? That's not far off. In truth, it's hard to put an actuary's whole career into one sentence that someone can understand immediately.
So what DOES an actuary do?
Good question. Actuaries work mainly in insurance and pensions. Here are some real life examples to give a flavour.
Working in insurance - of people (life insurance)
Most mortgages require life assurance so if the homeowner dies the mortgage is paid off. The actuary will work out the probability of people making it to the end of their mortgage and therefore how much should be paid each month for the cover. Too high and no-one buys it, too low and the firm makes a loss.
Working in insurance - of things (general insurance)
Your car insurance premiums are calculated based on a lot of "risk factors" - where you live, the car you drive, your age, etc - and all these plus statistics on claims already made enable the actuary to work out how much you should pay. Again, too high and the customer goes to another company, too low and the firm makes a loss.
Working in pensions
For the old style company schemes, an actuary will work out how much the employer needs to pay into the scheme to make sure that when their employees come to retire, there's enough money to pay them their pension. Too much and the company loses money it could have invested in growing the business, too little and the pensioners suffer.
The actuary uses maths and statistics (and these days, a lot of computing power!) to solve problems for companies who need to be able to predict what might happen in the future, and put a cost on those events happening. It's risk management, if you want to call it something posh. It gets very complicated - and therein lays the challenge and satisfaction of it all.
What sort of person becomes an actuary?
You have to like maths, money and computers. You don't have to be good at mental arithmetic, but a decent A level in maths is a must. You'll also need a degree if you want to get through the exams - people have done it without degrees but these days it would be almost impossible to get a job without one. If you aren't a "detail" person the first few years will be hard but once you're through the exams you'll be able to look at big picture stuff and leave the detail to the students again.
Oh, blow it. That's too much like the official line. I became an actuary because I wanted to earn as much money as possible in a cushy environment using maths and computing. And that's what you get with the actuarial career. It also gives you the potential for really big bucks if you progress within a large firm.
What about these tough exams then?
Oh yes, they're tough.
Really, how tough?
My best story is that of an assistant manager in a life insurance company, who had 5 A's at A-level, 1st in Maths from Oxford (a bit of a bright cookie) and had been working in said life insurance company for many years - but still failed the life insurance paper. In the later papers only 1 in 3 students will pass each sitting, and bearing in mind that the folks sitting the exams have already been filtered by the earlier exams and have all spent the last 6 months studying like mad you can begin to get the grasp of it all.
Exam sittings are twice a year and are designed to keep you on your toes. I found that there was more of a technique to passing than necessarily brain power although it requires discipline and a lot of work either way.
There are 23 papers in total but you only have to complete 15 to qualify. You have to pass all 12 of the first set of core technical and application papers (no choices!), then choose 2 from 7 and a further 1 from a choice of 7 for the later parts of the exams. The first 12 papers cover basic techniques in subjects such as accounting, economics, interest calculations, probability, financial products and more. You'd be able to knock up a spreadsheet showing how much you're saving through an offset mortgage by the end of these exams (and call yourself an "Associate" if you can't be bothered to finish the exams!).
The final 3 exams are more long winded written answers (the type of paper I used to avoid at school and uni!), and that last one is even more challenging just to make you feel like you achieved something. However, I found there was a technique to it and once I'd got that, then I made my way through them without too much trouble - although an awful lot of work!
As I took the most of the first set of the exams at university in my degree course, I only had a few left to do. I took my last 5 exams over 3 sittings, September, April and September. You'd normally expect to pass 2 of the early papers a sitting and 1 - 2 of the harder ones. This would make the total around 4 - 5 years to qualify, but you can do it quicker (and slower!). If you pass in 3 years you're probably not seeing daylight or any friends.
I studied an average of 17 hours a week for the whole 1.5 years (and yes, only an actuary would have worked that out!!!). That's on top of the 4 day week that you have to do to stay employed whilst you're passing. However, with a bit of discipline and careful management, you can fit that 17 hours into a week and your study day and still have all your weekends free. I studied in the morning before work because I was too tired to do it in the evening. That worked for me but others have different methods.
Is it worth it?
Mountaineers climb the highest, hardest mountain just because it's there, and get a lot of satisfaction when they make it. Actuarial exams are very similar and you do get satisfaction knowing that you've conquered some pretty hard challenges. If you don't like that statement and thought you wanted to be an actuary, then you might as well stop reading now!
A similar thing applies to the work you do. Whilst we often joke that if something is very complicated it was clearly done by a typical actuary, it's these hard mental challenges that make the job interesting.
You know what you need to achieve, and you've just got to work out how to do it. I'd say this is pretty much the same in all professions, it's just the toolset you use that changes. Ours is a calculator, spreadsheet and, on occasions, programming. Doing it quicker, faster and more accurately is the challenge!
What about the money!?
You want to get paid for this?? Surely the job satisfaction is enough??
Alright, here are some rough figures. Consultant actuaries generally get paid more than the in-house equivalent actuary. As a guide, though, a student actuary could start on £20k - £30k and after half the exams be getting £30k - £50k, and on qualification £50k - £200k+. To get the top bucks here, you have to be either a partner at a consultancy or a very senior figure in a large financial organisation such as a bank or insurance company. Frustratingly the jobs section at the back of "The Actuary" - the profession's monthly magazine - have mostly stopped putting salaries on them so it's hard to get a feel for the salaries any more.
The more soft skills you have, such as talking, persuading, presenting and being nice to people, the easier it is to find work and get paid more. But it's really all about job satisfaction, right??
You mentioned actuarial science degrees. Are they any good?
Well, I thought mine was good. I took an actuarial science degree at City University. My thinking behind it was that it wasn't a pure maths degree (not my cup of tea - boring!!!), it had some practical elements to it (so I could use what I learnt at uni later), and if I did want to be an actuary I was starting my career half qualified. All these came true.
However, what they don't tell you is that the drop out rate from actuarial science degrees in the later exams is much higher, because you start with more knowledge but less experience. As a result, a small number of firms prefer other degrees, which I feel is somewhat blinkered. Although initially I did drop out of the exams, when I was older and wiser I re-started the exams and finished them. Such is the power of experience. Of the top 10 universities supplying actuarial students, 4 do actuarial science degrees according to the Institute of Actuaries' website
My aim in life is to get paid lots for doing very little. Not always possible, so you then have a choice of getting paid lots or doing very little. I've opted for the former. The actuarial profession is no easy ride. The exams are tough, the pressure at work can be high and the hours can be long. However, if you're into numbers and computers then the rewards match the challenges and at least within the financial services you're in a profession that is recognised (maybe even revered!) as experts.
Even if at a noisy party when explaining what you do, people mishear and think that you're an "actor".