Ask an Actuary

"The work might be stressful at times, but it's a healthy stress that keeps me very interested in the work I do. "

"Ask an Actuary" features an actuary that is asked to describe the path that led him/her to an actuarial career.  For this installment, our featured actuary is Valerie M. Lopez, a Consultant at Towers Perrin in Chicago.

Q: When did you first decide to become an actuary?

A: As a sophomore at the University of Texas at Austin.

Q: Who or what influenced your decision?

A: Dr. Jim Daniel, who headed (and still does) the actuarial science program at UT had an ingenious approach to recruiting students to his program.  He passed out flyers to students in calculus, probability and statistics courses.  The flyers claimed that actuaries made lots of money, worked under low stress and were ranked #1 in the Job's Rated almanac. I was lured and after talking with Jim about the profession, I realized I had found my calling.  In hindsight, I know that the 'low stress' part of the job was a smokescreen for the real story!  Actually, the work might be stressful at times, but it's a healthy stress that keeps me very interested in the work I do.

Q: What is your educational background?  Where did you attend college and what was your major?

A: I attended the University of Texas at Austin.  I graduated with a Bachelor of Science degree in Mathematics with a concentration in Actuarial Science.

Q: What classes did you take in college that helped prepare you for the career?  What class was most helpful?  What classes outside of math and statistics (such as communications) were helpful?

A: Interest Theory was by far the most helpful. It gave me an introduction to the profession and was not as daunting as Life Contingencies (which I would later take at UT). I took a risk management course that was interesting.  One thing that I thought was extremely helpful was that Dr. Daniel included a writing component in his Life Contingencies class.  This meant that there was significant writing in the course.  It is critical to be an effective writer when practicing in this profession, whether as a property and casualty actuary or pension actuary.

Q: What was your first job in the profession?  How did you get the job?  Did you start as an intern or in an actuarial training program?  What type of work did you perform in you first actuarial job?

A: I applied for an internship at Towers Perrin prior to my senior year.  I got the internship where I focused on mostly benefit calculation, government filings and other administrative work.  After interviewing in other specialties and with other consulting firms, I chose to return to Towers Perrin for my full time employment.  I started off doing data collection, reconciliations and valuations of smaller pension plans. After a while, I could work independently and work on more and more complex cases.  I was also given special assignments in other Towers Perrin offices - this was a great way to introduce me to projects that I would never have seen in my local office.

Q: What was your career path from your first job to your current position?

A: After 5 years as a junior analyst in our San Antonio office, I was offered a chance to transfer to our Cincinnati office to move into more of a senior analyst and project manager role.  After 2 years, I was offered the chance to transfer to our Chicago office as a team leader.  A team leader is still responsible for client work and project management, but is also responsible for the training and development of new actuaries (those right out of college).  Last year, I was promoted to a consultant, so my role on my client teams has increased, but I still retain my team leader role. I've enjoyed having what I consider to be 3 different careers with the same firm.

Q: What type of work do you do on a day-to-day basis in your current position?

A: I will address the problems (technical and otherwise) of those associates who report to me.  They might need help with a pension pricing, or need help determining who to talk to for scheduling conflicts. The client work that I do is generally at a review level.  That is, I am reviewing the work that others have done for me.  I will typically prepare a detailed project plan (outlining steps, intermediate deadlines and budgets) then make sure that the project is moving along smoothly.  I sometimes feel like I run an assembly line, but there are plenty of occasions when I am the one responsible for doing the work.  Projects I've been involved with recently include determining the accounting effect of a Reduction in Force, preparing accounting disclosures for the international locations of one of my clients and determining the amount of assets that a client will receive if they transfer a group of participants from one plan to another. Towers Perrin works with mainly large clients and those clients generate the most varied work opportunities.

Q: How long have you been in the profession?

A: I was an actuary for 8 years.  I've been in my current position for the last year and a half.

Q: When did you take your first exam? Where are you currently in the exam process?

