Becoming an Actuary, Predicting the Future
March 10, 2021
Actuaries don't use crystal balls to look into the future—just math skills and an analytical mind.
If you have a passion for numbers and you're great at identifying patterns, you can make over $100,000 a year as an actuary. These professionals mine and interpret data to help businesses, insurance companies, government organizations, banks, consulting firms, and investment firms assess financial risk and make strategic decisions to mitigate it.
Surprisingly, becoming an actuary isn't necessarily a matter of getting the right degree. Should you choose an actuarial science major? Maybe not. Completing an undergraduate level actuarial science program isn't necessarily the best way to become an actuary.
If you're unsure whether you want to choose this career path, you can pursue several other bachelor's degree paths without hurting your prospects. That's because, as you'll discover below, becoming an actuary is largely a matter of passing professional exams.
So, becoming an actuary means making good money, playing with math, and having some flexibility when it comes to the required education. If that sounds like the makings of a great career, read on.
In this article, we'll cover:
- What is an actuary?
- Career stability for actuaries
- The four+ steps to becoming an actuary
- Pros and cons of becoming an actuary
What is an actuary?
With tongue firmly in cheek, BeAnActuary.com describes actuaries as "part superhero, part fortune-teller, part trusted advisor." They could have added that actuaries are also risk managers and risk mitigators.
What do actuaries do?
The majority of what actuaries do is assess risk using whatever data will have a direct effect on future outcomes. Sometimes they'll look at historical data, though it isn't always relevant.
What actuaries won't do is to try to calculate ROI or future success. The future, actuaries know, is volatile, and they're interested in what that volatility looks like, how to build safeguards that protect organizations from future undesirable events, and in some cases, how to profit from those events.
Where do actuaries work?
There are different kinds of actuary careers. Most actuaries—66 percent of them, in fact—work for insurance carriers, even though the insurance industry pays the least.
Actuaries also find work in management, scientific, and technical consulting. Comparably few actuaries work in government jobs. Business, professional, and political organizations offer the highest-paying jobs for actuaries.
Actuaries and career stability
One might assume that, since uncertainty always exists in business, actuaries are forever in demand. An actuary, however, might tell you not to make those kinds of assumptions without data to back it up. So, let's look at the data.
The Bureau of Labor Statistics predicts that the job market for actuaries will grow much faster than average, increasing by 26 percent by 2022. That's fairly compelling.
Of course, don't assume that merely passing the actuarial exams is a guarantee you'll land a job in the actuarial field. You'll hear people claim that the unemployment rate for actuaries is close to 0 percent, but before you decide that this is the career for you, consider the following: that unemployment rate is for fully credentialed actuaries—in other words, those who have passed all the SAO actuarial exams, not just some of them. Also, the unemployment rate counts all jobs as employment. An actuary who isn't working in an actuarial position counts as employed.
Becoming an actuary is highly competitive, but once you land your dream job, it will probably be pretty stable. It's during times of economic risk (when other jobs disappear from the payrolls) that companies need actuaries the most. US News & World Report, the Jobs Rated Almanac, and CNN Money have all called this one of the best jobs in the US, and that may be why.
The steps to becoming an actuary
The educational commitment to become an actuary is both simpler and more stringent than you might expect.
Step one: Get your bachelor's degree
Actuaries come from a variety of different academic backgrounds.
Common majors pursued by future actuaries include:
If you don't major in one of these areas but still want to become an actuary, you should take courses in economics, applied statistics, computer science, writing, and corporate finance. Some of these courses are requirements for future professional certification.
As you pursue your bachelor's degree, you should also consider taking programming classes. Most actuaries use packaged statistical software when calculating risk, but you might be more valuable to future employers if you can code your own.
You may be wondering why a BS in actuarial science wasn't the first degree mentioned. If you are 100 percent sure that you want to be an actuary, then definitely do look into the highly-rated programs at:
- University of Connecticut
- Temple University
- University of Nebraska - Lincoln
- Purdue University - Main Campus
- Drake University
- Ohio State University - Main Campus
- CUNY Bernard M Baruch College
As you look at degree programs, remember that a BS in actuarial science represents a highly-focused degree, and what you learn won't necessarily translate into other roles.
