Ask an Actuary

"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 Karen DeToro, FSA, Deloitte. We've begun the interview with a few general questions; you may continue the discussion by e-mailing your questions to Webmaster@BeAnActuary.org. We will post your questions and her responses as they are submitted. You will receive an e-mail notification after your contribution has been added.

Q: When did you decide you wanted to be an actuary?

A: I was at Oxford University, and I had just completed the first year of a Master’s program in English literature.

Q: What influenced this decision?

A: I had started graduate school with the intention of becoming an English professor. However, after one year, I decided that I did not want an academic career and that I would prefer to enter the business world. I had double-majored in math and English literature as an undergrad, and I knew that being an actuary was one of the best ways I could use my math degree without having to go to graduate school. Plus, I had student loans I needed to pay back, and I knew that the actuarial profession was well-paid (as opposed to most other jobs that you can get with a liberal arts degree like mine).

Q: Where did you go to college, and what is your educational background?

A: I have a Bachelor of Arts degree in math and English from Butler University in Indianapolis. I have an MBA from Northwestern University, which I got after I finished my actuarial exams. I also have completed some graduate work at Oxford University in England.

Q: What did you do before you were an actuary?

A: After I left graduate school, I spent several months preparing for the first two actuarial exams. I was also working in the billing office of a local ambulance company at the time. We sent a lot of invoices to Medicare and Medicaid, and we needed to understand the reimbursement process and rates. This experience turned out to be very helpful when it came time to take the exam on social insurance programs.

Q: What classes did you take in college that helped prepare you for the career? What class was most helpful?

A: Butler offered an excellent class at the time called Mathematical Modeling. The purpose of the class was to teach the principles of modeling with a significant emphasis on written communication and presentation skills. We were evaluated on our ability to convey highly technical information in a clear and concise way. I think this is an essential skill for actuaries to have. I would encourage students to seek out classes like these. Some universities offer classes on writing targeted to scientists or mathematicians. Anything along these lines is very valuable.

Q: What classes outside of math and statistics (such as communications) were helpful?

A: I didn’t take any business classes as an undergraduate, but I found the business classes in my MBA program to be very helpful. Actuaries need to be able to communicate with a wide variety of business people in insurance companies, including people in Marketing, Finance, Underwriting, etc. Just as actuaries have specialized tools, methods and language that they use, other professionals do as well. Being able to understand the tools and methods and speak the language that other business people use is very beneficial.

Q: Tell me about your first job in the profession. Where did you work? How did you get the job? What did you do?

A: My first job was at a small life insurance company in Indianapolis called American States Life. I started there in May of 1994. I got the job because a friend of mine from Butler worked there and took my resume to her boss. The company had just purchased some actuarial software, and I helped my supervisor test the software calculations for Universal Life and annuity products. It was a great experience because it illustrated for me how the various formulas worked and allowed me to practice doing the calculations on my own. It was also excellent preparation for some of the actuarial exams, and it allowed me to quickly learn about the products and their features.

Q: When did you take your first exam? How long did it take you to get through the process?

A: I took the first two exams in November 1993, a few months after I left graduate school, and I passed both of them on the first try. I thought it would be smooth sailing from there, but all of the sittings didn’t go quite that well! I finished the exam requirements for Fellowship in 2001 and received my FSA in February 2002, so the whole process took me a little over 8 years.

Q: What advice would you give to people preparing to take the exams?

A: The exams are definitely hard work, and they require many, many hours of preparation. For me, it was always important to network with other people who were taking the exams. It can be such a solitary process to read and learn the exam materials, very different from the more collaborative environment of college. I found that going to the library or to the coffee shop with other actuarial students to study made it much easier to commit the required time outside of work. My friends and I would go to the library on a Friday evening or Saturday afternoon to study, then go out to dinner afterwards to reward ourselves. We weren’t even studying for the same exams, but when one of us wanted to give up or stop studying before the specified time, the others were there to encourage that person to keep going.