A: Ugh.  This is a horrible question for me and I by no means serve as a role model in the exam program.  I took my first exam in February of 1989.  I fell under the spell that since I had aced my calculus and probability courses, I wouldn't need to study much. I was wrong, but I got Course 100 after my second attempt.  I received my Associateship in 1995. In 1996, I became an Enrolled Actuary (which allows me to be a pension practitioner). I am still pursuing my Fellowship, but I have at least a few more years to go (the exams I need are only offered in the fall).

Q: What advice would you give to someone first starting out down the path of an actuarial career?

A: Try to determine if the various fields in actuarial science hold interest for you.  You may be attracted to the insurance track, the investment track, etc.  When I started out, there was only insurance and consulting.  I chose consulting, but if I had known more about other options, I might be in a totally different place right now.  Once you've decided that, you absolutely have to determine if you can survive the exam process.  Exams are a critical part of being an actuary and your career choices are limited if you don't become credentialed.  I have seen many successful people working in the field who are not credentialed, but they have to work twice as hard to demonstrate their abilities.

Q: I am a sophomore at a liberal arts college. I just recently discovered the actuary profession and just garnered an internship at a large insurance company. However as my college does not provide a major in actuarial science and as a sophomore I am worried that I will not be adequately prepared for my internship or for the profession. What can people like me who were just exposed to the profession do to help prepare for internships and the profession?

A: I don't think you need to worry a whole lot about being unprepared for your internships. Most internships are developed with the idea that they serve as an introduction to the profession. Since I do not work for an insurance company, I am making some guesses about steps you can take to prepare, but certain things would apply even if you had an internship at a consulting firm. I would try to talk to anyone at the company who was recently an intern. They could tell you about valuable things to know when you walk in the door. I would encourage you to find out as much as possible about the type of work you'll be doing during the summer. For example, what line will you be working on; what software will you be using; who will you be reporting to; who will you be working with; and so on. You should probably know enough about the exam process and the first one or two exams. As far as being prepared for the profession, the best thing you can do is start taking exams. Passing them is a plus, but I'm doing OK and I failed more exams than I passed when I was in college! An internship under your belt will give you great preparation for the profession. As a sophomore, you should consider an internship in the consulting arena so that when you are making a decision about full-time employment, you can say "I've seen both sides of the aisle and I prefer this one." Good luck with your internship! Your desire to be well-prepared and informed ahead of time will serve you well.

Q: Hello, It has not been easy passing the Actuarial Exams, particularly those of us from Africa.  Can you give advise on "Study Techniques"?  Do or did you take exams at every sitting?  How did you combine studying and working?  Thank you.

A: [Thanks] for your long-distance question. I am on the super-long track to getting my Fellowship. It took me about 5 years to get my Associateship (under pre-1995 rules), and has taken me just as long to be 2 exams away from Fellowship. I have only taken a break when I felt the extra time was needed to study for the following exam, or no exam was offerred that I could take. It is difficult to work and study, but setting a realistic schedule for yourself and sticking to it is important. It is especially important to stick to the schedule early on, since making up for lost time is incredibly difficult. I can only assume the cultural differences that make it harder for those not in the U.S. to take our exams. What I recommend might help anyone taking the exam. I would suggest contacting universities with actuarial science programs since they might have more access to materials that could help you bridge the gap between the U.S. and your country. Find others who have passed the exams and find out how they have addressed any cultural differences. The more old exams you can get your hands on, the better. It should allow you get familiar with how the SOA likes to set up the problems. I would like to think that anyone picking up the exam, after having studied extensively, could master them no matter their origin. I have a great deal of respect for how the exams are graded without regard to sex, race, political views, etc.. This equitable approach interested me in the profession. The 'grader' did not know I was a Hispanic female and so I was treated equally. I have faced discrimination based on my race and gender and to know I could be successful in a profession without regard to those features was a major draw.

