A Day in the Life of a Actuary

An actuary assembles and analyzes facts and estimates risks and returns to make financial planning decisions in a specific area of expertise. As an actuary, you’ll spend a lot of time working with numbers. You’ll also spend up to 65 percent of your time working with people, establishing goals, reviewing work, and researching figures. “It’s a real learning experience at first-not at all like school,” one actuary wrote, referring to the interpersonal and communication skills that were required in her job. A significant portion of the aspiring actuary’s time is spent studying for the multifaceted, information-specific exams that every actuary must pass. Initial examinations test basic mathematical skills, such as probability, calculus, and linear algebra, and are used as “litmus tests” to eliminate those unsuited to the actuarial life. Surprisingly, we found little mention of the long hours spent outside of work studying for the exams and the lack of a social life this hard study encourages. Actuaries seem to enjoy the constant education the profession requires, regardless of the personal cost. These exams provide good indicators of progress as an actuary; full passage of the exams take between five and ten years.

Paying Your Dues

Becoming an actuary requires some of the skills of a gambler and some of the skills of a marathoner. You need a gambler’s understanding of statistics, probability, and risk analysis. Most actuaries graduate college with a degree in mathematics or a business-related field, although the industry trend of late is to hire more liberal arts students who can demonstrate a high mathematical aptitude. The endurance of a marathoner is required not for the hours, which are fairly acceptable, but to make it through the actuarial examinations, which can take as long as ten years to pass. These tests are administered biannually by three associations: The Society of Actuaries, the Casualty Actuarial Society (for casualty actuaries), and the American Society of Pension Actuaries. While each agency provides certification for a certain specialization, the first few tests are general enough that they may be taken without regard to any specific career path.

Present and Future

With the rise of the science of probability, described mathematically by Blase Pascal and Pierre de Fermat, came the ability to create probability tables for any given event-death, accidents, even loan defaults. In 1792, the Equitable Society of London (an insurer) decided to use these tables to determine their premiums, and thus was born the role of the actuary. Edmund Halley-after whom Halley’s Comet is named-developed the first table of mortality, thereby giving birth to the life insurance industry. The need for actuaries should rise over the next decade as insurance companies, pension plans, and large corporations recognize the need for accurate statistical analysis and cash-flow management. Computer skills are crucial at the cutting edge of actuarial development, particularly in the field of liability analysis. Another emerging field is actuarial health care science; with unpredictable changes in medical technology and the emergence of epidemic viral strains, life expectancy is becoming more difficult to predict and more variable-dependent. Some actuaries believe these probablilities are describable and are working with complicated mathematics to find a way to explain them.

Quality of Life

PRESENT AND FUTURE

In the beginning, actuaries, referred to by professional societies as “associates,” are rotated among different jobs within the company to learn the variety of processes that an insurance or pension company follows. Entry-level actuaries spend much of their time researching and preparing data. Many people enjoy the lack of professional responsibility these early years offer, mainly because it allows plenty of free time to study for the exams that mark the first few years. Attrition is low; satisfaction is average.

FIVE YEARS OUT

“Fast-trackers” diverge from others at this point, and those who have trouble with the exams or find producing analyses on other people’s demands unsatisfying leave (18Ð22 percent). Salaries rise, and some attain the professional title of “fellow.” Hours increase and specialization becomes critical-those who leave the profession beyond this point do so primarily because of a dissatisfaction with their area of specialization. Job performance is the distinguishing characteristic during these years; actuaries tend to view their jobs and colleagues as “very competitive.”

TEN YEARS OUT

Actuaries who have had success start their own actuarial consulting firms. Many leave the pure actuarial side and enter management and corporate strategy development. Some continue up the actuarial ladder, moving to “chief” or “head” of actuarial science. Others are recruited by the government or independent research panels for their statistical skill and their experience in a specific area of expertise.