Thinking about becoming an actuary?
When discussing the opportunities associated with becoming an actuary, it's difficult to avoid the notoriety the profession perennially receives as 'one of the best jobs in America.' As this distinction suggests, there are many advantages to joining the actuarial ranks. These rankings usually highlight the earning potential, job outlook, and work/life balance that the profession affords. Although such measurables distinguish actuarial opportunities, they don’t fully communicate the many attributes that make them worth pursuing. Actuaries enjoy respect from their colleagues, influence with their clients and employers, and substantial variety in their work.
For those unfamiliar with the profession, actuaries often work in the insurance industry and use mathematical models to help their clients and employers analyze financial risk.
Because of the mathematical nature of the work, there are some misconceptions about the profession. A common stereotype of many actuaries is that we sit in a back room, silently churning numbers like a mathematical cog in a risk-taking machine. Most actuaries, in my experience, actually do much more than model risk. From providing strategic advice and negotiating contracts to giving expert witness testimony and managing staff, most actuaries are asked to play a larger role beyond solving mathematical problems. In fact, most actuaries are asked to provide value around a broad array of business challenges and opportunities.
Not only is actuarial work rich in variety, but it’s important. Companies rely on actuaries to remain competitive while avoiding bankruptcy (not always an easy task for some risk-taking enterprises). Regulators rely on actuaries to protect the public from unfair or sometimes unlawful products. And, employers rely on actuaries to maintain a healthy and happy workforce. The actuarial profession provides value to companies, communities and society at large.
Perhaps most importantly, the profession has a justly deserved reputation for integrity. Actuaries are some of the most ethical professionals that I've encountered. Countless times in my career, I've seen actuaries make the hard but correct decisions when a flawed but easier decision would likely have gone unnoticed. It’s easy to be proud of your colleagues and your profession with this kind of commitment to integrity.
With so many attractive attributes to the profession, I would encourage anyone with a mathematical inclination to consider becoming an actuary. However, the path to the profession is not always easy. In order to obtain their credentials, actuaries are asked to pass a series of exams. These exams test each candidate's knowledge across a broad range of subjects; they are competitive and loaded with pressure. When I began my career, I was told to expect the exams to take between six and ten years to complete. At the beginning, this is a pretty intimidating proposition, but the process becomes easier over time. You learn to enjoy your successes and celebrate with colleagues (even while learning to commiserate with them during the failures). Without question, the exams are daunting, but they facilitate an important standard of work quality; the exams are a small price to pay in order to gain access to the opportunities the profession affords.
If you've taken the steps toward pursuing actuarial science as a major, I would encourage any student to consider the following advice:
Aggressively pursue an internship. Internships provide actuarial students with exposure to the day-to-day requirements of the profession, put the university curriculum into context and enable networking opportunities. Just as important, an internship can smooth the transition from being a student to being a professional. Many companies offer internship opportunities with an eye toward hiring the most promising students for full-time positions upon graduation. Also, many companies will judge a potential employee based on the presence and quality of an internship on the candidate's resume (in the same fashion that they place emphasis on a history of passing exams). Employers want to see students with an ability to take the initiative, apply actuarial ideas to real-life problems, and contribute to the organization, even at an internship level. An internship is a very effective way to advance your career.
Gain experience in developing models. Much of the data and other information that actuaries encounter are incomplete or even inaccurate. In addition, the responsibilities of an actuary often require that they analyze systems and risks that have not been analyzed before. Handling these kinds of responsibilities requires experience and confidence to know whether or not you're on the right track. I would encourage all actuarial students to invest some time trying to model anything that they might find interesting. This topic of interest could be something traditional like planning for retirement (with considerations for return rates, future salary, retirement age, mortality, etc.) or something more exotic like projecting next year's win total for their favorite baseball team (with considerations for reversion to the mean from the prior season's performance or simulations around injury scenarios). Creating a model from square one is a quick way to understand the dynamics of the questions that actuaries are asked every day.
Sharpen your communication skills. As a profession, actuaries are asked to provide analysis and advice on topics that can be both technical and arcane. Conveying the important elements of this work could be a challenge for the most gifted communicators. I would encourage any actuarial student to take advantage of the communication resources that are available while in school. Take a writing or public speaking course. Alternatively, you might keep copies of Elements of Style by William Strunk Jr. and E.B. White or Show Me the Numbers by Stephen Few as resources for your future job. Your clients or employer will seldom see the sophistication underlying your methods or the dedication it took to perform the work; instead, they will want to see the results. Your ability to effectively communicate those results can mean the difference between success and failure in your career.
I can’t promise that a career in actuarial science is for everyone: the exams are tough, and the work can be challenging. But for those students who do choose the profession, actuarial science will provide a rich and rewarding career. You will be happy with the decision.
Josh Sober is a Fellow of the Society of Actuaries and a member of the American Academy of Actuaries. He is also an alumnus of Michigan State Univesity and a native of East Lansing.