What is the daily life of an actuary like?
I'm a sophomore studying economics in college. I'm interested in a career in actuarial science, but I'm not sure what's the work of an actuary like. Can an actuary explain what's your daily job like? Thank you!
I am a pension consulting actuary in Chicago. My day-to-day changes quite a bit but the root of what I do involves working with our client's pension plans. There is a ton of work/regulations/deadlines that are involved with employer sponsored pension plans, and a pension actuary's role is to manage many parts of it and ensure the plan is properly funded and follows government regulations.
There are 2 main fields for actuaries: insurance and consulting. Consulting actuary life is vastly different than insurance actuary life. In general, insurance can be slow moving with many days feeling like the same, but it is a classic 9-5 job, pays well, low stress, plenty of time off to study for exams. Consulting is more interesting on paper with constantly changing projects day-to-day where it feels like you're never doing the same thing and there are always new challenges; it's fast paced and team-oriented and your work schedule is very flexible, but you work a lot more, don't get much time off to study for exams, and the frequent deadlines and client requests make it highly stressful. Consulting actuaries typically work 50+ hours in a week but it is very common to be working until 10 or 11 pm or later.
Things I wish I knew:
There are a lot of exams. A lot. And they're very difficult. You can become an actuary in the SOA (Society of Actuaries) or the CAS (Casualty Actuary Society). The exams vary depending on which path you decide to take, but here's the layout for the SOA:
3 VEEs - Accounting and Finance, Mathematical Statistics, Economics (you can get credit for these by taking/passing specific college classes)
7 exams - Probability, Financial Mathematics, Investment and Financial Markets, Long-Term Actuarial Mathematics, Short-Term Actuarial Mathematics, Statistics for Risk Modeling, Predictive Analytics (these exams are anywhere from 2-5 hours long and typically take 100 hours of studying for each hour of the exam in order to pass)
8 Modules - Each module has several hundred slides and then a graded exercise at the end, with the exception of module 8 which has a larger final assessment at the end
Associateship Professionalism Course - All you have to do is fly out to a conference and sit through "what it means to be an actuary" for a few days
If you do all of that, you become an Associate of the Society of Actuaries (ASA). Then, if you're still up for it, you can do anywhere from 3-5 more exams, another set of modules, and another course to become a Fellow of the Society of Actuaries (FSA).
Nearly all of my coworkers went to schools with formal actuarial science programs (Big Ten schools for example - U of I, Michigan, Wisconsin, Iowa, etc) and that gave them a good advantage (actuarial recruiters come to their campus, actuarial majors/classes to help pass exams, actuarial science clubs for networking). It's not impossible to be an actuary if you don't go to a school with an actuarial science program (I didn't go to one, for example), but it does make your life easier.
Being an actuary is a good job. It pays really well, there are plenty of jobs, and the work/exams are challenging. That being said, it is easy to get burnt out after spending years post-college taking exams and working long hours. The exams can make it difficult to find time for the important people in your life and to take care of you mental/physical health. This may not be the case for insurance actuaries, but I am speaking from a consulting background. It's easy to get stuck in the circle of "if I'm not working, I'm studying and if I'm not studying, I'm working". A career as an actuary is always high on the list of "best jobs" when you look at Forbes, WSJ, Glassdoor, etc, so there is definitely an appeal to the career and there are many reasons why.
Colton recommends the following next steps:
For a typical project, the work involves scoping out a project, determining what data is needed, requesting the data, receiving the data and making sure it is what is required, determining if the data is consistent, accurate, and questioning the source if it looks deficient, restructuring the data to work within the framework of software you have or manipulating and creating new software (by this I mean the calculation software to get the results you are interested in), running the software and analyzing the results, communicating the results in reports and/or meetings, responding to questions on the results, and providing action steps to the entity on how to improve outcomes.
To become trained as a fully accredited actuary requires the taking of exams. I followed the life, health, and pension track of the Society of Actuaries. It took me 5 years after graduating college to complete the exams, which was considered relatively fast track as there were 9 exams and some given only once a year. The course of study has changed a lot since I completed my exams in 1979 but they remain very challenging. See soa.org for details on the course of study (plus career information) of the Society of Actuaries. Alternatively, the Casualty Actuarial Society sponsors the exams for becoming a property/casualty actuary. The good news is as an entry level actuary at most insurance companies and consulting firms, and maybe even in the government, support is given by the employers for at work study time, reimbursement for exam fees and study guides, and bonuses/salary increases for passing.
I started out at a large insurance company where there were 100 of us in the actuarial student program including those taking their first exams to those almost finished with them. I enjoyed the camaraderie as it made for a smooth transition from the college environment. There were so many of us studying and new to the working work. Obviously, in today's world (Covid-19), working at offices has been changed to remote working. I retired 5 years ago and for the last 7 of my work years, I worked remotely with a team of remote workers plus at times a team of workers based in India. The software we used was connected to via secure VPN and work-wise, it was the same as working in the office. My teammates actually became quite friendly with one another despite some of us never meeting one another. Work got completed pretty seamlessly and very efficiently.
To get an actuarial position, it is very helpful to have passed one or two exams during college. That shows a prospective employer interest and ability. Also, it is good to take some of the early exams close to when you had the related mathematics course in college.
A background in a financial discipline such as economics is perfect. Liking mathematics is a common characteristic of actuaries and course work in statistics and probability is helpful. As in so many fields today, proficiency with computers is essential. Depending on ones interests, model-building can be a big part of one's job. For others, just understanding developed software and using it effectively is important.
Understanding the data that feeds the models is very important and if I were starting out today, I would want as much training as possible in data analytics. The saying "garbage in, garbage out" is so important. Many entry-level actuaries I trained would complain they were bored with the tedium of data work but I would always tell them that getting accurate data that is well-understood is essential to the conclusions. And when one has a grasp of the data, one can more easily understand the results. In today's world, as compared to when I started my career, there are many more applications that facilitate data preparation. Data analytics has become a discipline unto itself.
Donna recommends the following next steps:
A day in the life of an actuary differs depending on what track you are interested in exploring further. There are quite a few actuarial tracks, but the most employable tracks would most likely be Pension, Life, Health, and Property Casualty. In Healthcare, your days would probably consist of working with Excel and SQL, querying, cleaning, and modeling the data. One example would be looking into population-level risk and attempting to understand the frequency and cost of specific health conditions. That being said, there is a broad array of jobs that fall under this umbrella of actuarial services. Hope this helps!
Our objective is to accurately model our assets and liabilities and fully capture an accurate risk profile for the company. We parameterize different pieces of the business and then run that through the model to get simulated potential outcomes. Some parameters include the expected loss ratios for certain lines (amount of losses paid for policies / premium for these policies), and a volatility parameter for these outcomes. We also have reserves that are held to pay claims and we model the risk that we are either holding too much $ in reserves or too little and how adversely these could develop. Then there are the asset returns, so we have these balances included that get modeled using an economic scenario generator.
At the end of the day, we want an accurate picture of volatility of the underlying policies and returns and from there we can identify major risks, check if we are within risk tolerances, work on mitigating these risks. We also are involved in any new business ventures to see what impact these could have on our range of potential outcomes and key financial metrics.