It’s really important that your family and friends understand the time commitment involved in taking actuarial exams. My parents thought I was just being paranoid and studying too much until I failed my first exam. That’s when they truly began to understand how competitive this field is and how challenging the exams are.

Q: What is a typical day like as an actuary?

A: I work as an actuarial consultant, so my days vary greatly. In the past several months, I’ve traveled to New Jersey, Indianapolis, Las Vegas and London, and I have trips coming up to Hartford and New York. On those days, I’m typically working for a specific client at their office or visiting some of my colleagues in other Deloitte offices.

Today, I’m working in my office in Chicago. So far today, I’ve researched the applicable accounting rules and written a report for a client who’s acquiring a small life insurance company; provided guidance over the phone to a colleague regarding the audit of an insurance company; attended an in-house training session on the modeling of life insurance reserves; worked on a spreadsheet model to do financial projections for a client; and worked on developing some materials for an SOA committee on which I serve. All of those activities are representative of the various facets of my job – research, written communications, verbal communications, on-the-job learning opportunities, technical actuarial work and professional volunteering.

Q: How long have you been in the profession?

A: I have been in the profession since May 1994.

Q: What advice would you give to someone starting out in the profession?

I think the actuarial profession is one of the best in the world. There are so many opportunities for professional growth and achievement, while still allowing for a well-rounded personal life. New entrants to the profession should find a position that will allow them to learn as much as possible about their selected practice area, whether life, health, property and casualty or pension. Then, once they’ve gained relevant practical experience and made exam progress, they should begin to think about where they want to go with the profession. There are opportunities for self-employment, jobs with various types of insurance companies in various parts of the country, consulting employment, full-time work, part-time work, etc. If you develop a strong technical background, and have good communication skills, business acumen and knowledge of your industry, you have considerable flexibility in designing a lifestyle and career that works for you.

Additional Questions

Q: Like you I decided to leave graduate school after deciding that I did not want a life in academia. I received a M.S. in Applied Mathematics and because I do like math, I am really attracted to the actuarial career. I will take the first two actuarial exams in Spring '07. During my job search I have noticed that most employers prefer the candidate to have at least one year of experience or an internship. Are there internships available to non-students? If not, are there other career fields that I could apply to that would offer similar experience to that of an entry-level actuary?

A: I was lucky enough to be able to get a full-time job without a prior internship, but I think it's getting harder to do that. I think you should definitely submit your resume to employers, even if they say they prefer candidates to have a prior internship, because you have a very attractive background with your Master's degree. Also, some companies may be willing you to consider you for an internship even though you're not currently a student, so you should consider applying for those as well. This might be an attractive option for a company that would like some additional help outside of the normal summer internship. In the meantime, any type of job in the financial services industry would be helpful. It shows that you're committed to the industry, and you will be gaining some applicable experience.

Q: Thank you for coming up with such a wonderful website from where I learned a lot about the actuarial profession. I have some questions for Karen DeToro which I would like to get answered: What are some strengths/requirements necessary to get an entry-level job in this profession?

A: Generally speaking, employers will expect you to have a math or related degree with the necessary coursework, including multiple semesters of Calculus, Probability / Statistics, and Linear Algebra. Employers prefer candidates with high GPAs, as it shows that they have the aptitude for the exam process. Most employers will want you to have passed one or two exams and have held at least one internship. As indicated in the response above, you may be able to get an entry-level job without meeting these criteria, particularly if you have some other interesting skill set that you can offer an employer.

Q: Similar to Ms. Detoro, I decided to leave law school after realizing that I would not want a life as an attorney. Although I do not have a degree in math or finance, I do like math and I am attracted to the actuarial career. I am currently studying for the first exam. I would like to know what computer programs I also need to learn to prepare myself to be a better candidate. I also want to know what programs Ms. Detoro uses the most at work and what programs she thinks a person seeking a entry-level actuarial job should be familiar with.