Q: Hello Valerie!   Here's an e-mail from an industry outsider, if ever there was one!  I completed my master's degree in clinical psychology several months ago but noticed that I enjoy the statistical work over everything else.  So, I am now considering careers where quantitative work could be fused with the writing and interpersonal skills I gained via my psychology training. After reviewing my intellectual strengths, it seems that the actuarial profession suits me.  Given my atypical background, I hoped you could assess my "re-training plan" for later employability.  Here it is:
The University of Florida offers an actuarial minor, which includes courses relevant to Exams 1 and 2, and I plan on taking these courses as a postbac student. I could then sit for exams one/two in May 2002. With that training -- but lacking a formal math, stats, or econ degree (to list a few typical backgrounds) -- would my job opportunities be restricted? I raise this issue because many job postings include "mathematics degree," for example, among the job requirements.  However, at the same time, it appears that passing a few exams is sufficient to launch someone into the profession, that the exams serve as a screener for mathematical aptitude? Anyhow, thanks for your thoughts on this question.

A: [It] is not written anywhere in stone that an actuary must have a math degree. That said, I wouldn't recommend the profession to just anyone. You mentioned your interest in statistical work, as long as that interest translated into success on the actuarial exams, you probably won't see heavy statistical work on the job. At least not in the 'typical' actuarial tracks. I believe that the material on early actuarial exams can be mastered with course work and lots of hours studying. The later exams can be mastered with self-study, on-the-job experience and lots of hours of studying. I definitely recommend that you get started on the exams to determine if this will be something you can face for the next 5 or more years of your life. As long as you're going back to school, try to pick up some relevant coursework - economics, finance, accounting, business-centered writing, etc. Because you've already had work experience, when you complete your 're-training plan' and have an exam or two under your belt, you will be an attractive candidate to employers. You will no doubt, have the business skills that most college graduates take a few years to develop.

Q: I am looking to change careers but use my economics background.  I have an graduate economics degree. When I was in college I had a pretty good dose of stats, calculus and of course lots of micro and macro economics.  However, this has been a while and after viewing some of the sample exams I definitely would need to do some heavy duty reviewing (even take some classes) to get back into all the quantitative stuff. This would take quite a chunk of time and dollars.  I do not mind this at all, however, I am wondering what my employability as an actuary would be given my age.  What is the average age of an entry level person in this field, at the mid career level, and at the experienced level? Do you have any stats on individuals that have become actuaries after working at some other, allied, field?

A: An economics background is a good background to have whether you're right out of college or joining the profession after a few years of working. I would definitely encourage trying the first exam before committing to a career change. I would hate for you to be disappointed by the exam process and realize that perhaps this career change wasn't for you.  I do not know of statistics available regarding those who enter the profession after working in another profession.  I have anecdotal evidence from my own working career and I don't think it's a common practice. I mean, after all, if you've been working for 5 or 10 years and you've gotten accustomed to coming home after work and attending to your family or personal commitments, how easy is it to throw in a few hours of studying every night?  That said, I have known people to enter the profession and they have a drive that seems much more intense than that of a recent college graduate.  They know that they must make an impact in a short period of time (both to prove to themselves that the career change was worth it and to prove to the employer that the risk was worth it).  Since you don't mention your current work, I don't know how your experiences will translate to the actuarial profession, but certainly an advanced economics degree is useful in our profession.  Seek out local actuaries for their advice and please take the first exam as soon as possible to get a flavor for the profession.

Q: Passing exams require studying and mastering materials.   But for Course 3 and beyond, how much help does day-to-day work experience contribute?  Thank you.

A: The technical skills you learn on the job do make their way onto the exams after Course 4.  It depends on what line of work you're in, but it is likely that SOME of what you see on the job will make taking exams 5 and 6 bearable.  Course 8 is completely focused on what you do on a day-to-day basis.  I think what day-to-day work teaches you most is effective project and time management.  If you are successful on the job in adapting yourself to various projects and learning a lot in a short period of time, you can translate those skills into effective study techniques.  Good luck with the exams!

Q: For entry-level actuaries, what trends in the actuarial job market should they attend to in planning their careers?  What skills will set new candidates apart from the crowd?  Thanks.