If you're not sure you want to be an actuary—or that you want to make a lifelong career of it—then it might be best to pursue a degree in a related field. You can still become an actuary, but you'll have much more career flexibility.
Step two: Find an internship
While earning your bachelor's degree (or after obtaining your BS, if you prefer), you can start building your résumé through relevant paid and unpaid internships at insurance companies. Interns typically handle basic tasks in the actuarial department, such as conducting research, writing up reports, and testing policies.
If you can't find an internship in an actuarial department, don't worry. You may learn just as much by interning in an insurance company's underwriting department.
TIP: This is a critical step because many employers offer qualified, driven interns entry-level actuarial jobs.
Step three: Improve your technical skills
You can start improving your technical skills while you're pursuing your bachelor's degree. Excel proficiency is important—a quick scan of job listings on Glassdoor shows that just about every employer requires Excel skills—but you can pick up a lot of what you need to know by googling to find Excel tips from actuaries and online tutorials like the TIA Technical Skills course.
Programming skills aren't as essential, but they are absolutely in demand. Having necessary coding chops will make you a much more attractive candidate when you're looking for that first internship or job. VBA is an excellent language to start with because it can be used to automate tasks in Excel. You'll use your VBA skills a lot as an entry-level actuary, saving yourself tons of time and energy.
Step four: Pass a series of actuarial exams
Now we're getting into the nitty-gritty of becoming an actuary. The only way to become an actuary is to pass specific SOA exams or Casualty Actuarial Society (CAS) exams, depending on your field.
The SOA certifies actuaries working in life insurance, health benefits systems, finance, investment, and retirement systems. The CAS certifies actuaries working in the property and casualty field, which includes auto, home, malpractice, workers comp, and personal injury liability.
You can land an entry-level actuary position with one exam under your belt—provided you can show you're committed to pursuing the next one. Do you want to advance in your career by earning the Associate of the Society of Actuaries (ASA) credential? You'll need to pass five certification exams, which typically takes around four years.
From there, you might want to take the exams required to earn your Chartered Enterprise Risk Analyst (CERA) or Fellow of the Society of Actuaries (FSA) credentials.
It's a big commitment. In some cases, employers cover the costs associated with seminars and exams, but not always. The typical advancement path for an actuary can be long, stressful, and expensive. Most people will need three to six months to prepare for each exam, and there are a lot of different exams offered by the SOA and the CAS.
Many people fail the higher-level exams and must retake them multiple times. The material gets increasingly complex, and it can take four to six years to reach associate status, then another three years to achieve fellowship status.
In "Three Things I Learned From Being an Actuary," Mo Bunnell, CEO and founder of BIG, writes that the toughest thing about becoming an actuary is passing the exams.
"It was brutal, driving fear and stress in ways I haven't experienced since. I had to motivate myself to study for 500 or 600 hours every six months to pass."
Bunnell's mentors suggested breaking down his study goals using a spreadsheet (of course)—a technique he still uses today.
There's no getting around it. Before you can work as an actuary, you must become certified by the SOA and CAS. The smartest and most-driven actuaries start studying for (and taking) actuarial exams while still in college to be attractive job candidates right after graduation.
Pros and cons of becoming an actuary
Don't jump into an actuarial career because the money is good. It is good—actuaries earn about $102,880 per year, according to the Bureau of Labor Statistics—but this is probably not a good career for anyone who aspires to achieve work-life balance in the short term.
Fully qualified actuaries can sit back, relax, and enjoy plenty of time off the clock, but everyone else in the profession has to figure out how to work a full week while also studying and taking certification exams. For most actuaries, this process consumes the first nine years of their professional careers.
Then again, putting in the effort might change your life. On the BIG website, Bunnell added that becoming an actuary can change your brain (and your finances) for the better.
"Instead of 'long-term' being six or eight years, you learn to think in 60- to 80-year time frames," Bunnell writes. "It teaches you that small investments made consistently are the best way to build assets. That's impacted the way I invest money, but more importantly, I learned to use this way of thinking with relationships. Treat people right now, and that investment will grow."
There's an unexpected windfall: if you're willing to put in the work, an actuarial career could be the best way to mitigate and manage risk in your own life.
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