A: [Detoro, Karen (US - Chicago)] The software I use most in my current job is the basic Microsoft Office suite -- Excel, Access, Word and PowerPoint. I also occasionally use specialized actuarial software. Generally, employers do not expect entry level candidates to know these specialized software packages, as they will train you on the specific packages they own. It is also not usually required to know a specific programming language, although knowledge of a programming language may be taken as evidence of general computer aptitude. Finally, at the employers where I've worked, we have not expected inexperienced hires to know Microsoft Office, although it may give you an edge if you can show experience with these tools.

Rather than focusing on learning new software or programming languages, I would encourage you to take some math and business classes. This will show employers that you are serious about pursuing this career and will give you the additional skills and concepts you will need to successfully perform in the actuarial profession and on exams. Best of luck to you!

Q: What would you say is the ratio (time spent) of creative problem solving to routine number crunching in the work that you do? Could you give some examples of how the work you do is creative?

A: In my current job as a consultant, a good portion of my time is spent in creative problem solving. In fact, I would put it as high as 80 - 90% of my time. For our most junior staff, the proportion is probably closer to 30 - 40%, but that increases steadily as they gain experience. The reason the proportion is so high is that every project we do as consultants is somehow different than the last. It could be an entirely new concept that we're working with on a particular project, which requires a lot of creativity. Even in cases where we've done similar projects, the particular constraints and issues of a new client make the problem interesting. Some examples of problems that require creative problem solving include: finding ways to implement calculations when necessary data is unavailable or corrupted; coming up with innovative product designs to effectively compete with other insurers while maintaining profitability standards; balancing the necessary rigor for a calculation with constraints around run time or model size; and last but not least, delivering unpleasant or unwelcome news to client. The last one typically requires a large amount of creative problem solving!

Q: I am interested in becoming an actuary scientist and I was wondering what was the most common type of writing (reports, memos, etc.) an actuary did at their job.

A: Actuaries produce many types of written communications. There are formal filings and reports that are required by regulatory bodies, which can be very lengthy. There are also informal memos that are circulated within a company, which may vary greatly in length. Actuaries may also create technical documentation that is used to describe their calculations or methodologies. As a consulting actuary, I create many letters, memos and even e-mails to communicate with my clients. The format of the communication is dependent upon the nature of the actuarial work and the intended audience for the communication.

Q: Why did you decide to pursue a MBA after completing the actuarial exams? Is there any advantage to pursuing the MBA after completing the actuarial exams vs. completing the MBA before starting actuarial work? Is an MBA degree something an actuary should seriously consider if he/she is looking to work outside of the traditional industry roles?

A: I decided I wanted to broaden my business background beyond what was available through the SOA educational program of exams and seminars. I would definitely recommend starting the MBA after completing actuarial exams. First, I think I got more value out of the MBA after working for awhile because I had a base of experience to which I could apply the material I was learning. Also, I think the exams take a lot more dedication and work than completing the MBA, so I would get that completed first. Frankly, I believe an MBA is of great value, whether an actuary intends to work in a traditional or a non-traditional role.

Q: What sorts of roles can/do actuaries play in terms of social entrepreneurship and companies that pursue philanthropic ventures?

A: The most obvious application of this that comes to mind is in the mutual and fraternal insurance company market. Mutual insurance companies operate for the benefit of their policyholders. They have no corporate shareholders, as stock companies do; instead the policyholders effectively act as shareholders. Fraternal organizations are similar to mutual insurance companies, but these are non-profit organizations that are dedicated to a specific social purpose. In addition to fulfilling their social or philanthropic mandate, they also offer insurance products to their members. The role of an actuary in a mutual or fraternal organization would be similar to that of an actuary in a stock company. However, since the mandate of the company is different, this would influence the actuary's work, as the end goal would be to create value for policyholders (mutual) or further the company's social and philanthropic goals (fraternal), instead of to create value for shareholders.

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