A: I'm involved in recruiting for Towers Perrin and I know that there are certain skills that are taken for granted and certain skills that are highly valued.  For example, it is taken for granted that an entry-level actuary will come in with at least 1 exam and with relevant coursework.  Not having an exam or relevant coursework doesn't eliminate you from consideration, but just puts the onus on you to demonstrate that other skills are stronger.  The skills that we tend to highly value are effective communication, team work and project management skills.  In the consulting arena it's important to have the technical skills rolled in with the ability of making a strong presentation.  As far as trends, there has been a buzz in the last few years over non-traditional actuarial careers.  The assessment of risk goes beyond the insurance and pension consulting realm.  This has opened up the profession to a lot more avenues.   To find out more, stay up-to-date with the SOA and CAS web sites or contact recruiters that have contacts in non-traditional careers.

Q: I would like to ask Valerie if there is a connection between actuarial science and capital markets and how deep is it. How much an actuary is involved with investments, stock markets and other issues related to pension fund assets.

A: Thanks for the question. I'm not sure for how detailed a response you were looking for. Since I am a pension actuary, I'm not involved on a day-to-day basis with the types of investment analysis I think you're referring to. However, advancing technologies have allowed pension actuaries to have more involvement in asset analysis. Especially when it comes to projections. So, for example, when computers were slow and there weren't a lot of projection models developed, I would have focused exclusively on liability projections. Now, I can also do asset projections (considering different asset mixes, funding policies, plan design features, etc.) and advise my client about the future of their pension plans in both liability and asset contexts. I know that there is an investment track for completing Fellowship in the Society of Actuaries and someone who has pursued that and works in that line would be better able to talk about being an actuary focused on the asset side almost exclusively.

Q: You mentioned in an earlier response to a question that you have seen many successful people in the field who are not credentialed. What types of positions can you hold in the field if you are not credentialed?

A: I think someone who doesn't get credentialed can be a successful internal technician. They are likely to be the strong systems person within a firm or office. IF someone has the potential to attract additional client work, it is possible to become a consultant, but they will have to prove themselves by working even harder to demonstrate that. I think anyone considering working in the profession should try completing the exams. There are some people that I have come across that have decided that other things are important and try to find a way to add value to their employer by developing other critical skills. Please keep in mind that I am responding with my background in the consulting world. I do not know if the same reply can be made about the insurance industry.

Q: I have my MA in Pure Mathematics. I am currently a college instructor, and I do enjoy teaching. However, at this point, I feel like I need to pursue my Ph.D. to climb any more in my field, and education is not known to offer the highest paying jobs around. As a result, I am wondering if this a good time to change career directions. Do you feel that passing the exams would be less stressful, or at least of equal stress level to pursuing a Ph.D.? Do you agree that the salary potential is much greater in the actuarial field?

Also, I am a single mother of two children. One of the aspects of teaching that I enjoy is the flexibility involved. A friend of mine recently told me that there is also a great deal of flexibility available in the job of an actuarialist. Is this true? Or is this a field which requires working 60 hours a week? I don't mind working hard, and I love a challenge, but I don't want to make a career choice that will take away from my children. Thank you for your time.

A: I don't know much about the process for becoming a Phd other than friends who have taken that career path. I would think that taking actuarial exams in addition to working is much more difficult than completing a Phd. But, again, that's purely a personal observation. I also have no concept of what a Phd earns. I think the potential for actuarial earnings is great because you get significant pay increases each time you pass an exam. When you become credentialed, the pay increases level off and become tied to your performance, but it's likely that your completion of exams now allows you to become critical to the business development or management of the company's actuarial business. It is a difficult task to study when you have responsibilities for children. But, I know people who have been able to do it because they are committed to succeeding and know that if they are absolutely disciplined about their studying, they can get through exams faster and spend more time with their kids. If you have a strong support system of family, you could manage the time needed to study. I would never discourage anyone from trying. You must understand up front that it will be difficult, but I think the profession is rewarding enough that it may be worth the sacrifices.